Photo by foreverdigital via Flickr.
Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here’s Wednesday’s query:
John Feuille: Most of us have played Monopoly. You set up the board, deal out the money, roll the dice and play until one person collects so much of the wealth that the other players can’t buy anything, or pay rent, or pay utility bills. The game stops. The rich guy can’t sell anything, or collect any rent, the poor people can’t buy anything or pay rent, etc.
Let’s say, you want to keep the game going. The rich guy, with his eye actually on collecting more wealth more quickly in the future, might suggest getting rid of all those onerous taxes and fees in Chance and Community Chest. But that won’t get the game going again. Someone has to go into the bottom of the closet, find the old broken Monopoly game and deal out more money to the players. If you do that, the game can get going again. Kids can figure out what to do — it’s unfortunate that Congress seems unable to.
An inherent weakness of capitalism as a method to bring the most happiness, to the most people, most of the time, is that if too much wealth gets concentrated in too few hands, the game stops. The correct purpose of regulation is to keep the game going as long as possible.
Paul Solman: Provocative analogy, John. The game of Monopoly was actually invented to make your very point.
One question raised by your email, assuming for a moment that it’s true: Why don’t the rich understand this? To which a response might be: Many of them do. Hence the Buffett-Gates push for higher taxes on the wealthy. And what about the rich who resist arguments like yours? Could be they’re short-sighted. Could be just too greedy to let go. Could be they just don’t agree with you.
As to finding an old Monopoly game in the closet and using the money to keep the game going — it just so happens that’s what the Fed did after the Crash of ’08 and what the European Central Bank is doing as I write.