All of the blockchain world easily has one unifying factor — that of leaving the blame on Traditional Finance for the ills and agreeing that it is our raison d’être.
As Qiam shares the same thought, what we believe, also comes with a 360 degree alternative, using the wand of blockchain/digital technologies. But first, let’s unpack the “The ills of traditional finance”.
Let’s talk of the most prominent one first — Wealth Inequity in the world. Never has the world been more inequitable than it is now. The facts that face us are tragic to say the least. As humanity, we must hang our heads in shame. As a way of life, the dominant thought has been capitalism and as a natural corollary, wealth has been directly proportional to effort and opportunity.
As fair as it can be at a broad level, the cost of absence of opportunity, for a large majority has made the concentration of wealth very stark and upsetting. Let us look at some numbers:
- The top 10% population, corners 52% of the income of the world. What’s worse? This very same 10% actually has 76% of the world’s wealth!
- Since 1995, the top 1% have captured almost 20 times excess of the global wealth as compared to the bottom 50% of humanity
- The pandemic and related impact, has only made this situation even more acute and marked. In fact, Oxfam goes on to use a strong term “Economic Violence” to characterise this
- Oxfam reports that from March 18 to the end of 2020, global billionaire wealth increased by $3.9 trillion. By contrast, global workers’ combined earnings fell by $3.7 trillion
The vicious cycle that the disadvantaged find themselves in, makes it tougher for them, as the opportunities are very rare whereas the rich can systemically continue to erect mechanisms to grow their wealth. The rich provide lip service frequently with affirmative action, which reaches few and impacts fewer.
Thomas Piketty’s seminal work on this topic (incidentally published long before the pandemic!) sees a pattern where the return on capital(r) is higher than the economic growth(g). The traditional finance world looks at the return on capital through only a singular lens of time value-based return! We shall address this at length, in a later article. But, to stick to Thomas’s hypothesis, the pandemic was an example where r was greater than g and we saw it only make the rich richer, at a scale never seen before.
In summary, the constructs of the current financial system are loaded in favour of the rich and in fact controlled and influenced by a handful of them. The club mentality has been perpetrated by policies, friendly governments, tax regimes and use of power, where all else has unfortunately failed.
It’s now the time for us to think of a dimensional shift and systemic change to address this problem and bring out mitigating measures to address wealth inequality. Time to stop our focus on lip service and the so-called affirmative action, which is sporadic and hardly impactful.
Stay tuned for more.
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