Lecture Notes: Economics and Inequality

Introduction

• Speaker is in the top 0.01% of earners after a 30-year career in capitalism.
• Rich capitalists have become wealthier, raising questions about how this is achieved.

Key Question

• How do rich capitalists increase their share of the economic pie every year?
• Is it due to superior intelligence, hard work, or other personal attributes?

Core Argument

• The single factor is economics, particularly neoliberal economics.
• Neoliberalism has shifted economic policy to benefit big corporations and billionaires.

Economic Inequality

• In the last 30 years, the top 1% in the USA has gained $21 trillion, while the bottom 50% lost $900 billion.
• Neoliberal economists advocate for more austerity and globalization despite middle-class struggles.

Call for New Economics

• Current economic models are not conducive to societal prosperity.
• Neoliberal economic theory is flawed, unscientific, and unsustainable.
• Real science shows people are inherently cooperative and moral, not selfish.

Flawed Neoliberal Assumptions

1. Market Equilibrium

   • Neoliberalism believes markets are efficient equilibrium systems.
   • Example: Seattle's $15 minimum wage did not lead to unemployment; it boosted the economy.

2. Value Equals Price

   • The belief that income equates to value produced is misleading.
   • Wages reflect negotiation power, not productivity.

3. Homo Economicus

   • Humans are not purely self-interested, as revealed by new scientific research.
   • Neoliberalism's focus on self-interest perpetuates inequality and selfish economic policies.

New Economic Model

• Cooperation, not competition, is key to prosperity.
• Inclusive economics can sustain high levels of social cooperation.
• Innovation and consumer demand drive prosperity in a cooperative market capitalism model.

Moving Beyond Neoliberalism

Five Rules of Thumb:

1. Markets as Gardens

   • Markets require regulation and social norms to prevent creation of new problems.
   • Examples: Climate change, financial crises.

2. Inclusion Drives Growth

   • Economy is built on people; inclusion fuels economic growth.

3. Corporate Purpose

   • Corporations should improve welfare for all stakeholders, not just enrich shareholders.

4. Greed is Not Good

   • Sociopathy is harmful in cooperative economic models; greed doesn't equate to capitalism.

5. Economics is a Choice

   • Unlike immutable physical laws, economic policies are man-made and changeable.
   • New economic models can be chosen to create a more equitable and sustainable economy.

Conclusion

• A new economic approach is needed for a fairer, more prosperous society.
• Speaker advocates for changing narratives and laws to impact the economy positively.