What do WW1, WW2, COVID-19, the 80/20 rule, and the climate crisis have to do with one another?
Many will come up with some similar characteristics whether in culture or personae, and perhaps draw parallels to other events and eras which share these similitudes. In this blog-interview, we will try our best to leverage ChatGPT as of the time of this post on June 26, 2023, to uncover some patterns and data we can source to best highlight potential roots challenging democracy and its sustainability in the long run.
We will also offer some solutions, if we naturally arrive at a logical explanation for these.
Why Democracy?
Era: Democracy is important for several reasons:
Protection of individual human rights: Democracy ensures that each human has certain fundamental rights and freedoms, such as but not limited to the right to vote, freedom of speech, and freedom of opinion.
Government accountability: In a democratic system, the government is accountable to the people. Elected representatives are responsible for making decisions and policies that reflect the will and interests of the citizens. If elected representatives are seen to be corrupt and easily coercible, people lose trust more easily and must be therefore controlled into submission, through the mechanisms available at that point in time to those in power.
Participation and inclusivity: Democracy promotes the participation of citizens in decision-making processes. It supposes that people from diverse backgrounds will also have a voice in shaping their society and influencing that which affects them. It ensures that power is not concentrated i.e. that 1% of people do not end up holding and controlling 99% of the wealth.
Peaceful resolution of conflicts: Democracies are supposed to provide a peaceful means for resolving conflicts and differences of opinion. Through open debates, negotiations, and legal processes, they aim to find consensus and avoid violent confrontations through a #culture of dialogue and compromise.
Economic and social development: #Democracy allows for the creation of stable institutions, protection of property rights (though who owns what can be debated with no end), and encourages innovation and entrepreneurship.
Overall, democracy is important because it provides a #framework for protecting human rights, resolving conflicts peacefully, and fostering economic and sustainable social development. It serves as a foundation for a just, humane and inclusive society.
Principles of Democracy
Let's begin with the principles of democracy, per ChatGPT v3:
The principles of democracy generally include the following:
Popular Sovereignty: The power and authority of the government is derived from the people. In a democracy, the ultimate decision-making authority rests with the citizens.
Political Equality: All individuals have equal rights and opportunities to participate in the political process. Each person's vote carries the same weight, regardless of their social status, wealth, or other factors.
Rule of Law: The government operates based on a set of laws that are transparent, predictable, and applied equally to all citizens. No one, including government officials, is above the law.
Civil Liberties: Democracies uphold and protect individual freedoms and rights, such as freedom of speech, press, assembly, religion, and the right to a fair trial. Citizens have the right to express their opinions and criticize the government without fear of reprisal.
Pluralism and Inclusion: Democracies value diversity and ensure that multiple viewpoints, interests, and identities can coexist and participate in the political process. Minorities and marginalized groups have the right to be heard and represented.
Political Participation: Citizens have the right to participate in the decision-making process through voting, running for office, and engaging in political activities. Democratic systems encourage active civic engagement and foster a sense of ownership and responsibility among the population.
Government Accountability and Transparency: Governments in democracies are accountable to the people. They are expected to act in the public interest, and mechanisms are in place to ensure transparency, oversight, and accountability of government actions.
Peaceful Transfer of Power: In a democracy, power is transferred peacefully through regular and free elections. This principle ensures a stable and orderly transition of leadership and prevents the concentration of power in the hands of a few.
It's important to note that these principles may vary to some extent in different democracies, as they can be shaped by cultural, historical, and institutional factors. However, the core principles of democracy aim to promote freedom, equality, and active citizen participation in the governance of a nation.
Basis of the Principles
Era Psodis: For these principles to be upheld, what must hold true?
ChatGPT: For the principles of democracy to be upheld, several conditions and factors are important:
Respect for Human Rights: There must be a recognition and respect for fundamental human rights, including civil, political, economic, and social rights. Protecting individual freedoms and ensuring equal treatment and opportunities for all citizens are essential for a democratic society.
Rule of Law and Independent Judiciary: A strong legal framework, an impartial judiciary, and effective law enforcement are crucial. The rule of law ensures that laws are applied consistently, providing citizens with legal protections and access to justice.
Free and Fair Elections: Regular and transparent elections that allow for genuine competition and provide citizens with a meaningful choice are fundamental to democracy. Elections should be conducted freely, without coercion or manipulation, and must be accompanied by mechanisms to ensure integrity, such as voter registration and verification.
Freedom of Expression and Media: Robust freedom of expression, including freedom of speech, press, and assembly, is vital for a functioning democracy. Citizens should be able to express their opinions, access information, and engage in open debates without fear of censorship or reprisal. Independent media plays a crucial role in providing objective information and holding governments accountable.
Civil Society and Citizen Engagement: A vibrant civil society, including non-governmental organizations (NGOs), community groups, and active citizens, is essential. They provide avenues for public participation, advocacy, and monitoring of government actions, ensuring that diverse voices and interests are represented.
Checks and Balances: Effective checks and balances among different branches of government, such as the executive, legislative, and judicial branches, help prevent the concentration of power and abuse of authority. Separation of powers, oversight mechanisms, and a system of checks and balances promote accountability and safeguard against authoritarianism.
Education and Access to Information: An educated and informed citizenry is vital for a functioning democracy. Access to quality education, including civic education, promotes critical thinking, understanding of democratic principles, and active citizenship. Additionally, access to information, both online and offline, enables informed decision-making and helps prevent misinformation.
Respect for Minority Rights: Protecting the rights of minority groups and marginalized communities is crucial in a democratic society. Ensuring their inclusion, representation, and participation in decision-making processes fosters social cohesion, diversity, and equality.
Economic and Social Development: A democratic society should strive for economic prosperity, social development, and the well-being of its citizens. Addressing socio-economic inequalities, providing basic services, and promoting inclusive policies contribute to a more stable and resilient democracy.
It's important to note that upholding these principles requires ongoing commitment, active citizen engagement, and a willingness to address challenges and adapt to changing circumstances.
Great! ChatGPT did a great job in highlighting for us some basic premises. Now, let's analyze the situation from a decision-making authority perspective.
How many people in the world are considered to be in the decision-making ruling elite today? This question is difficult for an AI model of course, so we must use a proxy. Another tricky task, to which GPT highlights a study from Credit Suisse done in 2020:
"According to the Credit Suisse Global Wealth Databook 2020, the top 1% of the global population owns approximately 44% of the world's wealth. This means that a relatively small percentage of individuals hold a significant share of global wealth. However, this data does not specifically indicate the exact number of individuals who make up the top 1%.
It's worth mentioning that estimates and figures related to global wealth distribution can vary depending on the source and methodology used. Different studies and reports may provide slightly different numbers. Additionally, wealth distribution can also vary across countries and regions."
AND
"According to the Credit Suisse Global Wealth Databook 2020, the top 10% of the global population owns approximately 82.7% of the world's wealth. This means that roughly 10% of the world's population holds the majority of global wealth. However, this specific data does not provide the exact percentage of people who own 80% of the wealth."
Basic Mathematics and Statistics
Now, Wikipedia speaks about this from a conceptual framing with the Pareto Distribution, which "has often been used to mathematically quantify the distribution of wealth at the right tail (the wealth of the very rich); stating that the upper 20% owns 80%, the upper 4% owns 64%, the upper 0.8% owns 51.2%, etc. In fact, the tail of wealth distributions, similar to that of income distribution, behaves like a Pareto distribution but with a thicker tail."
In a perhaps perfect scenario, one might suppose a 50/50 split were possible, or even a 51/49, however, historically, has the 80/20 ever really applied? And is it realistic to expect a Pareto where 1% controls nearly half of the wealth, can sustain a democratic framework of implementation for conscious capitalism?
Per Wikipedia, "Wealth inequality refers to uneven distribution of wealth among individuals and entities. Although most research depends on written sources, archaeologists and anthropologists often view large houses as occupied by wealthy households.[8] The distribution of contemporaneous house sizes in a society (perhaps analyzed using the Gini coefficient) then can regarded as a measure of wealth inequality. This approach has been used at least since 2014[9] and has shown, for example, that ancient wealth disparities in Eurasia were greater than those in North America and in Mesoamerica following the earliest Neolithic period.[10]
Global inequality statistics[edit]
A study by the World Institute for Development Economics Research at United Nations University reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total. The bottom half of the world adult population owned 1% of global wealth.[13] A 2006 study found that the richest 2% own more than half of global household assets.[14] The Pareto distribution gives 52.8% owned by the upper 1%."
ChatGPT answers the question of the Pareto and democracy interplay as follows:
"In the context of democracy, income inequality can present challenges and potentially impact the functioning of democratic systems. While some level of income inequality is inevitable in any society, excessive and persistent inequality can undermine the principles of democracy, such as equal representation, social cohesion, and fair opportunities.
In a democratic society, the well-being and participation of all citizens are important. When income inequality becomes extreme, it can lead to disparities in access to resources, opportunities, and political influence. This can result in an imbalance of power and limit the ability of marginalized or economically disadvantaged individuals to fully participate in the democratic process.
However, it is worth noting that the relationship between income inequality and democracy is complex and multifaceted. Different democracies may have varying levels of income inequality, and the impact on democratic systems can depend on various factors, including the overall quality of governance, social policies, and institutions in place.
Efforts to address income inequality and promote inclusive economic growth can help strengthen democracies. Policies that focus on promoting social mobility, equal access to education, healthcare, and economic opportunities, as well as progressive taxation and redistribution measures, can help mitigate the negative effects of income inequality on democratic principles.
Ultimately, the sustainability of a democracy depends on its ability to address the concerns of its citizens, including those related to income inequality, and ensure that all individuals have a voice and an opportunity to participate in shaping the decisions that affect their lives."
Now. We have a small problem - if we could even hypothetically agree that a 80/20 rule might work, we have a missing ~10% gap scenario to help enable a democratic rule of law or order, or whatever we may choose to call it.
The Missing 10-19%
Going back to ChatGPT, let's look for some resolutions. And, being conservative, let's suppose the missing class of "voters with their wallets" are being left out for the enablement of a democratic society is higher than the presumed 10% to achieve the Pareto 80/20 rule. For instance, what if the truth were closer to a 99/1 rather than a 80/20 split?
Era: Chat GPT, how can we increase the growth of the middle class in a way that is economically sustainable?
ChatGPT: Increasing the growth of the middle class in an economically sustainable manner requires a multi-faceted approach that focuses on several key areas. Here are some strategies that can contribute to such growth:
Promote Education and Skills Development: Investing in education and skills development programs equips individuals with the knowledge and skills needed for higher-paying jobs. This can include vocational training, technical education, and continuous learning opportunities to adapt to changing market demands.
Enhance Job Creation and Economic Opportunities: Encouraging entrepreneurship and creating a conducive environment for business growth can lead to job creation and economic opportunities. This can be achieved through supportive policies, access to credit, reduced regulatory barriers, and investment in infrastructure and technology.
Ensure Fair and Inclusive Economic Policies: Implementing policies that promote fair income distribution, social protection systems, and inclusive economic growth can help reduce income inequality and create a more level playing field for all individuals to access economic opportunities.
Strengthen Social Safety Nets: Robust social safety nets, including affordable healthcare, unemployment benefits, and pension systems, provide a safety net for individuals during economic downturns and help prevent them from falling into poverty.
Encourage Financial Inclusion: Expanding access to financial services, such as banking, credit, and insurance, enables individuals to save, invest, and protect their assets. This can foster economic stability and upward mobility for the middle class.
Foster Sustainable Economic Development: Emphasizing sustainable economic development practices, including green technologies, renewable energy, and environmentally friendly industries, not only creates jobs but also contributes to long-term environmental and economic sustainability.
Address Gender Inequality: Promoting gender equality and empowering women in all spheres of life, including education, employment, and entrepreneurship, can contribute to the growth of the middle class by unlocking the full potential of half the population.
Strengthen Social Dialogue and Collaboration: Engaging various stakeholders, including governments, businesses, civil society organizations, and labor unions, in dialogue and collaboration is crucial for developing comprehensive policies and strategies that support middle-class growth and sustainable development.
It's important to note that these strategies should be tailored to the specific context and challenges of each country or region. Implementing a combination of these measures, along with continuous monitoring and evaluation, can contribute to sustainable growth and an expanded middle class.
Right.
Era: What is the role of small businesses in the economy?
ChatGPT: Small businesses play a crucial role in the economy, contributing to economic growth, job creation, innovation, and social development. Here are some key roles that small businesses fulfill:
Job Creation: Small businesses are significant job creators, especially in sectors such as retail, services, and technology. They provide employment opportunities for individuals, contributing to overall employment rates and reducing unemployment levels. By starting and expanding their businesses, entrepreneurs generate new jobs and stimulate local economies.
Economic Growth: Small businesses are essential drivers of economic growth. They contribute to the Gross Domestic Product (GDP) of a country through their production, sales, and tax contributions. Their agility and flexibility enable them to respond quickly to market demands and drive innovation, leading to increased productivity and economic expansion.
Innovation and Entrepreneurship: Small businesses are often at the forefront of innovation and entrepreneurship. They have the ability to introduce new products, services, and business models, driving competition and fostering technological advancements. These innovations can have a ripple effect on the economy, creating opportunities for growth and development.
Local and Community Development: Small businesses are rooted in local communities, contributing to their social and economic fabric. They provide goods and services that cater to the specific needs of their communities. Additionally, small business owners often participate actively in community initiatives, supporting local events, charities, and employment opportunities.
Regional Development: Small businesses play a vital role in regional development, particularly in areas with limited economic opportunities. They help diversify local economies, reducing dependency on specific industries or employers. Small businesses can revitalize declining regions by creating employment, attracting investment, and stimulating economic activity.
Supplier Networks and Value Chains: Small businesses often form part of supply chains, serving as suppliers to larger companies. Their participation in value chains contributes to economic interdependence, creating business linkages and fostering collaboration. Small businesses can provide specialized products, services, or expertise that larger companies may not offer.
Entrepreneurial Spirit and Resilience: Small businesses embody the entrepreneurial spirit and resilience. Entrepreneurs take risks, pursue their ideas, and adapt to changing market conditions. Their ability to navigate challenges and persevere in the face of adversity contributes to the overall dynamism and vitality of the economy.
Given the significant contributions of small businesses, supporting their growth and providing an enabling environment through policies and programs is crucial. Access to financing, business support services, training, and reduced regulatory burdens are some of the ways to foster small business development and enhance their role in the economy.
Agreed. One might go one step further and try to infer which type of small business specifically is conducive to a resilient and sustainable economic path forward. I thus asked ChatGPT to run a small piece of analysis for us. The results below:
Era: What would happen if small businesses were crowded out of the economic system?
ChatGPT: If small businesses were crowded out of the economic system, it would have several implications for the economy and society as a whole:
Concentration of Power: Large corporations and established players would dominate the market, leading to increased concentration of economic power. This concentration can result in reduced competition, limited consumer choices, and potentially higher prices for goods and services. (*I believe this means inflation - EP)
Job Losses and Unemployment: Small businesses are significant job creators. If they were crowded out, it could lead to a decline in job opportunities, especially at the local level. This could result in higher unemployment rates and a decrease in overall economic mobility.
Innovation and Entrepreneurship Decline: Small businesses are often the drivers of innovation and entrepreneurship. Their absence from the economic system could lead to a decline in new ideas, disruptive technologies, and fresh approaches to business. This could stifle economic growth and hinder technological advancements. (*it could also kill legacy arts and skills which are essential for culture and heritage knowledge and historic awareness i.e. loss of Indigenous knowledge or how to make natural products sourced from other small producers - EP)
Economic Inequality: Small businesses provide opportunities for upward mobility and income generation. If they were crowded out, it could exacerbate economic inequality, as wealth and resources would be concentrated among a few dominant players. This could widen the wealth gap and limit opportunities for social and economic mobility.
Local and Community Impact: Small businesses play a vital role in local communities. They contribute to the social fabric, create employment opportunities, and support local initiatives. If small businesses were crowded out, it could lead to a decline in community development and a loss of vibrant local economies.
Reduced Consumer Choice: Small businesses often offer unique products, services, and personalized experiences. Their absence could result in a homogenized market where consumers have limited options and reduced diversity of offerings. This may lead to less variety and innovation in the products and services available to consumers.
Loss of Entrepreneurial Spirit: Small businesses embody the entrepreneurial spirit, risk-taking, and creativity. If they were crowded out, it could discourage aspiring entrepreneurs and limit the opportunities for individuals to pursue their business ideas. This could result in a loss of innovation potential and the dynamism that entrepreneurship brings to the economy. (*this is the backbone of a functioning capitalist society which is also conscious)
Overall, crowding out small businesses from the economic system would have detrimental effects on competition, job creation, innovation, local communities, and economic inequality. It is important to create an inclusive and supportive environment that allows small businesses to thrive alongside larger enterprises for a healthy and vibrant economy.
Right.
Era: What has happened to small businesses since COVID-19?
ChatGPT: The COVID-19 pandemic has had a significant impact on small businesses worldwide. Here are some key effects:
Business Closures: Many small businesses have been forced to close their doors permanently due to the economic downturn and prolonged lockdowns. Sectors such as hospitality, retail, and tourism have been particularly hard-hit.
Financial Strain: Small businesses faced financial challenges during the pandemic, including loss of revenue, reduced cash flow, and increased expenses for safety measures. Many struggled to meet rent, payroll, and other operational costs.
Job Losses: Small businesses are major employers, but the pandemic led to widespread layoffs and job losses. This had a significant impact on employment levels and contributed to increased unemployment rates in many countries.
Shift to Online and Digital: To adapt to lockdown measures and changing consumer behavior, many small businesses had to pivot to online and digital platforms. E-commerce, remote work, and contactless services became essential for survival.
Government Support: Governments implemented various relief measures to support small businesses, such as grants, loans, and wage subsidies. These initiatives aimed to provide financial assistance and help businesses stay afloat during the crisis.
Uneven Impact: The impact of the pandemic on small businesses has been uneven across sectors and regions. Some industries, such as technology, e-commerce, and healthcare, experienced growth opportunities, while others, such as hospitality and retail, faced severe challenges.
Innovation and Adaptation: Despite the difficulties, many small businesses demonstrated resilience and adaptability. They found creative solutions, implemented new business models, and explored innovative ways to serve customers and generate revenue.
Shift in Consumer Behavior: Consumer preferences and behaviors changed during the pandemic, with increased reliance on online shopping, home delivery services, and digital experiences. Small businesses had to adjust their strategies to meet these changing demands.
Recovery and Rebuilding: As vaccination programs progress and restrictions ease, small businesses are focused on recovery and rebuilding. This includes rebuilding customer trust, rehiring employees, and finding sustainable ways to operate in the post-pandemic landscape.
It's important to note that the specific impact on small businesses can vary widely based on factors such as location, industry, government support, and pre-existing financial stability. The long-term effects of the pandemic on small businesses are still unfolding, and their recovery will continue to be a priority for economic growth and stability.
Era: How has COVID affected the wealthiest people and companies in the world?
ChatGPT: The COVID-19 pandemic has had a complex impact on the wealthiest people and companies in the world. While the pandemic initially caused significant disruptions and financial losses across various sectors, the wealthiest individuals and some large corporations have also experienced certain effects:
Stock Market Volatility: The stock markets experienced significant fluctuations during the pandemic, leading to both losses and gains for investors, including the wealthiest individuals and institutional investors. While some sectors suffered declines, others, such as technology and pharmaceuticals, experienced substantial growth.
Wealth Fluctuations: The net worth of the wealthiest individuals fluctuated throughout the pandemic. Initially, the global economic downturn resulted in a decline in the value of assets for many billionaires. However, as the markets recovered and certain industries thrived, some billionaires' wealth rebounded and even increased significantly.
Industry-Specific Impacts: The impact on the wealthiest individuals and companies varied depending on the industry in which they operate. For instance, tech companies that provided digital services, e-commerce platforms, and streaming services experienced growth, leading to increased wealth for their founders and major shareholders. On the other hand, industries such as hospitality, travel, and retail faced significant challenges, impacting the wealth of those involved.
Philanthropic Efforts: Several wealthy individuals and companies responded to the pandemic by increasing their philanthropic activities. They donated significant sums of money to support medical research, healthcare infrastructure, and relief efforts aimed at mitigating the impact of the pandemic.
Criticism and Scrutiny: The wealth and actions of billionaires and large corporations were also subject to increased scrutiny during the pandemic. Public opinion focused on issues such as income inequality, tax policies, and corporate responsibility, particularly regarding worker safety and fair compensation.
It's important to note that the pandemic's impact on the wealthiest individuals and companies is not uniform and depends on factors such as their specific industries, investments, and pre-existing financial positions. While some experienced setbacks, others saw opportunities for growth and increased wealth. The overall effects on the wealthiest individuals and companies remain complex and multifaceted.
Era: So on aggregate the wealth / market capitalization of large corporations and large investors has not increased after covid?
ChatGPT: On aggregate, the wealth and market capitalization of large corporations and large investors have experienced significant fluctuations during and after the COVID-19 pandemic. The effects have varied across different sectors and companies. While some corporations and investors have seen increases in wealth and market capitalization, others have faced declines.
Market Recovery: Following the initial market downturn at the onset of the pandemic, many stock markets rebounded and reached new highs. This recovery has contributed to the overall increase in market capitalization for some large corporations. Tech companies, in particular, have experienced substantial growth and increased market capitalization due to the accelerated adoption of digital services and remote work.
Sector-Specific Variations: The impact on market capitalization differs across sectors. Companies in sectors such as technology, e-commerce, pharmaceuticals, and digital entertainment have generally seen increases in market capitalization. Conversely, sectors heavily affected by the pandemic, such as travel, hospitality, and traditional retail, have faced declines.
Mergers and Acquisitions: The pandemic has also led to increased merger and acquisition activities in certain industries. Large corporations with strong financial positions have taken advantage of market conditions to acquire struggling businesses, potentially leading to increased market capitalization.
Government Support and Stimulus: Government stimulus packages and support programs have provided financial aid to corporations and industries affected by the pandemic. This support has helped stabilize some businesses and contributed to their market capitalization.
It's important to note that these trends may not apply universally to all corporations and investors. The pandemic's impact has been diverse, with winners and losers across different sectors and companies. Additionally, the long-term effects of the pandemic on market capitalization and wealth distribution are still unfolding.
True, and perhaps a bit redundant. Looks like I need a bit more research here, so let's get this ball rolling. Era: Ok, so I will look for a study on this.
ChatGPT: That's a great approach! Conducting research and referring to studies can provide you with more specific and detailed insights into the impact of COVID-19 on the wealth and market capitalization of large corporations and investors. Academic research, economic reports, and analyses from reputable sources can offer valuable data and findings to support your understanding of the topic.
Now, looking into this, I find the following article from McKinsey very insightful.
In essence, at the beginning of the crisis, there were historically material losses across all sectors. After mid-March, due to the surge in stimulus packages and government spending. big pharmaceuticals and biotech fully recovered. This recovery however was far from even, with clearly emerging winners and losers and as time went on, the discrepancy began to widen.
While it is important to note we cannot expect the analysis to yield precise scientific refults devoid of bias in data interpretation and methodology, the evidence suggests a widened and widening wealth inequality gap. While this is not new, the crowding out of small business poses a significant thread to sustainable development and can be seen to have been triggered at multiple points during history, particularly during trialing situations where trust and whom you can trust comes under a great deal of scrutiny. #greenwashing #socialwashing #ethicswashing
Thus, if we were to try and re-establish some balance, for sustainable development that upholds the principles of democracy over autocracy, we may consider the counter-effect through targeted re-investment in the small business community, for increased
Job Creation
Economic Growth
Innovation and Entrepreneurship
Local and Community Development
Regional Development
Supplier Networks and Value Chains
Entrepreneurial Spirit and Resilience
Please consider subscribing or sharing with a friend as we further expand on what type of Nature and Nurture-Based Solutions fit the bill for such a tall order as re-balancing growth and power mechanics. And of course, you insights, opinion, and respectful discourse is much appreciated.
Book recommendations of the week:
The Mechanics of Power, 1966, MacGregor-Hastie: British author, journalist, political commentator, poet, lecturer, and translator from and into Romanian.
Principles of Engineering Economy, 1950, Grant: Professor of Economics and Engineering @ #Stanford #University *available at AMNIe.org, at #ECRareBooks in Vancouver, and in other book / thrift shops near you. Always remember to look for book value characteristics when evaluating a book on both content and origin.
With much love and appreciation to all those who read and support us and one another other in the development of sustainable and resilient communities.
Era (Creative Assistant @ #AMNIe, with input from our expert network, ChatGPT, and Wikipedia