A well-known way of beating the house in a casino is playing poker and being able to count cards. For that reason, there are a few people who have been identified as card counters and are banned from gambling. All gaming establishments have layers of protection against the less skilled who try to count cards or attempt other ways of beating the odds. We all may dream, some of us seem to have more luck, but profit in Las Vegas comes from the odds being stacked toward the house.
A way of winning in a capitalist economy is known as the miracle of compound interest. When $1,000 is invested at a return of 2% a year, you will double your investment in 35 years. If you invest at 5%, you will double your investment in 13 years. In order to reap this reward, all you must do is not spend $1,000 in one year and invest it or bank it at interest. After that, someone else puts out the effort to make your money. When you add zeros to the original sum, or you continue to invest the original amount each year, your own labor’s ability to increase your wealth is expanded by the results of another person’s labor. It is not a bad deal, right?
Any economic system is complex, but when politicians are running for office, they try to simplify their plans to keep a chicken in every pot by creating a slogan. We have a good many of them coined in the last century.
They often center around tax policy. Tax the rich! Lower taxes! They are sometimes summed up by bringing up old definitions highlighting the differences between socialism and capitalism. When 80% of Americans listen to these arguments, we think of our wages and retirement investments. We, understandably, want to keep as much as we can.
Our government not only taxes us to pay for services, it legislates laws which regulate our actions in various areas in order to create equity. Another way of saying it is to level the playing field. For the last forty years, regulations have been promoted to us as hindering our freedom and getting in the way of maximizing our incomes. It was verifiable in earlier years. Now it is something of a con.
We have been talked into the idea that lower taxes and less regulation make our lives better. However, when applied to the financial markets and those whose wealth comes from investing other people’s money, it has allowed counting cards and compound interest to beat the house of inclusive economic prosperity.
Technology and the application of algorithms has allowed investors to, essentially, count the cards. They influence, even create, both supply and demand. Automated trading allows them to profit from buying low and selling high in market conditions they are creating mathematically. Day trading by computer has lacked rigorous oversight.
While small investors are unable to live on the interest from their investments at current low risk rates, large investors can. If you also tax many types of investments at lower rates than those of some high wage earners, the large investor has an advantage. Prosperity gathers with those who are already wealthy beyond imagination.
Voters who support economic legislation which gives economic privilege to the wealthy are not lacking intelligence.
They simply have not considered a critical examination of the results in terms of their own budgets and retirement planning.
The status quo continues. We may aspire to wealth. We may even gamble on the chance for wealth. But is it really in our own interest to legalize the accumulation of wealth by letting a few individuals beat the house? The advantages of compound interest are and should be available to everyone, while card counters should be banned.
Linda Brugger, retired from the Air Force, leaning Democrat and community activist can be reached at IdahoAuthor@outlook.com. She welcomes feedback.
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