“If we keep doing what we have been doing, we’ll keep getting what we’ve always gotten,” – Paul Batalden
Income inequality in the United States has been growing for almost three decades. A new study, an analysis of tax filings, shows that the income gap between the richest 1 percent of Americans and the remaining 99 percent widened to unprecedented levels in 2012. The top 1 percent of U.S. earners collected more than 19 percent of household income, breaking a record previously set in 1927.
Previous posts – The Grapes of Wrath and How Winner-Take-All Politics Created the Great American Inequality – describe how over the past 40 years the economic system was altered so that more and more of America’s wealth is funneled to the already rich, the “have-mores,” and away from the “have-nots.” The already-wealthy’s siphoning off of a disproportionately large and ever increasing portion of America’s wealth forces more and more people into lives of poverty, frustration, illness, ignorance and domination. Increasingly they are without the money they need to take advantage of opportunities to live the lives they want. At the same time that a few very wealthy people enjoy lives of unimaginable privilege, the web of life that supports everyone’s existence is being destroyed.
System structure is the source of behavior. System behavior reveals itself as a series of events over time.
How to change the economic system to produce more of what we want, economic equality, and less of that which is undesirable, inequality? Before we can start to make the changes we think will produce the benefits we want, we need to understand how the economic system actually works. The first and most difficult step in this process is changing the way we think:
“I’ll believe it when I see it,” should actually be: “I’ll see it when I believe it.” – Dr. Wayne Dywer
Trying to understand how people, the national economy, the nation’s wealth and the earth are affected by one another can be challenging if not impossible without thinking in terms of systems. Systems aren’t just any old collection of things. A system is an interconnected set of elements that is coherently organized in a way that achieves something; it must consist of three kinds of things: elements, interconnections, and a function or purpose. For example, the elements of your digestive system include teeth, enzymes, stomach and intestines. They are interrelated through the physical flow of food, and through an elegant set of regulating chemical signals. The function of the system is to break down food into the basic nutrients and to transfer those nutrients into the bloodstream (another system) while discarding unusable products. A school is a system. So is a city, and a factory, and a corporation, and a national economy.
Systems produce the effects they do because of the way they are structured, the interconnections between elements, and their purposes. The elements of a system are often the easiest parts of a system to notice because many of them are visible, tangible things. The elements of a tree are roots, trunk, branches and leaves. But before going too far in that direction, it’s a good idea to stop dissecting out elements and to start looking for the interconnections, the relationships that hold the elements together…Some interconnections in systems are actual physical flows, such as the water in the tree’s trunk or the students progressing through a university. Many interconnections are flows of information – signals that go to decision points or action points within a system…
If information-based relationships are hard to see, functions or purposes are even harder. A system’s function or purpose is not necessarily written or expressed explicitly, except through the operation of the system.
You can understand the relative importance of a system’s elements, interconnections and purposes by imagining them changed one by one. A tree changes its cells constantly, the leaves every year or so, but it is still essentially the same tree. If you change the players of a football team performance is usually not significantly affected. Change the rules of the game from football to basketball and you have, as they say, a whole new ball game. Changes in purposes can be drastic. What if you keep the players and the rules but change the purpose – from winning to losing?
Understanding the economy as a system is an important first step in decreasing economic inequality. It does not get us all the way to our desired destination, however. More about that in our next post.