Although unknown by most who play it, Monopoly was invented as an education tool to demonstrate the pitfalls of wealth being concentrated amongst a few.
It was designed to be a warning of the danger of ‘Monopoly’!
The history of the western world’s most popular board game is fascinating, especially in how it mirrored reality including in the events surrounding how it came to be so widely loved and the wealth it created. Parker Brothers, who marketed the game and brought it to global prominence, still to this day does not acknowledge Lizzie Magie’s role in the game’s origins.
Lizzie Magie developed the game, which she called “The Landlord’s Game”, at the beginning of the twentieth century. Now early in the twenty-first century it still explains much of the behaviours within society, and it remains “a practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences… It might well have been called the ‘Game of Life’, as it contains all the elements of success and failure in the real world, and the object is the same as the human race in general seem[s] to have, i.e., the accumulation of wealth” as it did then.
To suggest to an anxious and emotionally taught public that the light at the end of the COVID-19 tunnel is close is irresponsible in the extreme.
Yesterday I heard an Australian restaurateur enthusiastically discussing the 3-step plan to reopen the Australian economy and he used this same analogy. All I could think of was this poor fellow mistaking daylight for the light of a fully laden freight train.
The Elites use the same repertoire of tools in a crisis to frighten the public into believing that there is no other option but to return the ‘Game of Life’ as closely as possible to how things were before the crisis.
Of course they would do that. That is the ‘game’ they know best. In fact they came to know it so well, including through intergenerational wealth and power, that they have come to control or even own the game.
Lets take what occurred in the global financial crisis (GFC). Through the rampant greed of a few, investment products dreamt up on Wall Street created a deluge of debt down to Main Street so that anybody with a pulse could get a loan to turn a necessity of life – a home – into a speculative asset and with it the dream of a better future for the budding speculator on Main St. Of course what I describe is a classic bubble and they have a nasty habit of bursting, which is exactly what happened in the US in 2006. As the value of those speculative assets – homes – fell, the value of the products created and traded on Wall Street fell such that the financial viability of financial institutions around the world trembled. Indeed, long-standing investment firms collapsed whilst others were forced to merge.
As the value of their homes fell, and with the economic shock emanating from Wall Street reverberating, many people on Main Street lost their homes as well as chunks of their retirement savings and the ensuing recession cost many their jobs.
But it was not those people on Main Street, who were so directly disadvantaged, who received assistance. Instead the bankers who created the problematic products, and had earlier lobbied for the removal of regulations which would have prevented the egregiousness that caused the bubble, were bailed out by Governments. And no sooner had the cash come in their front door from the Government did the bankers turn around and give themselves rewards and incentive bonuses.
Meanwhile Central Bankers around the world continued to flood the globe with liquidity, from their own dreamt up manoeuvres, to keep aloft asset prices especially stock market values.
It is hardly surprising, then, that inequality between the owners of capital – the already wealthy – and the providers of labour – the workers who have little else to trade other than their own hourly labour – has continued to increase.
Effectively what happened in the GFC, as in other financial collapses, is that the ‘game’ became so out of balance that it collapsed under it’s own weight.
Imagine a Monopoly board in 2007 tipping under the weight of all of the hotels on the expensive half of the board, from the red properties to the royal blue ones, so that everything was sliding off the board. Immediately those who owned all of the hotels said they realised that they made an error in being so greedy, but they needed the (central) banker to get things back to ‘normal’ and support that side of the board so the game can continue safely. So everyone scrambled and lifted that side of the board and quickly put all of those hotels back in place. And for good measure the (central) banker paid them a few times over for a job well done. Meanwhile, the people in the cheapest properties lost their houses and were set back enormously.
Nothing demonstrates this truth better than this graph from the US Federal Reserve which demonstrates clearly that the only group of Americans back ‘in the green’ after the GFC is the most wealthy 10% (‘Top 10’). Moreover, this group experienced the least set back to their wealth during the GFC, besides the least wealthy Americans (‘Bottom 30’) who own few assets which went backwards in value, but who remained 31% less wealthy in 2016 than in 2007!
Already in the economic response to the COVID-19 pandemic there are signs that wealthy Americans are benefitting disproportionately which creates a perception that it is always ‘Heads we win, tails you lose‘.
In my post “The Magic Sauce of American Economic Dynamism Is Not Based On Personal Greed” I laid out my arguments for why such personal greed is not integral to the capitalist system of which America is upheld as the pinnacle, rather it is a malaise of wealth which serves to weaken society and thus the capitalist system.
Actions by Elites, including the bankers, politicians and senior bureaucrats (including Central Bankers), which have led directly to increasing inequality within societies, only serve to weaken trust in institutions.
Thus humanity confronts major challenges which threaten our sustainability on Earth from a weakened and non-cohesive position. It is in this fertile ground where populists with extreme views and emerging powers advance their interests.
The COVID-19 pandemic is fast-evolving and the consequences apparent already are devastating, but that does not stop some from continuing to try to downplay its significance. Another challenge, the climate crisis, is more serious but to this point has evolved less rapidly which allows some to downplay its consequence and even its very existence in the face of significant evidence and the intellectual weight of the scientific community.
In large part it is exactly the same actors who seek to dismiss or downplay the need for action on both crises.
The increase in inequality in developed countries is seen as a prime reason for the growth in populist politics. In the United States and the United Kingdom the top elected representatives presently are Caucasian men with similar backgrounds and political playbooks, born into immense privilege but having convinced a heartland of the most financially disadvantaged that they offer them a brighter future by scapegoating migrants and anybody or any organisation working towards a more united humanity. The current Australian conservative Government under PM Morrison uses a very similar playbook.
In the companion post to this, “Toxic Masculinity and Political Footballs“, I discussed how the elected officials of the major Anglophone countries have created a great deal of momentum towards re-opening economies while COVID-19 remains poorly understood in their communities, and what is known of it is devastating.
For these conservative Caucasian men the answer is always more economic growth, and suppression of any questioning over what is the quality of life experienced by broader society from that growth and how sustainable is it.
These same men, who apparently care about mental health in society during crises, but do not recognise that mental health has long been deteriorating in Western societies, never give credit to the opportunity to work on the deeper causes of this with the aim of improving the underlying mental health of populations.
They cannot do that because they continually promote ‘aspiration’ which is a synonym for competing in a never ending cycle of one-up-manship which we all implicitly understand is a zero sum game because no matter how rich we become, there is always somebody who has more wealth, unless you are Jeff Bezos… for the moment…
There are some Elites that I can respect and even admire – they are those who authentically understand the privilege that they have enjoyed, usually from birth by virtue of the luck of being born in a developed country or into middle class even if they consider themselves ‘self-made’, as well as respect and appreciate relationships with other human beings especially the people who loved and guided them.
Steve Schwarzman is a quintessential Elite and to some a hero of capitalism, or more specifically, the way it is currently practised. Schwarzman is enormously wealthy and by virtue of this wealth he is one of the most powerful men in the contemporary world. I recently watched his interview with David Rubenstein on Bloomberg Television. Now in his 70s, in modern parlance Schwarzman would still be described as being extremely goal-oriented and driven, almost the definition of ‘aspiration’. If you measure life success in terms of wealth accumulation, while there are a few that still have an edge on him, his personal wealth would equate to the cumulative wealth of quite a few million of the poorest of our 7+ billion contemporary human beings.
In discussing his formative years with Rubenstein, Schwarzman did not seek to disguise his lack of appreciation for, or even understanding of, his parents’ station in life. His mother was devoted to the family as a housewife. The family owned a retail shop in Philadelphia which his father ran successfully. Schwarzman told Rubenstein the story of him being a young man suggesting to his father that the success of his business suggested that he could take the store concept nationally. His father said he did not want to do that. He then suggested he could develop a strategy to open new stores throughout the state, to which his father again stated he was not interested. Finally he suggested that his father open more stores throughout the city. His father told him no, he was content and happy with what he has. Schwarzman shook his head saying that he could just not understand his father. The story was meant to be an indication of how a lack of aspiration was essentially the antithesis of Steve Schwarzman’s very existence.
How very sad…. for Steve… that he is blind to his own impoverishment.
I wonder whether Joseph and Arlene Schwarzman knew another quietly influential Philadelphian, Lizzie Magie, or at least learned the lessons of her game which they may well have played in their youth? Or perhaps it is just a strong indication of the change in American culture post 60’s as I discussed in “The Magic Sauce of American Economic Dynamism Is Not Personal Greed“.
In the midst of the COVID-19 pandemic, right now people are scared and they are training their hopes and trust on institutions and officials. Popularity of elected officials is (or has been) high but electorates will become more discriminate in their opinions as the shock of their altered existence subsides.
As I explained in “Politics Vs Society in the COVID-19 Pandemic“, it is never possible to totally remove politics from decisions and actions by officials. As would be expected at such times, there has been a range of responses – some of these trusted sources are acting responsibly and less politically, while others are using the COVID-19 pandemic as a crisis to advance their own political agendas.
In “The Great Reset” I discussed how major events that affect large swathes of society typically result in significant changes in the psyche of citizens, and such changes threaten incumbent Elites because they controlled the ‘game’ as it stood.
Right now there is an extraordinarily heavy weight pressing down on the centre of that Monopoly board. In early March this pressure was suddenly recognised and positions began sliding into the centre. Global efforts by Central Bankers have, however, supported the centre of the board and the Elites are busy sliding their property and other wealth back into position and making arrangements to keep them in position.
To be clear, from my first comments on the economic impacts in my 11 February Coronavirus (COVID-19) Update and in “Repeat After Me, This Is Not SARS: COVID-19 Is Far More Serious” I said that I expected Central Bankers to try “absolutely extraordinary actions (as opposed to the already ‘extraordinary’ actions that we have become desensitised to over the decade)”, and further suggested that while I was concerned about their continual inclination to ‘over-egg’ markets by doing too much and creating moral hazard – which they have never tried to redress by ‘removing the punch bowl’ – I felt that a financial panic on top a health panic was to be avoided.
Nonetheless, critically the response should be aimed at smoothing the transition to prices reflecting the nature of the challenge confronting humanity and thus businesses, not acting like it does not at all exist!
At the same time those playing the ‘game’ are becoming unwell, some are dying, others dealing with the pain of loss of a loved one, but all grieve the loss of their former freedoms.
True to type and form, the Elites want the board supported at all costs so that the ‘game’ can continue even if it means more players suffering personally devastating impacts.
Presently there is no better example of this than what is being played out in meat processing plants in America where President Trump has ordered them to stay open even though workers in such plants have been dying of COVID-19 and many are afraid to work, and COVID-19 is spreading quicker in areas where there are major meat processing plants suggesting that it is a high risk factor. The move listed meat processing as an essential service and protects the industry from legal liability should more workers become infected.
The inescapable reality is that 90% of those in the ‘game’ are sharing the resources from just the first 5 squares after “Go”, the least valuable 1/8 of the board, and every time they round the board, after they pay out the rents to the Elites, they keep going backwards.
Sometimes they pay with their life. Then again, their life has always been something that Elites have been prepared to sacrifice to meet (or meat?) their ends.
The memory of the wealthy being bailed out during the last collapse is fresh, as is the sting of how their own lives were negatively impacted, so Elites need to try even harder to give the appearance of the bailout not being tilted so heavily in their favour.
Then again, greed is such a serious malaise, and well everyone knows that political science, with its modern social media tools, has reached such an advanced state that the 90% will feel powerless to do anything other than accept the situation as inevitable, right?
Maybe…
Then again, human history is full of kids flipping the board while playing Monopoly against others who own all of the wealth of the board, especially when it is realised that the banker is slipping favoured players extra money for nothing and all of the “cards of chance” in the game have been intentionally tilted to favour the landlords.
The Elites know this well, and are aware that this risk is growing.
But greed is such a powerful malaise!
And power affords a lot of protection, right?
What I advocate is not a ‘flipping’ of the board, which some might equate with revolution, or anything near it, because that entails more loss in and of itself, and there is a wide range of possible outcomes with a great deal of uncertainty as to whether we will arrive at a place that is better.
But we do need a peaceful revolution to readjust the ‘game’ to make it much more fair and that requires resolute and sustained society-wide engagement.
Having just watched Warren Buffett’s entire 2020 Berkshire Hathaway Annual Meeting I was, as I often am, in total agreement that conditions have improved (not just in America but throughout the developed world) over the last century. Buffett’s comments around diversity in his introductory comments were welcome, even if the related motion did not carry. (Sadly this topic was not discussed in the Q&A.)
Moreover, due not just to his success but because of his patent authentic humanity, Buffett has become the cheerleader of prominence for American capitalism which, as I discussed in “The Magic Sauce of American Economic Dynamism is Not Based on Personal Greed“, has taken on a very hard edge in recent decades. Sadly Buffett bypassed the opportunity to take this on and instead largely concentrated on historic diversity and inequality.
Still Buffett’s clear views that there remains much to do to improve American society around these issues, as perhaps the best known “proponent” of capitalism, were incredibly valid and valuable.
I am a great admirer of John Lennon and I, too, am a pacifist. However, we have learned in history that when we are entirely passive then the aggressive actors within our societies will push all of their favourable positions back in place and with growing inequality, as discussed by many others including Ray Dalio, probably the highest profile hedge fund manager at present, we all risk a much more disruptive response in the future.
“The Great Reset” provides us all with an opportunity to dream of a world that we want for ourselves and the people we love most, and ponder how we can realistically bring that to fruition, not instantaneously but with enduring commitment and innovation.
Goodness knows humanity has proven to itself, once again, even still in the early stages of this pandemic, that human ingenuity and endeavour is without limits.
My general optimism in humanity means that, even while often pessimistic (or realistic) about issues over the short term, I am often considered a dreamer on the big picture.
It is a badge that I wear proudly, for I know that I am not the only one. In fact, we are the majority.
Let’s get to work, in our minds, our hearts and in our actions, and claim that luminous future for all.
The alternate path is dark and disturbing for everyone including the Elites, as I have spelled out in “Xenophobia Must Be Challenged For An Effective Response To Climate Change Inclusive Of Human Population Growth“, “The Conundrum Humanity Faces: But Nobody Admits“, “Investment Theme: Defence and Military Spending” and “Let’s Wage War On Climate Change“.
Nobody should think for a second that our success is inevitable. There is no doubt that the Elites are going to make it so that we have to earn it.
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© Copyright Brett Edgerton 2020
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