The Hobbit – a warning against Capitalism left unchecked?

U.S. Billionaire Wealth Surged by 70%, or $2.1 Trillion, During Pandemic. They Are Now Worth a Combined $5 Trillion.

https://inequality.org/great-divide/updates-billionaire-pandemic/

Introduction

I love the story of the Hobbit, reading it with my dad as a kid I remember how the fantasy adventure setting truly captured my imagination and brought me every night into a world of wonder and mystery. Now I see the story differently, in part, I see the entire premise of the Hobbit as a warning, of what could become of society if we allow corruption and greed to run rampant.

I’d like to make some comparisons from the story to today’s society in a sort of semi-structured rant…

I’ll use America in many of my examples because:

• They’re effectively the world’s leading economy
• Most countries depend on the US Dollar as their Reserve currency.
• There are a lot of resources covering the American economy available to me.
• It seems that a lot of American culture seeps through to my home country (the UK) and therefore, what affects them also affects me, more than most other countries.
• And finally, they seem to be to be the best example of the points I'm going to make here.

As a disclaimer, I make some very cynical points, and may even allude to conspiracy. While I don’t believe “the whole system is rigged” like some grand conspiracy necessarily, I think that there are some very logically reasons why our society may appear to be and in some cases, may even become rigged by it's very twisted nature.

There must be a reason wealth distribution follows an exponential distribution pattern. If you take nothing else away from this rambling mess of a piece of writing, I’d ask that you really try to absorb the implications of a wealth distribution chart that looks like this:

https://income-inequality.info/

I am also throwing together numbers and quotes where I can, please take them with a grain of salt, I’m just a dumb ape trying to communicate my frustrations, please feel free to point out any errors I might have made etc. I'm also very much open to other points of view, maybe I'm wrong about everything I write about here, I hope so, but I struggle to see how from my own research.

I just want to cover the prologue of the book here, essentially how the situation came to be, how the Dragon took his hoard and what actions and mistakes were made that led to that event taking place (this also means there aren't really any spoilers for the Hobbit if that was a concern for anyone).

The Prologue

The Hobbit (The “Wealthy” Individual)

Born into money, Bilbo has everything he needs.

Many are born into money, Nepotism takes many forms, passing wealth onto children seems to be amongst the most accepted practices, and while it often has heavy taxes associated, the rich often have the power to avoid paying them, which seems to be typical these days… 5 minutes on google and you’ll see exactly what I mean:

“Eight tech companies in the UK avoided an estimated £1.5bn in 2019 – New Research” – https://www.taxwatchuk.org/tech_companies_2019_update/

“Amazon had sales income of €44bn in Europe in 2020 but paid no corporation tax” (2021) – https://www.theguardian.com/technology/2021/may/04/amazon-sales-income-europe-corporation-tax-luxembourg

“Amazon had to pay federal income taxes for the first time since 2016 — here’s how much” (2020) – https://www.cnbc.com/2020/02/04/amazon-had-to-pay-federal-income-taxes-for-the-first-time-since-2016.html

“In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes.” – https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

Say what you will about the sources, but the consensus seems to be unanimous.

Bilbo is content and fears change that may affect his lifestyle.

Once individuals have attained “Financial Freedom” or even just more wealth than most, they often become conservative in nature, fearing that any changes that “target the wealth of the rich” might drag them back down into the churn of the working or middle classes. Perhaps many don’t realise that they are still closer to being homeless than “rich” when compared to the wealthy-elite (check out this visualisation on wealth inequality, this is the best site I’ve seen to help really understand how obscenely wealthy these people are: https://mkorostoff.github.io/1-pixel-wealth/)

We’ve been convinced somehow, that those who have financial freedom are somehow comparable to the ultra-wealthy, the 1% of the 1%. In today’s economy, with a few million dollars and some safe investment schemes, you can live the rest of your life without ever having to worry about money or having to work again. But these people aren’t “rich”, compared to those who hold tens, hundreds, thousands even tens of thousands of times more money than even that.

How can we justify anyone being worth that much? Does anyone really need 210 Billion Dollars (that’s NINE zeros: $210,000,000,000)? Do we really need to give anyone more money in the world for them to make their contribution to society?

Most Americans will earn something in the range of 1.5 – 3 million dollars in their entire lifetime, most of which will go straight out the window paying for food, shelter and other necessities. Some of the richest people on the planet are currently worth more than one-hundred thousand times (100,000x) more than what the average person will earn in their entire lifetime.

Bilbo lives a relatively humble life. Nicer clothes, nicer home than most, but not overly extravagant. He has enough money to live without working.

Many are content once they have escaped the threat of poverty, they don’t seek power or absurd wealth, they just want to live their lives in peace, falling into comfortable routines, enjoying what they have.

People argue that “money doesn’t buy happiness”, but the first step toward happiness is often removing sources of stress, such as the threat of poverty. How can you be happy when you’re only a missed paycheck or two away from being homeless? It’s like working with a gun pointed at your head. And naturally, this opens people up to being taken advantage of, if you’re so close to the brink of poverty, you can’t afford to risk quitting your job, meaning employers might try to pay them even less (which is in their interest as it keeps them even more dependent on the job they provide), even potentially opening the employees up to being abused, who will likely choose to just “take it on the chin” for fear of being fired.

Money buys you the time and resources you need to focus on yourself, it will absolutely fix many of your problems, and those it doesn’t – you’ll almost always stand a better chance of resolving with money than without.

Dwarves (The People)

An industrious people who found a way to gather enormous wealth. Wealth was shared for a time, Dale becomes a rich and prosperous town thanks to being a trade hub connecting the mountain to the rest of the world.

In the name of innovation, driven by technology and human ingenuity, we’ve been able to build societies of immense wealth.

As the industrial revolution starts, everyone becomes richer very quickly, the quality of life for the average person rises exponentially, technology spreads, goods are exported, the whole world benefits directly or indirectly in some form.

Capitalism and Democracy bore a golden age for humanity that has brought unimaginable prosperity, if you were to show people who lived even 100 years ago what we have now, let alone those who lived a thousand or more years ago, the ease of access to food and information, transportation, communication – it’s almost too much to comprehend. It’s easy to take this for granted, and while we should absolutely be grateful for what we have, that mustn’t prevent us from continuing to drive on, to bring those remaining in poverty out of it, to address issues like the living wage crisis and to tackle the ever-growing epidemic of wealth inequality.

Thror (The Corrupt Politicians)

The dwarf king, taken by greed, saw opportunity to hoard gold for himself, rigged the system to amass great wealth.

Power, left unchecked, almost always corrupts. Few individuals are selfless and have genuine concern for others enough to be trusted with great power, and we shouldn’t blindly give it away simply because someone fought hard for it, especially since it seems to be that the very people who seek power are often the people who you would least wish to have it.

There was good in him still, he had loyalty to his kin so others shared in the wealth at least in part, but far less so than before.

Corrupted by greed, but still his humanity remained. This actually likely puts a limit on the amount of damage that he will cause directly but leaves him open to be overthrown by those who truly have no qualms with trampling others for their own benefit. In this story, Thror in his greed simply opened the doors for true corruption, laid the stage for the truly depraved to steal everything.

The Dragon (Billionaires)

Smaug the Dragon, the greediest of all, all too capable of taking advantage of the very system Thror had designed to hoard his treasure – the defences of Erebor, attacks and steals it out from under them and shutting everyone out, keeping the treasure for himself, and sleeps in his new found wealth under the mountain for decades.

Smaug is the epitome of exactly who you would not want to allow to amass too much wealth, a greedy, narcissistic, murderous creature, who cares only for himself.

Power attracts the greedy, the abusive and the corrupt.

Once Smaug has all the power to himself he will hoard it until his dying breath.

The ultra-wealthy will not surrender their hordes willingly, they will do anything in their power to hold onto it, believing they have earnt it and perhaps even believing that the wealth can do the most good for the world in their own hands (narcissism).

The dwarves are homeless, powerless to stand up to the Dragon who is hoarding the very treasure (and therefore, power) they would have needed to raise an army to overthrow him. They are forced to work for scraps, living with resentment for their lost home and wealth.

It is in the wealthy-elite’s best interest to keep the population poor, to keep them trapped, feeling as-if they must always continue to spend all their time and energy working, lest they lose everything. This keeps them subservient, allows them to be taken advantage of, and prevents them from taking action against the wealthy – for they are simply too busy trying to survive.

Hope of escaping poverty may even have a pacifying effect on the poor, if you believe that if you just work hard for another few years your contributions might be recognised, you might be rewarded with some more money to make your situation more bearable… then you might just hunker down, wait it out.

Now if you get your small reward of a raise, which you sought after so desperately, you might feel that it is well earned, and now you may even be convinced that it is possible to rise to the top through hard work. Still missing the fact that what you’re earning now, and what you could ever earn on the path you’re on still pales in comparison to the wealth your contributions earn for those with the real power.

Now that the treasure has all been amassed by Smaug, the wealth becomes inaccessible, no longer shared out as it did initially under Thror’s rule.

Trickle down economics probably works under the right conditions, but once the wealthy-few have dug their claws in deep enough, they’re cunning and powerful enough to put a decisive stop to the bleeding of their own wealth to others.

It is only once the Dragon has taken hold (the inevitable result of Thror’s greed, the Dragon Sickness**), that the Dwarves were able to realise their mistake, but too late and all was lost to the Dragon for the longest time.**

This is where I think we are now, Billionaires running rampant, somehow seen as “Celebrities” and revered by many. I think I’ve made it clear by now that I don’t believe that anyone should be worth over one hundred thousand times more than the average person. We don’t live long enough, and we aren’t diverse enough as a species for that to make any sense. Some people have more “value” to contribute to society – and capitalism aims to help to exploit this potential (for the greater good, in theory) by offering a reward to the individuals who make exceptional contributions, but I think it’s fairly clear that this has gone too far and for too long.

A note on the “9-5” and “Wage slavery”

I make a lot of points in my writing here that point to the poor being taken advantage of by their employers, while I believe this is the case for many of us today, in the world our parents lived, and their parents lived in, this wasn’t such a glaring reality. This also explains why so many “boomers” complain that the current generation must just be lazy or not want to work, because the change has happened so quickly that they haven’t realised what it’s like to be starting from scratch today.

Imagine a situation where you have a choice, between taking a risk and starting your own venture, or choosing a safe and secure job from someone who already has a well-established company. (Assuming the job offers a fair value for your time, which they used to, more or less). It will provide more long term security for the worker and their families and opens up the possibility of buying a home (basically everything most people need to live a happy fulfilling life). Most people will understandably be inclined to choose the latter option, after all, in the UK 20% of all new ventures fail within the first year, 60% within 3 years (https://fundsquire.co.uk/startup-statistics/). Who could blame you for choosing the safer option? It avoids stress, it grants you freedom, and with a fair value for your time, you can choose a balance between your time and money, you might choose to live a humbler lifestyle and work part-time, while still able to afford a smaller mortgage and support a family. You have options.

The situation is different now though. Workers are often paid too little to buy a home, they’re living paycheck to paycheck, desperately trying to make ends meet. The possibility to raise capital to start a new venture might well be an insurmountable task for many. Here we have the problem, the choice has been taken away, we no longer have the option to choose between taking a risk, going down your own path, building your own business, or working for someone else. Now for most, we have little choice but to go to university and take out student loans just to stand a chance at getting a “decent job”, to be noticed by the established employers. Forced to take “opportunities” when they arise because we can’t afford to wait for a better job to come around, this naturally will push the average wage down, since people are jumping on the low-ball offers, desperately trying to make enough money to pay their bills. Working is no longer about offering your time in exchange for fair compensation, it’s now about getting a job to be able to live.

Why has this happened? Well, I think at least in part:

• Massive corporations have come to power. Once a company is too large, it will wield power that may be impossible to contain. Employing tactics like smothering the competition to protect their profit margins, paying off politicians to push their own agendas and possibly even more malevolent things than this… a corporation becomes a cold uncaring beast once it grows large enough, by it’s very nature it forces its employees to operate in its interests or be replaced by someone who will, “Metrics” and “KPIs” are good excuses to treat employees like robots, it sends a clear message “be productive, save the company money or we’ll find someone who will”.
• This very system also attracts those who will happily trample others for their own benefit, if you cut costs for the company, by, for example, finding a loophole to avoid paying for maternity leave, or paying employees less, then you’re rewarded with a higher position, all thanks to the cold and calculating nature of a for-profit publicly traded corporation.
• This also will very likely result in fewer companies offering competitive jobs, if the mega-corporation has crushed the competition, then they are also the only people left to work for… giving them to option to further inflate their profit margins by pushing their labour costs lower.
• Publicly traded companies, like mega-corporations almost exclusively are, are always going to be prioritising their ownership (shareholders) over any other stakeholder, as the shareholders can always take their money elsewhere. Therefore, maximise profits, pay dividends not wages, and crush the competition where possible to mitigate risk to the stock prices. The irony here is that the companies are held to these standards by the government because publicly traded companies are now “public interest” and therefore must prioritise its shareholders over almost anything else… but who owns these shares? (Hint: it’s not the public)
• Manipulation of the markets, housing and stock bubbles, further take away our options, how can we even try to grow our wealth when the massive corporations control the markets? How can we afford a house when a bank won’t offer us enough money, and when it would take us our entire lifetime to pay off the debt even if they did?

Edit: To remove some references to specific billionaires, that's not the point of this post.

If you got this far, thanks for subjecting yourself to my ramblings! I hope you have a great day 🙂