Introduction

About me

Hello everyone. My name is Chris Shotwell. This is my first post for my Bainbridge Graduate Institute blog. I just started the program and I'm super excited to explore the many ways in which business can make the world a better place.

First, I want to introduce myself. I was born in Seattle and moved around quite a bit as a kid - to suburbs of Phoenix, Portland, and, finally Sacramento at age 11. After high school I attended California Polytechnic State University, where I proceeded to change my major several times, finally settling on City and Regional Planning. this major exposed my to quite a few new ideas and influenced my desire to protect the environment. Indeed, a major part of the urban planning profession is a dedication to protect our natural resources through responsible land use and transportation policies.

After gradation, I took the first job that was offered to me: a "planner" position with a multinational engineering and architecture firm with an office in Seattle. Unfortunately, while most of the work the firm did contributed positively to society, I found that the focus was often on pleasing the clients and shareholders rather than on making the best products possible. In addition, a sink-or-swim attitude towards recent college graduates left many of us barely treading water, and when the recession hit most of us were laid off after a few months of twiddling our thumbs. I took a few odd jobs during unemployment and eventually found a fit at Trader Joe's, where I could make enough to pay the bills while I reconsidered my path, which led me to BGI.

Inequality

But enough about me for now. This first post, I'd like to focus on a topic that has gained a ton of attention over the last few years and has launched a political and social movement: inequality. Specifically, income inequality. A lot of heated rhetoric is thrown around by both sides of the American political spectrum, and it takes some courage to step back and examine the issues with a cool head.

First, some of the facts: According to the congressional budget office, the income of the top 1% of households grew by 275% from 1979 to 2007, while incomes grew much more slowly among other groups. Similarly, while the income share of those top households grew by 10% over that period of time, the income share of the other groups actually fell by 2-3%.

An important question to address is "Why does this even matter?"

Happiness and inequality

According to recent studies an income of $50,000 is the sweet spot for happiness. below that, happiness plummets, above it happiness grows much more slowly. This makes sense, as below a yearly income of $50,000 money becomes something we are always aware of when we make a decision. Above 50,000, we can go out to lunch, head up to the mountains, for a day of skiing, and take a week-long vacation each year without financial worries becoming a burden.

Even more interesting is that studies show a moderate negative correlation between inequality (as measured by the GINI coefficient) and happiness. Why might this be? I would posit that being exposed to people who are significantly wealthier than oneself makes one significantly less satisfied - and more insecure - with one's own lot. Rather than enjoying my nice cottage, suddenly I'm wishing I had a lakefront mansion. And it makes me sad.

I'd also like to point out that while the capitalist economic system has certainly reduced absolute poverty (those living in abject conditions), this has not been uniform or universal, and in many cases, such as urban slums, living conditions have actually deteriorated even as material wealth has increased.

Economics and power imbalances

Now, I'm just starting my studies of economics but I can offer a few nuggets. The political right would argue that the wealthy make the world go round and are the main instigators of economic growth. While many wealthy people are investors, many of these investments mainly serve to make the investor more rich and, in some cases, are actually standing in the way of progress. While Joseph stiglitz's argument for causality (that inequality has been a major contributor in the current economic depression) may or may not be provable, there is little doubt that income inequality in America leads to a lopsided political situation in which the rich have a disproportionate amount of power (consider Rodney's political campaign). The rich can get away with a lot more than the middle class and poor (hire a good lawyer, just pay the speeding ticket, etc.) And as shown during the recent economic depression, when the wealthy and powerful take a risk, it can bring down an entire economy.

Something I'd like to look at in future blog posts is how much the wealthy are saving vs investing, as well as the social and economic benefits (or lack thereof) of those investments. One of the most common arguments (if not the primary argument) for low taxes on the rich is that the rich are: a.) stimulating the economy; and b.) giving large amounts to charities. If we can show that these investments are smaller and less beneficial than the right wing claims then we might be able to gain a foothold. (Is the stock market much more than a glorified gambling parlour?) I will also examine other sides of this debate. For instance, does some amount of inequality lead to greater productivity through motivation, investment, etc? Is there a sweet spot we can aim for?

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