10 July 2012

Robert Frank: The Darwin Economy

An economic lecture in which Frank discusses how the current capitalistic model is likely to lead us to a place with massive corporation that have to act in extreme, economically and socially, bad ways in order to continue to compete. He attributes this to the evolution escalation principles identified by Darwin. In this principles, individuals do what helps them survive best, even if it is detrimental to the whole. For example, the antlers of the modern bull elk, measuring at some massive four feet wide, represent an enormous investment on the part of the elk. In order to compete, the other bull elks need to grow equally large, or larger, horns representing a similar individual investment. In the end however, if all the bull elks grew foot long antlers, they would all have the same relative advantage without the deep personal resource investment.

To manage the some competitiveness in a capitalistic model, Frank suggests removing the income tax and installing a progressive consumption tax. Such a tax, he argues, would discourage the enormous waste that comes with lavish spending because it would in effect bring the upper end of the extreme to a lower margin. Instead of having to build a 4,000 square foot house to spend a million dollars (with most of the money going to the builder), you would only have to build a 2,000 square feet (with say, half the money going to the builder and the other half paying a consumption tax).

Robert Frank: The Darwin Economy (RSA)

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