I think the system of today has meritorious features, but it’s not complete enough for what the future needs. It was designed by and for a simpler age.
To give an example of what I mean, using a far simpler scenario than our complex, inter-connected markets: Imagine the only financial system in existence was a world bank that paid a flat 10% return on any investment, of any size. Beyond this is only production and consumption of material goods; the financial system consists of either holding your cash at home, or making 10%, period.
Even though this sounds equitable and fair, there’s a flaw in it. Because when you play it out over centuries, some people are going to spend their money better than others; some are going to get robbed and have their capital taken away. The richest will earn far more money per year than the rest, and the wealth gap will continue to get worse and worse. Millionaires will make $100k a year, but trillionaires will make $100 billion a year.
Without a system of scaled taxation that puts an upper bound on how much a single person can earn in a year, and without a system where inheritance laws return a large portion of the estate’s assets back to the community, then a few centuries later you end up with a few ultra-rich families who possess the majority of all the earth’s resources and who just hand this wealth down to their own in-group from generation to generation. The rich truly get richer — by 10% a year — while the poor can’t keep up with their expenses anymore and as a result don’t even benefit from the 10% guaranteed return.
I would say in this example that interest is not is bad, or the banks that offer it, or even the wealthy people who take advantage of what’s legally available to grow their money; it’s the generational damage done to those who were denied the ability to retain their wealth; it’s the preferential treatment given to the richest that too long preserves their dominance; it’s the lack of accountability to society itself which must come to recognize that the happiness of the majority truly is better for the happiness of individuals.
Our markets are a sharp sword; the blood-letting has not yet fully reached the consciences of those who must change it. Once it does, those blades can be put to the field and the bountiful harvest that results will be incalculable.
The “American dream” offers the promise that anyone, of any background, can make it rich if they apply themselves; but the truth is that some among us had their ankles cut at the very beginning of the race, and are now being punished for not having kept up, despite making twice the effort in many cases. And not only that, but the winners just keep getting more and more of the pie — compounding over time! — until soon, if we don’t change things, there won’t be any pie left for anyone else. Already 70% of the world’s working-age population only owns 2.7% of global wealth. This should be unconscionable, even to those who are doing everything completely above board. We’re treating life as though everyone else is fundamentally a stranger, rather than seeing ourselves as a single, spiritual organism.