networked city
We are all in this together. No, by that I do not mean what Andrew Horney calls "all those cloyingly saccharine, feel-good public service announcements being delivered by famous faces on television and social media platforms, telling us "we're all in this together." We are all interdependent through the production of goods and services that constitutes the market order. Some critics of the current crisis see it as yet another case of the rich getting one over on the rest of us. I will argue that this cannot be correct, because the rich as well as the poor (and the middle class) depend on the freedom to produce, and are all harmed by the lack of it.

Angelika Albaladejo writes, "The Rich Are Getting Richer," citing a new report that "shows that some American billionaires are making substantial gains during the global health crisis." Wilamette Week asks, "How Will the Rich Get Richer During the Pandemic-Fueled Economic Collapse?"

Israel Shamir in "Deep Pockets Love Lockdown" suggests that the rich do not like the widespread availability of travel:
No more travels for us. The very rich folks will regain their solitary possession of Venice, the Côte d'Azur, and all the other elite destinations so recently inundated by mass tourism. Once again they will have it as good as they had it in the 19th century. Travel is a luxury, and ordinary people do not deserve luxury. They tried to keep us away by making travel as unpleasant as possible with body searches, but it didn't help. If this global pandemic doesn't stop us, they are simply going to cut us off.
The greatest influence on everyone's standard of living is the overall production of the society they live in. Under the current prohibitions, some businesses gain market share — a larger piece, but sliced from a much smaller pie. The rich, who enjoy and can afford luxury goods, depend on the productivity of all members of society for these goods. Those who can afford to fly first class, or perhaps in their own private planes, depend on the engineering advances from the mass production of airplanes that have reduced the cost and made private jets "affordable." Time-shared private aviation costs in the low six figures.

High-end travelers rely on the proliferation of airports made possible by the masses of middle-class travel worldwide; on the sizable labor pool of skilled pilots with commercial air travel experience to fly their private planes; on the development of air traffic control through the management of millions of flights annually; and on the gradual improvements in air traffic control to improve air travel safety.

Fine hotels where the rich stay in suites exist nearly everywhere due to middle-class and business travel. International brands are able to bring quality hotels online and up to international standards quickly due to experience operating in many global markets, and they are able to staff new hotels with experienced managers from existing properties, where they have honed their skills.

The private chefs that the rich hire to cook for them emerged from a vast food service industry consisting of culinary schools and fine restaurants even in small- to mid-market cities, where chefs learn their craft. The ingredients are available because of demand to feed the millions. Restaurants are often funded by investors who either specialize in the restaurant sector or made their money in another business. The top-tier chefs who work privately for wealthy people have reached the top of a competitive pyramid through years of restaurant experience, travel, studying under other experienced chefs, and trying out different restaurant concepts to develop recipes and techniques. The Gordon Ramseys of the world stand atop a vast competitive pyramid of chefs.

The writers who suggest that the lockdown is another means for the rich to get richer, perhaps by buying up discounted assets in a financial panic and eventually monopolizing all commerce, lack an understanding of capital markets.

Financier and political advisor Bernard Baruch is reported to have gone to cash, to have shorted the US stock market in the late 1920s leading up to the crash of 1929, to have advised friends to do the same, and to have made millions on the trade. Kennedy family patriarch Joseph P. is reported to have done likewise, realizing that the market was at a top when shoeshine boys gave him stock tips.

Fortunes have been made by shorting bubbles before market crashes or buying up assets on the cheap in the aftermath — but does that benefit "the rich"? This ignores that for every Bernard Baruch who sold millions of dollars in assets there had to be another buyer who bought them near the top and suffered the losses that Baruch avoided.

Those who own most of the assets are by definition "the rich." A rich person is someone whose property consists mostly of capital goods — directly owned, through businesses or through stocks and bonds, which are claims on capital goods. When Baruch wishes to sell $1 million in assets, which, as Dr. Evil has observed, used to be a lot of money, there must be a buyer who has that much cash on hand to pay for them. This buyer can only be another rich person, or an organization that represents a large number of individuals — a pension fund, a life insurance company.

Collectively all assets are at all times owned by someone. "The rich" as a whole can not exit asset ownership, because there is no external population of Martians who will take those assets off their hands (unless the Fed buys the entire stock and bond market, which I don't rule out, and perhaps the Fed governors are from another planet).

Most of the world's wealth is in capital goods; those who own the most of them are the rich. When markets are repriced — downward — the rich as a whole suffer most of the market value losses. Those who cashed out at the top benefit at the expense of those who held the assets on the way down. And anyone, at any size, who has cash finds that the purchasing power of their cash has gone up when measured in terms of assets. The position of small investors who have cash on hand improves relative to the rich when asset markets crash. Even those who do not invest in capital goods at all find their position improved in relative terms, because the ability of the rich to bid for consumption goods by offering capital goods has diminished.

At any moment in time, the upward or downward price movements in capital markets are a zero-sum game. But there is a more fundamental way in which we are interdependent. The capital goods underlying financial assets derive their market value from their role in the production of consumer goods. The value of a corporation is derived from consumer demand for its products. Many of the rich became so by starting a business that they still own which grew by satisfying consumer demand. Others have sold a business or inherited wealth which they try to preserve through the ownership (direct or indirect) of capital goods through financial assets.

And from where do consumers derive their ability to demand? We know from Say's law that consumers demand by supplying their own production to the market. Everyone who works and produces a good or a service, by supplying it to the market, demands some other good or service. In the general glut debate, the proponents of Say's law used it to show that because every instance of supply constitutes a demand, and vice versa, aggregate supply and aggregate demand are not only equal, but simply different ways of looking at the totality of transactions that occur in the market as a whole.

The demand that the rich depend on to support the valuation of their assets is largely not from other rich people demanding Cartier jewelry, Rolex watches, yachts, and custom basement wine cellars. It is largely from the mass market of consumers through division of labor, which provides the goods and services that we all depend on. The ability of the poor and middle classes to demand comes mostly from their wages, which they earn through their contribution to the production of a range of goods and services. Their supply in turn constitutes the demand for other — different — goods and services, which supports the valuations of businesses, and therefore financial assets.

And although the rich consume higher-quality goods and services than the rest of us, they depend equally on the flow of goods and services, the division of labor, and the development of new products. Although they may cherry-pick the best off the top, there has to be a chocolate sundae underneath to support the cherry.

Most mass consumer goods start out as luxury goods. Then, as the manufacturers work out the kinks and capital investment enables production at a larger scale, these goods become mass market goods. The 1987 movie Wall Street featured actor Michael Douglas in the role as a hedge fund titan. In one scene he is shown carrying what at the time passed for a mobile phone (a luxury good only available to the super rich) about the size of a large brick. When I have traveled in low- to middle-income countries (back in the days when we were allowed to travel more than one hundred yards from our residences), smartphones were ubiquitous. While it is true that the middle class and eventually low-income consumers benefit from the adoption of new products by the rich, the fall in these goods' costs also makes the rich man's dollar go further. Improvements in the design and function of the products through generations of products and mass production make better products available to all classes.

Even the government depends on the market, innovation, progress, and falling costs for its nefarious objectives. Governments would like to surveil us all — even more than they already do. According to the BBC News, "More than a million Australians have downloaded a coronavirus contact tracing app within hours of it being released by the government." The plan is clear enough, but if no people can afford a modern mobile phone with GPS any longer and lack the ability to pay for their data plan, this effort might fall a bit short. The phone, the network, and the existence of either wifi or a mobile signal nearly everywhere are due to carriers' vast capital investment and the dramatic fall in these technologies' prices. We can all afford these things because of our participation in the market, producing other goods and services.

I will be the first to say that I do not understand why our insect overlords are attempting to damage social trust (though "snitch" portals) and to destroy our civilization itself through the prohibition of commerce, education, healthcare, athletics, professional sports, entertainment, dating and family formation, the arts, music, dining, family gatherings, religious observance, and all other forms of civilized life. Nor can I explain the "mask hysteria" that is spreading like a highly contagious virus on social networking websites such as NextDoor.com. Without an explanation that makes any sense, where does that leave us? What keeps me up at night is that we have not yet seen the end game, and that when we do it may be worse than what anyone can imagine.