Home » Columns »Sustainable Planet » Currently Reading:

Yard Sale – Part 2

January 25, 2011 by Blue Ridge Leader filed under Columns, Sustainable Planet No Comments

“A guiding principle is that new ideas come from profound analysis of simple models – thinking deeply of simple things.” Ray Pierrehumbert, Principles of Planetary Climate, Cambridge University Press, 2010.

“Misery and poverty are frequently confused, because they are close – close, but located on either side of a limit. On one side, economic life is not assured; on the other side, it is assured. Beneath that limit, there’s misery, no certainty of a viable life, constant risk; above the limit, the risk stops, and poor or rich, there is assurance. Immediately above the limit is poverty, and above that are the successive zones of affluence. All below is misery; poverty is only a little above; thus the two are close in quantity, closer than much affluence is to poverty. Judging only by quantity, wealth is much further from poverty than poverty is from misery; but between poverty and misery is a distinction in quality, in nature.” Charles Péguy, 1902 essay “De Jean Coste.” [1]

Tony Noerpel

Following Pierrehumbert’s advice, Last week I discussed the need for simple economic models and listed some requirements of a good model. I suggested Pareto’s Yard Sale model [2] to describe the observed migration of wealth from middle class and poor to the wealthy which seems to have occurred in all human civilizations since humans discovered the principle of private property and commerce. Prior to about 10,000 year ago, humans lived as small (between 75 and 150 individuals) egalitarian groups based on hunting and gathering with little concept of private property. With private property came trade and with trade came inequality. Pareto’s yard sale model suggests that inequality is inherently a result of commerce even without considering individual characteristics such as intelligence, good looks, shrewdness or dishonesty. In a large population some individuals will win big and many will lose. There have always been kings and emperors, dictators and captains of industry while most of the population either just got by or were slaves or destitute. According to the yard sale economic model with near certain probability somebody will become as wealthy as Bill Gates. The probability that Gates’ himself would turn out to be that person were probably rather low but because of his personal characteristics and inherited wealth certainly much higher than most people.

Another simple model that can show that this propensity of commerce to make somebody rich and many people poor is the Gambler’s Ruin problem from probability theory [3]. If two gamblers start with an equal amount of money and make a series of small wagers on the outcome of the toss of a fair coin, it is easy to show in closed form that there is a 50 percent probability that the first player will become bankrupted and a 50 percent probability that the second player will become bankrupted and zero probability that the game will continue without bankruptcy. This result is exact.

Further, we can calculate the probability of ruin for the two players if they start with unequal amounts of money. As you would expect, the player starting with the most money is most likely to win. The problem can be made more interesting by varying the relative probabilities of each player’s chances of winning. In other words, if the first player cheats a little bit, he may increase his probability of winning each coin toss slightly but he will increase the probability of the second player going bankrupt substantially.

At this time, 129 million Americans have health care problems which qualify as pre-existing conditions. All of these people could be denied coverage by their private-for-profit health insurance companies if the GOP/FOX/corporate elite succeed in overturning Obama’s health care plan [4]. Since health problems are the principle reason families are forced into bankruptcy in the United States, more American families will become vulnerable if Republicans were to succeed.

A recent report published by the Levi Institute finds that the top 1 percent of American households by income hold 37.1 percent of all wealth. The next 4 percent hold 27.9 percent. The next 15 percent hold 22.2 percent. The next 20 percent holds 10 percent of all wealth. The middle quintile holds 3.1 percent of all wealth. The bottom 40 percent of American households hold -0.8 percent of all wealth. 24.1 percent of all American households have negative net worth [5]. We see that wealth distribution is highly skewed and most Americans are vulnerable to economic failure even without suffering a debilitating injury or illness. The author of this report, Edward Wolff, concludes:

We can see how the rising debt of the middle class made them vulnerable to income shocks and set the stage for the mortgage crises of 2008 and 2009 and the resulting financial meltdown. The rapid decline in house prices over these two years (on the order of 24 percent) left many middle-class families (I estimate 16.6 percent of homeowners) “underwater” (greater mortgage debt than the value of their homes) and, coupled with a sharp spike in unemployment, unable (or unwilling) to repay their mortgage loans.”

Since the exploitation of fossil fuels, humans have been able to create new wealth faster than the natural migration of wealth from middle class and poor to the wealthy. In the recent past, this has led to increasing prosperity for a greater number of people but it has not eliminated misery. The large middle class was a positive feedback further increasing total wealth. This led to the evolution of modern democracies and the sense of fairness in which we all believe. A prudent and honorable goal of our society might be that no American has to live in misery and indeed we were on our way to achieving this goal. Poverty as defined by Péguy is fine so long as all Americans have equal opportunity, access to education, freedom from hunger and adequate health care and nobody is forced into misery. While some unequal wealth distribution may be acceptable and even desirable, vast accumulation of wealth is quite unnecessary and is harmful to the democratic process. Chief Justice William Brandeis wrote [6]: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” One of the mantras of the current economic crises is that failed banks were “too big to fail” and were subsequently bailed out. The lesson might have been that we should not let corporations become too big to fail or individuals to wealthy and powerful to corrupt, but we appear to have lost the opportunity to learn and apply this important lesson.

Naturally, extreme wealth is connected with extreme influence and power and of course that corrupts democracy. The Supreme Court’s Citizens United decision allowing unlimited funding of political campaigns by wealthy individuals and corporations probably signaled America’s transition from an oligarchy to a keptocracy [7]. Since Justices Scalia and Thomas met with the Koch Brothers who directly benefitted from the decision several times while the Supreme Court was dealing with the issue, they should have recused themselves. This is of course text book corruption.

Since the natural flow of wealth seems to be from poor to already wealthy and the natural evolution is to fewer and fewer larger and wealthier entities and individuals, we need a progressive income tax in order to redistribute wealth back to society. This is not a new idea but it is one that has been both successful and then successfully attacked by corporate elite, since the Reagan administration. We need to overturn the Supreme Court’s Citizen United decision and institute real campaign finance reform. We can learn from more successful democracies. We also need to decide, as a nation, whether or not we are going to tolerate misery, as we do today, or work to eliminate it. Since most of us are perhaps a single transaction away from misery, this might be the preferred choice of a majority of well informed citizenry.

I don’t suggest that excess wealth be taxed and then simply given to the poor. What I suggest is that it be taxed and then invested in the needs of society such as building schools, financing single payer federal health care, building mass transportation systems and of course funding research and development.

In part 3 of this series, I will describe Herman Daly’s ecological economic model of the economy and how it can show us how to invest in society in a sustainable way.

[1] http://www.energybulletin.net/stories/2011-01-17/decent-poverty-report-poverty-and-misery

[2] Brian Hayes, Follow the Money, American Scientist, Volume 90, Number 5
Page: 400, DOI: 10.1511/2002.5.400September-October, 2002 http://www.americanscientist.org/issues/pub/follow-the-money/2

[3] Ghahramani, Fundamentals of Probability, second edition, Prentice-Hall, 2000.

[4] http://www.washingtonpost.com/wp-dyn/content/article/2011/01/17/AR2011011702842.html

[5] http://www.levyinstitute.org/pubs/wp_589.pdf

[6] http://en.wikiquote.org/wiki/Louis_Brandeis

[7] http://www.commondreams.org/headline/2011/01/20-2

Comment on this article


By commenting, you agree to abide by our Terms of Service.


 

 

 

 

Columns

Charles Murray’s Middlebury Melee

“Earthrise”, photo taken from Apollo 8 by Bill Anders on Christmas Eve, December 24, 1968. By Tony Noerpel On March 2, 2017, the appearance of Charles Murray at Middlebury College in Vermont caused a small riot [1]. The media blamed …

Earth System and Paleoclimate Change

In a new paper Owen Gaffney and Will Steffen [1], present a high order abstraction of the Earth System, E, in the form This is fine as an abstraction and shows the subsystems which impact the Earth System. The authors …

Famous Estate Blunders and How To Avoid Them

These celebrities’ tales are a strong reminder to review your estate plan before it’s too late. There’s a calm comfort that comes with estate planning: a sense that your family will be taken care of after you pass away (hopefully …

Fidget Gear, Good or Bad?

What do you think about the new fidget cubes and fidget spinners, and do they really help kids with ADHD? They’re making their way around our neighborhood, but I couldn’t find any good studies out there on either of the …

A Community Together: The Ten-Year Remembrance of 4/16/2007

Time moves forward, whether we are ready to move on or not. It’s been ten years since the massacre that shocked America. I’m talking about the event that started a standard of condolences from the president, tears and prayers from …

Soul Lost in Translation

“Greed, for lack of a better word, is good,” Gordon Gekko (Michael Douglas) tells us in the 1987 movie Wall Street. The newly released book, Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted …

Just Like Nothing (Else) on Earth: North Fork Road

It’s difficult to be in a hurry when all the surrounding geography seems to encourage thoughtful, relaxing contemplation – maybe even a meditative cat nap thrown in for good measure; now – turn your TV off and take the music …

Student News

Congratulations, Class of 2016

6 Jul 2016

Woodgrove High School’s Class Of 2016 Graduation – By Amanda Clark On June 16, Woodgrove’s Class of 2016 was the 5th graduating class to walk the stage and accept their diploma. The ceremony was filled with anticipation as the chorus, …

(Be the first to comment)

Buckland Earns Degree In Medicine

6 Jul 2016

Molly Buckland, D.O., graduated from the West Virginia School of Osteopathic Medicine with a degree of Doctor of Osteopathic Medicine on May 28. While at WVSOM, Dr. Buckland received the Dr. Roland P. Sharp President’s Award and the James R. …

(Be the first to comment)

Adams Promoted To Lieutenant

6 Jul 2016

Lt. James Adams, from Sterling and a Potomac Falls Halls Graduate, earned the promotion to the rank of Lieutenant. Adams is a Navy Week and Executive Outreach Planner for the Navy Office of Community Outreach in Millington, Tennessee. U.S. Navy …

(Be the first to comment)

ATTENTION CALENDAR USERS: IT IS NO LONGER NECESSARY TO LOG IN TO POST EVENTS. PLEASE CLICK HERE INSTEAD.

Calendar

April 2017
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
March 27, 2017 March 28, 2017 March 29, 2017 March 30, 2017 March 31, 2017 April 1, 2017

CA$H Bingo

CA$H Bingo

”Homage to Mother Earth”

”Homage to Mother Earth”

Nebbiolo Vertical Tasting

Nebbiolo Vertical Tasting

Notaviva Vineyards - Bluegrass Jam - FREE event

Notaviva Vineyards - Bluegrass Jam - FREE event

Old Time Country Ham and Turkey Dinner

Old Time Country Ham and Turkey Dinner
April 2, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

GALLERY COFFEEHOUSE: Readers Theater, “One Slight Hitch”

GALLERY COFFEEHOUSE: Readers Theater, “One Slight Hitch”
April 3, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 4, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 5, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 6, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 7, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

First Friday at the Winery

First Friday at the Winery
April 8, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

Cherry Blossom Celebration

Cherry Blossom Celebration

Come Paint with Us! Cherry Blossom

Come Paint with Us! Cherry Blossom

Meet the Artist - Robert Merhaut

Meet the Artist - Robert Merhaut

Healing Service

Healing Service

North Gate Vineyard presents a Vertical Tasting

North Gate Vineyard presents a Vertical Tasting
April 9, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

SPRING AWAKENS: DECORATED EGG AUCTION

SPRING AWAKENS: DECORATED EGG AUCTION

GALLERY COFFEEHOUSE: Writers’ Night Out

GALLERY COFFEEHOUSE: Writers’ Night Out
April 10, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 11, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 12, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 13, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 14, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

CA$H Bingo

CA$H Bingo

LAST HAM STANDING COMEDY IMPROV

LAST HAM STANDING COMEDY IMPROV
April 15, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

CA$H Bingo

CA$H Bingo

Easter at the Park

Easter at the Park

Easter Extravaganza

Easter Extravaganza
April 16, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

Easter Sunrise Service

Easter Sunrise Service
April 17, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 18, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 19, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 20, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 21, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

Jules & The Hammer Band with Teddy Chipouras

Jules & The Hammer Band with Teddy Chipouras
April 22, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

20th Anniversary Celebration & Grand Re-Opening

20th Anniversary Celebration & Grand Re-Opening

Celebrate Earth Day at North Gate Vineyard

Celebrate Earth Day at North Gate Vineyard

Andrew McKnight & Beyond Borders

Andrew McKnight & Beyond Borders
April 23, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

Franklin Park Big Band is Coming to Franklin Park Arts Center

Franklin Park Big Band is Coming to Franklin Park Arts Center

Jammin' at James

Jammin' at James
April 24, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 25, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 26, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 27, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
April 28, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

April Fourth Friday

April Fourth Friday

CA$H Bingo

CA$H Bingo
April 29, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”

2017 Virginia Touch-A-Truck

2017 Virginia Touch-A-Truck

Live Music: Dear Creek

Live Music: Dear Creek

Music With a Cause - The Loudoun Chorale

Music With a Cause - The Loudoun Chorale
April 30, 2017

”Homage to Mother Earth”

”Homage to Mother Earth”
Current Print Issue:
Sign up for our email newsletter:

Recent Comments

  • muskegon community college on Fidget Gear, Good or Bad?: I’ve been reading a lot about Fidget Gear, Good or Bad? , but none of the posts were as useful...
  • Vernon on Leesburg Debuts New Bike Trail Network: It's a pity you don't have a donate button! I'd most certainly donate to this excellent blog! I guess for...
  • SS Teacher on Fidget Gear, Good or Bad?: The fidget spinner and the fidget cube are very different. The fidget spinner is a disease to the classroom. It's...
  • Jimmy Hill on March 28 Purcellville Town Council Work Session: We have 2 playground areas within a few hundred yards of the proposed one from the article. LVCC has two...
  • Susan T. on ZOAM 2016-0014: Not exactly. ZOAM 2016-0014 allows for a maximum density of no less than 4 residential dwelling units per acre. ...

Lifestyle

Welcome Home to this Colonial in Lovettsville

6 Apr 2017

By Hannah Hager All of us seek to put down roots in ?a pleasant, safe and prosperous area, and you’ll find as much within this home in the Dutchman’s Creek neighborhood in Lovettsville. Today, Lovettsville has all the trappings of an all-American hometown – a pizzeria downtown, excellent schools and busy streets that settle into quiet nights. Its claim to …

(Be the first to comment)

Keep Loudoun Beautiful

5 Apr 2017

Greater Lovettsville Area Volunteers Needed The Keep Loudoun Beautiful spring clean-up takes place the entire month of April and greater Lovettsville needs volunteers. Bags, vests, gloves and grabbers are available at the Lovettsville Community Center during normal business hours, Monday through Friday.  Contact Lovettsville area leader, Laura Lieberman, for details and to coordinate pick-up  locations:  laura.long.lieberman@gmail.com.

(Be the first to comment)

Take Me To the Garden Show

5 Apr 2017

The 27th Annual Leesburg Flower & Garden Festival comes to town Saturday, April 22 from 10:00 a.m. to 6:00 p.m., and Sunday, April 23 from 10:00 a.m. to 5:00 p.m. The award-winning event, estimated to attract 40,000 visitors over the two days, gets better and better every year. And, that’s not just the vendors and organizers talking; that’s the truth, …

(Be the first to comment)

Editorial

Priscilla Nabs Plum Planning Commission Post

Appointment Shocks Many On January 3 Supervisor Tony R. Buffington Jr. (R-Blue Ridge) nominated Tom Priscilla for the Loudoun County Planning Commission to represent the Blue Ridge District. Priscilla was …

Op-ed

Opinion: Terrorism, Debt, and China: Oh My!

– By Nick Reid world can be a very dangerous place sometimes, especially for a nation state such as the United States. Although danger is always present, the number and …

Metro Money Mess Pushing West

– By Delegate Dave LaRock (R-33rd) A local paper recently quoted Loudoun Board Chair Phyllis Randall as saying that in her observation “some of the concerns raised by the people …

Dear Editor

Why Williams Gap Road Should Not Be Paved

Today, most residents of Loudoun County know nothing about Williams Gap, even those living on Williams Gap Road (Route 711). Knowing who “Williams” was, why a gap in the Blue …

Vote No To the Minor Special Exception

We are a group of Loudoun County citizens who will be adversely affected if the board grants a special exception for the Catesby Farm property at your upcoming meeting. You …

View From the Ridge

Envision Loudoun – Bold Action Versus Business-As-Usual

Everyone is talking about it. “Envision Loudoun,” our local government’s effort to reach out to the public for advice on how to rewrite and update the County’s Comprehensive Plan. Officials …

Around Virginia

Rep. Comstock Returns from Bipartisan Congressional Delegation to Egypt, Jordan, and Lebanon

Representative Barbara Comstock (R-VA) released the following statement after returning from a bipartisan Congressional Delegation visit to Egypt, Jordan, and Lebanon: “As believers around the world observed Holy Week, I appreciated the opportunity to visit and hear from those who serve our fellow man – our military men and women …

(Be the first to comment)

Governor McAuliffe Announces Growth in Solar Industry-Related Jobs

Governor Terry McAuliffe announced that Virginia is one of the fastest growing solar job markets in the country. In the Solar Foundation’s National Solar Jobs Census 2016, Virginia is 2nd in the Southeast and tied with Utah for 9th in the U.S. for year-over-year solar job growth. The Commonwealth is ranked …

(Be the first to comment)

McAuliffe Vetoes LaRock’s Public Assistance Eligibility Legislation  

On March 28, Governor Terry McAuliffe vetoed Del. Dave LaRock’s (R-33) House Bill 2092, which would have required any applicant for public assistance to undergo a full review of death records, incarceration status, employment status, lottery winnings, and all income. Recently, an Arlington woman was arrested on four counts of welfare fraud for …

(1 comment)

Sports

Woodgrove Training for Spring Track

9 Apr 2017

Woodgrove students get ready for the upcoming Spring track season. Photos courtesy of Robert Nelson

(Be the first to comment)

Western Loudoun Volleyball Summer Camp Launched

6 Apr 2017

Western Loudoun Volleyball Club will be hosting its first ever summer camp June 26-29 at Foxcroft School in Middleburg.  The coed, four-day camp will run from 9-5 each day and feature advanced skills training, game strategy and mental approaches to the game.  The program will be managed by WLVBC’s Technical …

(Be the first to comment)

Archives

  • +2017
  • +2016
  • +2015
  • +2014
  • +2013
  • +2012
  • +2011
  • +2010
  • +2009