Why Wealth Disparity is an Emergency?
Ray Dailo, the founder of the world’s largest hedge fund Bridgewater, recently commented that income inequality is a national emergency. I cannot agree with him more.
For the past few years, I’ve tried to work hard in my entrepreneurial efforts.
However, my companies are still mostly at the “survival” levels and I wouldn’t call it a “success” by most measures, although we did accumulate valuable experiences in building a fully remote work culture, and achieve a certain work effectiveness.
Our main problem, besides lacking the right knowledge and guidance (for example, I only now recognize the importance of having experienced mentors), is that doing a startup is quite hard. By that I mean being able to create a new business models isn’t an easy task.
Yet they’re vital to job creations.
What I’ve observed is that, due to the increasing power of technologies, the entry barriers to doing a startup (particularly in tech) is ever lower. However, that does not mean it’s become easier by any means.
Due to tech’s nature, even if new markets can be created, they’ll be “winner-take-all” markets. That means for any given domain or category, likely only the largest will survive and thrive in the end, while most others will perish.
Amazon is a good example, so is Apple. Almost nobody can reasonably think of challenging Google in search.
These companies are massively successful, efficient, and are able to recruit the best talents to continue their leadership in the foreseeable future.
But the actual working people, they can either choose to join the big companies and participate in proven, existing business models, or they can take on jobs that do not pay well. Or they may choose to create new startups, which mostly will end up in failure.
It’s not that starting new businesses had been easy, but the current tech reality is that due to the easily scaling nature of modern technologies, particularly software, once someone has figured out the right way to do certain things, they can quickly grow to scale.
The low success rate plus the super-dominance of successful players, means that wealth and power will be concentrated to ever fewer people, and that’s just the nature of things.
If tech and software were to take over world economy, as Marc Andreessen observed, wealth disparity will only become worse, and faster than we expect.
This also means that unless you’ve become and joined the few ultra-successful, likely your access to economic wealth will end up on the long-tail.
Histories in the past have shown that when most people do not share in the benefits or wealth created, revolutions happen.
While it’s unlikely we will see bloody revolutions, as even the “poor” in modern days still enjoy much better material life than those well to do in the past. Other forms of “revolutions” or dissents likely will occur. For example, the models of how economies are currently run may be challenged.
Our team at Joint Commonwealth Fund (JCF) is trying to solve the wealth disparity problem with an unusual solution. If you’d like to know more, please visit us to learn more and we’d be happy to hear your feedback.
