The paradox of richness

It is bankers’ bonus season again in the UK. £7bn is expected to be paid out to our senior bankers – not bad at all, at a time when the economy is suffering and businesses and government departments across the land are cutting costs and jobs.

The funny thing is that the bankers genuinely seem to believe they have earned these ridiculous amounts. According to them, their contribution to society is so valuable that it justifies them being paid twice as much in a year as a teacher, an intensive care nurse or a soldier fighting in Afghanistan will earn in a lifetime. Who are they trying to kid?

But I am not here to bash bankers, fun though it may be. I am really only interested in underlying patterns. I want to know what is going on in our society that allows such disparities of wealth to arise. And I think I have an answer.

It seems to me that the bankers’ bonuses are a classic symptom of a society plagued by the “paradox of richness”. The paradox of richness, as explained to me by a botanist friend, is a counter-intuitive phenomenon in nature, where if you increase the fertility of soil, you tend to reduce the biodiversity. So for example among the most beautiful and species-rich grasslands in the UK are chalk downlands, which can have 50 or more different species in one square metre. Yet chalk downlands have very poor soil – just a very thin layer of topsoil and below that chalk, which contains little that plants can feed on. If you increase the fertility by applying fertilisers you will end up with lots of lush growth but a vastly reduced species variety – perhaps 15 species per square metre. It seems that when the soil is poor, there is a chance for every plant species to find its niche and show its beauty. But when the soil is rich, a small group of species become very strong and crowd out the others.

Now apply this to our society. In the last 40 years or so there has been an explosion in the availability of money. There is simply much more money around than there ever used to be (this phenomenon is due to a number of technical reasons I won’t go into here but that James Robertson explains brilliantly – see his website www.jamesrobertson.com). The consequence of this application of excessive fertiliser, in the form of money, to our society is that a few species (bankers, lawyers, accountants, Tesco) have tended to thrive, and become fat, metaphorically at least, while other species (teachers, public servants, nurses, small shopkeepers), that are not designed by nature to flourish in such rich soil, become marginalized or wither away.

Superficially the field that has been fertilised looks healthy and attractive – it is deep green and lush. But a closer look reveals the truth – there are far less flowers, far less insects, far less birds.  What’s more,  the wide diversity of species in the poor soil ensures that, whatever the weather conditions in a year, enough species will thrive to ensure a healthy ecosystem – biodiversity brings resilience. By contrast in the rich field, with just a few species, unusually harsh weather conditions can do far more damage.

So where are our farmers in all this? Surely they can step in and do something? Sadly our farmers in recent times (named variously Thatcher, Major, Blair, Brown, Cameron plus their teams of helpers) have based themselves in farmhouses that are rather too close to the factories where the fertiliser is produced and rather too far from the fields. They spend their time in the company of the fertiliser producers and convince themselves that all is well, relying on distant reports that judge only quantity and make no mention of quality.

If they would only step out into the field and leave their advisers and lobbyists behind, they might see what is really going on. That the world is simply not so beautiful without the corncockle and poppy, the quaking grass and cowslip, the meadow saxifrage and yellow rattle, and all the other beautiful wild flowers that we are slowly driving out of our pastures (the equivalent in our society being the small shops, the small building societies, the teachers – or at least the status of teachers). What’s more, unlike the pampered and overgrown dominant species that require large applications of fossil fuel based fertilizers every year, the wild flowers grow happily, without external aid, year after year. All they need to flourish is a level (playing) field. In such an environment, each species learns not to fight the others but rather to find their niche so that nature’s rich bounty of air, light and water can be freely shared. In effect, they cooperate.

So what’s the solution? You can’t take back the money that has been put into the system, otherwise the whole economic machinery will seize up. What we need to do is make that money less valuable relative to things that have real value (like fertile land, and human endeavour). This is the solution outlined by economist Richard Douthwaite in his contribution to a recently published book “Fleeing Vesuvius” (to which I also contributed a section). Douthwaite suggests that, once we have taken back control of our money supply, we should allow inflation to occur. This should allow the price of assets to reduce over time in real terms, thus allowing us to return closer to balance.

This is not the path that our current political leaders are pursuing – instead they are attempting to slash costs, trying desperately to maintain the value of money. But never mind. Douthwaite believes, and I agree, that in the next few years time this will be taken out of politicians’ hands. He points out the close links between energy and money, and suggests that the coming energy crisis will cause the value of money to decline relative to things of real value. The task for our leaders then will be to help society negotiate the inevitable humps and bumps as we transition to an age where money is more evenly distributed, where small businesses thrive rather than being swallowed up or driven out by predatory larger ones, and where nurses can dream of bonuses as big as bankers. A nice dream…