From: ohumukin@spectra.com (Kawika Ohumukini)
Newsgroups: misc.invest
Subject: Re: Wealth in the 1990's
Date: 12 Oct 92 16:56:20 GMT
Organization: Spectragraphics Corporation

In article <1992Oct9.165957.6557@magnus.acs.ohio-state.edu> cthorne@magnus.acs.ohio-state.edu (Charles E Thorne) writes:
>In article <1992Oct8.193905.26574@spectra.com> ohumukin@spectra.com (Kawika Ohumukini) writes:
>>The distribution of wealth is not a good indicator of anything other
>>than that those who have it are doing something everybody that doesn't
>>have isn't doing.
>
>>It may be useful to not worry who has the wealth and try to blame them
>>for your financial or career woes.  They aren't the source, the government
>>isn't the source (although they certainly have assisted the growth of
>>the gap, later about that).  Instead of looking at that indicator and
>>expecting the government to do something about it (which they are slowly
>>just now beginning to address the issues) look at where the economy has
>>been and where it is going and anticipate the trend and be the first
>>to ride the shift.
>
>At a time that companies that supplied things we needed to live were small
>companies, that was true.  We could affect who we purchased items from and
>bargain for the best price.  As companies became larger and larger, that
>gradually became less true.
>
>When John Rockefeller started the Standard Oil Company, he realized that if
>he controlled all of the oil he could control the price.  Within a generation
>of starting he controlled 90% of the world oil.  He shipped the oil in railroad
>cars to refineries (which he owned) and was so powerful that he controlled the
>prices that the railroads charged--even to the point that he received rebates
>from government regulated prices--including rebates for shipments of his
>competitors.  Likewise Andrew Carnegie was the biggest steel producer in the
>world and controlled steel from the iron ore, coal, transportation and sale. 
>
>By the time of the 1920's, large corporations controlled how everyone in the
>industrialized countries lived.  They controlled wages paid to workers and
>prices charged to those who bought from everyone.  Thus they gradually controlled more and more of the world's "wealth".  When the crash came at the end of
>the 20's normal economic theory would have predicted that companies would 
>lower their prices due to lack of demand.  The companies were so large and
>powerful that normal economics did not solve the problem and the depression
>lasted for more than 10 years, finally ending with a rise in the economy at
>the start of World War II.
>
>Many of the wealthy people lost money in the depression, but since the end of
>WW II, the wealth has again becoming more concentrated in the hands of owners 
>of large corporations.  One attempt to end the depression was the increase of
>government spending during the 30's which really was insufficient to solve the
>problem.  We did, however, increase government's role in the economy by
>providing social security and other social welfare benefits to people who
>would otherwise live in poverty.  Government also increased its regulation of
>the business world, attempting to curb monopoly and damages to health and 
>safety of workers and to the environment.
>
>One of the actions of the Reagan administration was to drastically cut taxes
>to the wealthy class (the only class that really benefitted from his tax
>cuts) and to also decrease government regulations affecting how corporations
>act in the market place.
>
>On the other hand, the middle income class has seen government taxation
>increase and job security decrease (I'm including in middle class the auto
>and steel workers who make $40 - $50,000 per year--who had social security
>taxes increase greatly over the past 10-15 years).
>
>Thus, the wealthy (who own the large corporations) have become wealthier 
>and more powerful (partly by having a bigger control over the government that
>"regulates" them, and the working class has become less well off by actions
>of the wealthy (e.g. shipping jobs to Asian countries, Latin America
>countries, etc.).

	This is certainly true and the difference is one you may have
	missed, I know until recently I surely did.  And that is that the
	Rockefellers and the Carnegies of that time were dealing in
	physical resources.  Today the biggest companies are not dealing
	in physical resources, they are dealing with resources created
	and increased in size by technology.  Computers, air freight, 
	telephone lines all are resources surely, but the mere possesion
	of them (beit 1 or 100 or 1,000 airplanes) does not necessarily
	guarantee you will get the order.  The one who gets the order is
	the one who provides the best technology and price.

	And since technology determines what a resource is, oil was a waste
	product/land wasn't a resource to indians/electricity wasn't a resource
	until we harnessed it/the pet rock was nothing but dirty stone until
	someone did something with it/sand wasn't a resource until we made
	silicon chips what is the hot item today may be gone tomorrow.
	Look at computers, yesterdays computer is out of date which has
	happened several times already and the personal computer is only
	11 years old.  With the technology of today and the near future,
	oil will certainly be replaced, if not slowly, by alternative fuels
	such as electricity/solar/human power/etc.  Technology is stretching
	the supply of oil, fuel injectors/mass transit/new fuels means less
	oil consumption, so far before we run out of oil new technology will
	replace it.  What of the oil rich countries then?  They better ride
	the shift or get lost in the process.

	So my point is that anyone with the ability to harness todays technology
	in a new or better way will be the WalMart of today.

	Kawika 

	Kawika