Dear Friends,
It seems to me, the Pareto distribution is a natural law, and since it is a natural law, we should harness it as we have done with fire, gravity and chemistry. Fire burns those who touch it, yet we use it safely and effectively, to heat our homes, power our cars, and wage our wars. Fire is scary and dangerous which is a strong disincentive to harnessing fire. We did nonetheless and our species has benefited greatly. The same can be said of chemistry, where so many chemicals are deadly, and gravity where even a small stumble can break a man’s neck. The Pareto distribution is no different. It is an uncomfortable thing, it burns the heart like fire does the skin, it is toxic to the soul as DDT is to the liver and causes many to fall. Yet when harnessed, it has propelled us faster and further than fire, chemistry and gravity.
Socialism is a system that seeks to eliminate the Pareto distribution, but instead of eliminating it, it releases the Pareto curve’s destructive potential. It replaces merit, birthright or station, as the distributive metric, with political favor. The Pareto distribution is still met, but those with everything are the political elites, instead of the capitalist elites, or the hereditary aristocracy. There is still a small group that owns everything… just a different group. What socialism actually accomplishes however, is loosing a danger, that could be harnessed to good. Like setting your city on fire, to protect it from fire. Socialism then is an answer, not to the question of how to get rid of the Pareto distribution, but how can the elite turn the Pareto curve to their favor, forever.
Capitalism is the only system devised to pervert the Pareto distribution to the betterment of mankind. Not only the free enterprise system but the copyright and patent systems as well. Meritocracy. These at initial glance would appear to only benefit those who come up with ideas. Under such a system, anyone can get rich. All you need do is come up with an idea that is innovative and meets a need of humanity (else no one will buy it) and the potential wealth you could get from it is limited by, well… the Pareto curve. Which means by definition, the needs of mankind are met, better and better. Every time someone gets rich by inventing something, starting a business or anything creative, all of humanity benefits. The Pareto curve can power innovation like fire powers an engine.
This only works when capitalism is tempered with limited government. Because the moment someone gets rich, they also gain political favor, if for no other reason than they have the ability to donate money to politicians. Once anyone has political favor, it is in their best interests to subvert the paradigm from meritocracy, to distribution by political favor. Once enough elite become convinced they can live from the teat of government forever, that is when they claim the Pareto distribution is unfair and needs to be tempered, with political favor. When instead, what a society that is drifting towards socialism really needs, is limited government, not unlimited government. That way, those who have won, can’t close the door behind them to everyone else. As is the normal state of affairs.
Harnessing a dangerous element like fire, chemistry or the Pareto distribution is tricky. When controlled in an internal combustion engine, fire is harnessed to drive our world, when it is a wild fire however, it is destructive. The Pareto distribution is no different. It is sometimes harnessed to improve the lot of Man, but usually it is allowed to become an inferno, as in communism, aristocracies and tyrannies. Meritocracy is fragile. It can be disrupted by a number of things, usually stemming from some political attempt to change an outcome, to benefit a politically favored player. While meritocracy allows anyone to get rich even those who are hated by the political elite. Nevertheless, harnessing the Pareto curve for the benefit of Mankind is genius, while allowing it to become a wild fire… is stupid.
Sincerely
John Pepin
