The Evaporation of Wealth

John Ralston Saul, in his 2005 Collapse of Globalism, keeps mentioning the evaporation of wealth. The concept is curious, elusive, and basically not talked about by anyone else because it challenges a lot of ideas in economics. We have to remember that money is not real and something that always sits a top the value of an asset is the concept of utility (which is hard to measure so economists hate it). We all know economics eventually have to go beyond a focus on GDP and switch to harder to quantify measures like happiness, but that is barely discussed. As JRS likes to remind us, if you ask around at economics schools if they’ve changed their curriculum since 2008, they will admit not by much.

There is a growing anxiety related to the not yet widely understood evaporation of wealth phenomena that is driving the democratic socialist movement which many elites like to ridicule. Our leadership and even our intellectuals are really weak on economics so they tend to grasp for or mock ideas like socialism. They cannot seem to see giant problems staring them in the face.

The easiest way to begin wrapping your head around the evaporation of wealth (exacerbated by globalism) is to consider decades ago what happened when women were added to the work force. If a family has two incomes, it should be wealthier, but that just hasn’t been the case. We once had a prosperous country where a family could support itself and achieve considerable happiness on a single income often working only 40 hours a week. Somehow we have evaporated that entire extra income as well as a hundred years of other accumulated assets. A lot of this has to do with how we allocate the tax burden and how we allow sanctioned corruption in the political process (lobbying).

A lot of people think of the evaporation of wealth only as inflation and deflation as well as speculation, but there is a lot more subtlety to it. Evaporation may also not be the best metaphor, but it is a good starting point. Evaporation also happens by degrees and is not an on or off phenomenon. Not all saving is evaporative, but some is significantly as the piles grow and the amounts in the billions lose productivity. When middle class people benefit from tax cuts and can save, their savings have normal utility, but when the 1% and .01% get a tax cut, the money has significantly different utility and is essentially evaporated or put into permanent storage where is does not contribute to the prosperity of the country.

The main focus of this blog is the collecting and republishing of old beverage technology research papers and they are a great example of evaporation (my library card is my condenser!). These papers were publicly funded research that took place over large spans of the 20th century and they should be part of accumulated American wealth and resources with utility to draw from, but somehow they managed to become hidden.

This is just like money we stashed and forgot where we put it, but it also gets wrapped up in various infamous pay walls that privately tax you when you try to access your public wealth. We do not understand our miscellaneous public assets. We improperly archive them by under funding our libraries, allowing private gatekeepers that should not be there, and essentially evaporating vast utility. Americans have so thoroughly forgotten their public resources that they’ve allowed lobbyists to hijack our copyright system, robbing the public of wealth that is supposed to accumulate.

The new American distilling scene is approaching a billion dollars in market value and for some reason this rickety blog is the largest source of advanced educational material because I condensed a forgotten trove of public research returning our wealth. I’m currently holding multiple pieces of forgotten public research I haven’t shared that will dramatically advance every major distilled spirits category.

The biggest art museums which are quasi public-private (but essentially have public missions) are quick to tout statistics like only 3% of their collection is on view at any one time. This means they evaporated nearly 97% of a few millennia of art they rounded up and put in warehouses. Civilization should have accumulated so much fine art by now that it is coming out of our ears, but we put it in storage where it has near no utility. This art could adorn our public schools which look like prisons and countless other public spaces like post offices and public libraries. If the West is turning its back on Enlightenment values, spread that damn Enlightenment art!

Vladamir Putin is thought by many to be the richest man in the world, but all the wealth he robbed from the people of Russia has very little utility. It is all hidden and sheltered because he is not supposed to have it. Russia has vast natural resources and it has been extracting them for decades during their recent kleptocratic era, but all that wealth basically evaporates because they have no visionary entrepreneur/inventor who can create new prosperity from so much accumulation. Kleptocratic wealth is not original prosperity, but merely a transfer from the public good. Much of it goes to countless 40 million dollar Manhattan apartments that no one lives in. Though many of these investments have a dollar value, they have no typical utility.

We drag along far more military these days than our grandfathers did who supported large families working one blue collar job which is a wide avenue of wealth evaporation. The world may have changed, but it takes us so much more military to get the same utility (hell, we may get less because we are in perpetual conflict). At forty hours, we used to drag along diplomacy and the draft, but now we drag along bloated pork project fighter jets and multi million dollar missiles that are useless (declining utility) against the increasing irregular warfare phenomenon.

Spending on police or the TSA is relatively less evaporative because it is labor intensive and employs the middle class, but that is starting to change as the police militarize and use expensive swat teams to serve simple warrants. We are also evaporating money into settlements for police misconduct that we likely aren’t even legally allowed to track and study. The expense of wrongful death after wrongful is a part of that albatross around the neck of every citizen keeping them from supporting a household on 40 hours a week.

Much global tension comes from the rapidly deflating value of fossil fuel assets. All parties know their fossil fuel wealth is slipping into relative uselessness and there is a race to unlock this wealth before it evaporates. As a non-OPEC member, the U.S. is currently winning big time and as demand slows, the U.S. keeps opening its faucet to keep the price down though many parties have innovated and automated to the point they can make money on $35 crude.

In the new era of fossil fuel divestment, there is actually multi tiered evaporation going on. First, oil wealth is evaporating like just housing wealth in a deflating real estate bubble. Then secondly, this wealth is distributed to where it’s utility is low so it does not create a diverse economy that can help the civilization it serves move on. Petrol-states rely on a template of transference prosperity, they have proven unable to create hard won original prosperity.

Many futurists are starting to discuss the parasitic city where housing crisis are developing. Housing speculation is transference prosperity and those that benefit from it fall into the petrol-state template and can likely never create original prosperity. Money is sucked up from would-be middle class innovators and perpetually put into storage. Vast wealth is sucked up by the landlords to create pretty mundane lives of no particularly amazing happiness (I know countless of these people personally via my restaurant). Ostentatious behavior would condense the wealth and we don’t even see that. The only place the money ever goes is to corrupting our political system.

Commodity speculation is a classic hated layer of evaporation. Imagine the supply and demand curve of the price of oil. Now add another elusive pulsating curve atop it and the space between is the meddling of the spectators. When you reach in, you cannot grab that efficient price, you can only grab something from that layer above belonging to spectators and pay their private tax. Speculation is a transference of wealth from those trying to create original prosperity with the commodity to the speculator who is often Goldman Sachs, Exxon, or actually myself.

I have had great success as a commodity speculator and have funded a lot of my art projects that way. The wealth I transfer (should be illegal) is not evaporated because I use it at normal utility. Putting the money to use, I am overall a prosperity originator. The first dollars Goldman Sachs makes are not exactly evaporative because staff eats, clothes themselves, drives to work, and participates in gross ostentatious behavior supporting original prosperity. The last dollars, the majority, are supremely evaporative.

Oil is a strange ethical case. If the price is high we will use less creating less environmental burden and alternatives may seem more viable. If the price is low, oil isn’t always worth taking out of the ground. Oil companies make significant money on speculation and at the moment it keeps the price up in a viable zone. Banning speculation by financial regulation is a choice we are allowed to make and could eventually propel oil out of it’s viable zone downward toward staying in the ground. This is complicated by the fact that a lot of speculation these days is betting against oil. It starts to melt your brain and I would rather make my money via my workshop.

I work in an odd neighborhood restaurant in a super zip where I’ve noticed hundreds of millions in pretty evenly distributed wealth sitting around as customers on a Sunday night. The modesty is amazing and there are bank executives with Timex watches that drink $9 Montepulciano by the glass. Everybody knows our names and there is no hint of any gross culture associated with Wall Street (so I’ve set the scene with all the “elites” you hear about #banalityoffinancialevil). Second only to 45, everyone talks about Elon Musk. These bankers, real estate tycoons, heirs to fortunes and family businesses are all enamored with Musk’s massive scale original prosperity and intuit that his wealth draws from a more noble category than theirs (but sadly they leave it at that). Their money is in storage because they don’t know what to do with it besides protect it from taxation while Musk is commanding hundreds of billions and knows what to do with every dollar like someone on minimum wage. [This is far too optimistic and from a time where we knew little about Musk from journalists. He hadn’t even entered his pedo-phase.]

Musk is what we thought trickle down economics was for. Reagan might have had the best intentions, but the country could not produce enough prosperity originators for all the evaporators. Those that didn’t spend their capital actually inventing stuff, the evaporators, they had plenty of money to influence government and here we are today. [This is again far too optimistic and before we had any public knowledge of what a train wreck Musk was or how he did not originate a lot of his technology.]

There turned out to be no trickle down economics, but there certainly is the evaporation wealth.

 

If you are intrigued, I took a break from beverage technology blog work to write:
Optimism is your weapon!, Inherently Good, and the Public Good
What is water? Swimming in the Public Good
Our Social Contract, Taxes and Charity
Ideology and the Supernormal Stimuli
A New Institution of the Public Good: Mandatory Civil Service