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Where Will You Be Seated at the Banquet of Consequences?

The Banquet of Consequences is being laid out, and so the question is: where will you be seated? The answer depends on two dynamics I’ve mentioned many times: what types of capital you own and the asymmetries of our economy.

One set of asymmetries is the result of the system isn’t broken, it’s fixed, i.e. rigged to favor the few at the expense of the many. There are many manifestations of neofeudal asymmetry that divides neatly into two classes and two systems, the nobility and the serfs.

A rich kid caught with drugs gets a wrist-slap, a poor kid gets a tenner in the Drug Gulag.

Upper-middle class households are tax-donkeys, paying high taxes and getting few deductions, while mega-wealthy corporations and financiers enjoy offshore tax shelters of the kind exposed by the Panama Papers.

The stock market operators use high-frequency trading to front-run the market and generate profits that are inaccessible to serfs with retail trading accounts.

And so on. Given that the nobility control the machinery of governance (so-called democracy), there’s no way for commoners to influence the neofeudal cartel-state asymmetries short of shutting down the entire system.

Which leaves the asymmetries created by the dynamics of the 4th Industrial Revolution in which new technologies and business models are destabilizing every sector of the old economy.

The core dynamic here is value flows to what’s scarce and in demand. The asymmetric returns on capital and labor are the direct result of what’s scarce and what’s not scarce and what’s in demand and what’s not in demand.

Ordinary labor and college diplomas are not scarce and therefore command very little premium. Ordinary capital is also not scarce, and hence the low yield on ordinary capital.

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