The Occupy movement is wrong about the rich

Is it ethical to sell to someone who made a lot of money in an unethical way? If you have difficulty answering this question, you are guilty of two mistakes. The first is the assumption that society will allow unethical ways of making money to exist, instead of outlawing those activities as soon as they are shown to be harmful. The second is the assumption that the buyer in a transaction benefits more than the seller, and that the only way to reverse this arrangement is to be dishonest.

This is a result of the culture in which people are brought up. People in the lower half of the income distribution—of any country—tend to associate with others of similar economic status, and have more sensitivity to scarcity and wanting something but not being able to afford it. This causes them to assume that the best way to help other people is to offer a less expensive product, and that the best way to increase sales is by decreasing prices.

People in the upper half of the income distribution have fewer unsatisfied needs and are more likely to assume that products will naturally be sold for significantly more than their production cost, because they buy at the upper end of the quality scale or enjoy a sense of status from their purchases which can only come from product scarcity. They are more likely to charge and accept higher prices in the normal course of business.

The first group may feel that avoiding competition based on price is implicitly dishonest, while the second group is likely to accuse the first of ignoring price tags and purchasing things they obviously don't need at their level of income. Either group might feel that the economy would be better off if everyone adopted one or the other spending philosophy, but the truth is that neither of these strategies is stable by itself.

If everyone tried to compete on prices, some people would still end up wealthier which would create demand for higher quality products. If everyone tried to compete on quality, some people would inevitably become poor from spending their money on necessities which would give someone an opportunity to gain market share by selling at a lower price. It is unrealistic to think that people will lower the prices they sell at if it causes them to lose money or to pick the more expensive of two comparable products just because they have money to spare.

This applies to corporations as well. Some people think that corporations should be nice and pay significantly higher than market wages instead of giving their profits to shareholders who are already rich, but if more corporations did this it would just mean that their employees would accept higher prices for things they bought, meaning that those profits would just end up in the pockets of the shareholders of whatever corporations chose not to do this. The choice of the owners of a corporation to redistribute profits back to employees, or to retain employees whose jobs are unnecessary, is just like the one in the classic game theory problem of "The Prisoner's Dilemma" [http://www.smbc-comics.com/index.php?id=1899], but instead of playing against a single opponent who you must trust not to defect you would be playing against millions of opponents all of whom have the opportunity to defect for a large profit.

The third option which would help employees of a corporation without giving the shareholders of other corporations a chance to defect is work conservation [http://jobcreationplan.blogspot.com/2012/05/work-conservation-is-solution-to-global.html], but that is not actually the main focus of this text.

The reason for the above explanation of why giving things away for free or nearly free does not always help the economy [http://www.smbc-comics.com/index.php?id=2413] is to lead to the point that there are many people who could be richer than they are, who are just not interested in doing so. They might think that raising prices is wrong or unaware that it can be an effective strategy, or they might like the customers they currently work with. Maybe they don't have anything they feel they need to buy. There are many flaws in using the amount of wealth someone has as a standard to estimate the amount they could have if they wanted to be rich.

But people still support the idea that becoming rich is an honest and admirable goal, not only because it is less risky and less costly to society, but also because it allows you to influence the perceptions others have about how you see yourself as being viewed by giving a commonly accepted standard of achievement with no upper bound on the limits of measurement. The key point is that you may want to make yourself appear to be more than you really are or less than you are, because this ambiguity can serve both as a test for the accuracy of thinking of others and as an excuse for your behavior when someone fails that 'test'. Being able to manipulate your perceived self-worth to match that of someone else is a valuable social skill, and expressing greater or lesser acceptance of the accuracy of income to measure ability is one way to accomplish this.

However, deviations from the common standard are based on the idea of alternative, more accurate ways of demonstrating personal ability and discernment of benefit to society. These standards can sometimes come in almost unrecognizable forms if society is perceived to be inherently evil which may cause people to feel they must embrace the use of the same strategy in order to survive, but they are always intended to lead ultimately to a positive result for both the individual and society. In cases where no agreement can be reached about what standard would best help society and the individual, such as with the issue of whether to raise prices or to lower them or for many political topics, conflict itself can be seen as positive by encouraging people to find a better solution which resolves that conflict.

This leads to the final point. Money as a standard of achievement can be replaced, not by an idea which can be easily expressed as a single number, but by the more complex and more accurate standard of whether you are able to prevent benefit to society from conflicting with your own goals. Some people may feel the desire to become rich and compete within the social and economic circles of the wealthy, but this concept of success should only be one among many and should not lead to harmful economic effects for the rest of society. Work conservation [http://jobcreationplan.blogspot.com/2012/05/work-conservation-is-solution-to-global.html] is essential not only to eliminate unemployment which results from the desire to become rich or show off status by earning and working as much as possible, but also to directly refute the idea that everyone wants to become rich as their personal idea of success.

There is nothing wrong with being rich, or part of the top 1% of income. Unemployment and the rise in inequality are everyone's fault and it is therefore everyone's responsibility to support the solution to these problems.

Fruits

I think it helps to add a practical example. Take the iPhone, which costs $650~850, half or more of that being gross profit. People might assume that since Apple is a nice company, they keep prices low to make their products more affordable to consumers and pay their workers a substantial amount of the production costs. But Apple's profit margins are much higher than its competitors because it doesn't need to keep prices low, and just sells for maximum profit. Much of that profit is sitting in tax havens outside the US. Apple currently has over $100 billion in cash and other relatively liquid financial assets.

People might buy an iPhone or another of Apple's products while knowing the high profit margins, or even because of its price. If it forces them to make other sacrifices in their budget you might say they are making themselves appear to be "more than they are" if they flaunt their new item. Yet if appearing "more than you are" is seen as a negative thing because it implies a low true value, possession of an iPhone is actually making yourself seem "less than you are" if you are aware that trendiness has no intrinsic value and are just trying to deter people who are prejudiced against iPhone users.

Now take the knowledge of Apple's profits and combine it with an analysis of how much of your money comes from the rich vs how much goes to the rich [http://jobcreationplan.blogspot.com/2012/05/alternative-to-socialism.html]. If you sell to poor people, you can conclude that buying an iPhone contributes to unemployment and so possession of one is evidence either that you don't care about unemployment or you don't understand the economic consequences of your actions. This identifiable direct consequence to society has the effect of resolving the uncertainty such that an iPhone would unambiguously make you appear "less than you are" if you think that unemployment is an important problem, unless you really are rich enough that you don't have anything else to spend money on.

But maybe you think that having an iPhone is more important than unemployment. You would then be able to attract the interest of other people who feel the same way.

Now consider what it means if you don't have an iPhone. Maybe it's because you don't want your money to go to corporate profits! This makes you look like a nice person, when maybe you're just too poor to afford one; not having an iPhone can therefore make you appear "more than you are", the same result that owning an iPhone led to. Meanwhile, since it would still help employment to buy an iPhone if you're rich, you can also pretend you're a nice person—even if you're not—if you're rich by buying an iPhone which could make you seem "more than you are". And conversely, someone who cares so much what other people think of them probably has low self-esteem, so people might think you appear to be "less than you are", and actually emotionally vulnerable and approachable (despite being rich).