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Luke Hutchison

TED Fellow, Google

TEDCRED 50+

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Is capitalism sustainable?

Bono stated in his TED2013 talk that the numbers show that we can eradicate all poverty worldwide by 2030. While I really hope that is true, it begs the question: Is capitalism sustainable? Is it possible to have a rich and middle class without a poor class? The sad reality of capitalism is that if there is an exponentially small number of people with exponentially large wealth, there has to be an exponentially long tail of much poorer people who are each contributing to that wealth. Not that we necessarily need an exponentially small number of people with exponentially large wealth, but would the world keep running without capitalistic incentives that increase the separation between rich and poor? Can we eradicate all poverty without the rich sharing their riches? What happens to civilization when nobody is willing to work in the factories and orchards, or build roads?

(Please don't take this question the wrong way! Personally I wish that nobody had to work menial jobs. I just don't understand how we can eradicate poverty when so many jobs will always translate into low-paid labor.)

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  • Mar 15 2013: Yes, capitalism is the only sustainable and dynamic economic system; however, current consumption of raw materials, pollution, and population growth may not be sustainable. In the past, we have found solutions to our problems, providing more food for more people, living ever longer and wealthier lives. If we find are able to get more cheap energy... there are real possibilities.

    Regarding your question about wages, people are paid real wages (nominal wage/ price level) based on the marginal productivity of their labor. To raise real wages, one must raise productivity, and to raise productivity we need more education and technology (usually related to more knowledge & education). It will never be possible to eliminate jobs that are "low paid" (in the sense that they are paid less compared to others) but it is very possible to eliminate absolute poverty.

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