Money doesn’t grow on trees, but we know some people have vast reservoirs of wealth at their disposal. In certain cases, their tools for wealth creation are passed down from generation to generation. Why do these bottlenecks happen and why does wealth inequality exist? How can we work towards a more equitable society, where those in poverty have a better change at upward mobility?
The answers to these questions aren’t easy, especially when the law itself appears to be a hindrance to the masses. In this episode, Katharina shares her valuable insights on how the law works—and why it is not working in favor of the most vulnerable.
Policymaking around assets is concerned with creating conditions where everyone can prosper. As a result, the legal code is constantly designed and redesigned in an attempt to evolve alongside society.
However, Katharina discussed how the people behind the code have consistently chosen to angle the content towards their benefit as the resource holders. This means that when wealth is created, it is typically bottlenecked within families or corporations who have the resources and power needed to influence state decisions. These exclusive groups can generate value from that asset for a longer period of time.
This is where power asymmetry happens. The state is responsible for turning land into physical property, ideas into intellectual property, and assets into financial property. Legal backing is a social resource that is used to cordon wealth from the masses. It’s time we think of ways we can level out the playing field and stop this one-sided reinforcement of wealth accumulation.
The state endeavors to produce a legal environment where everyone is equally protected to the law. However, this lofty goal often discounts the reality that not everybody has equal access to the law. The privileged would have the resources to hire lawyers who can bend the law to their will across not just one, but multiple legal systems.
The mantra “it’s legal” now carries a darker undertone.
Katharina described gaming the law as “exploiting every little gap in the scaffolding of existing regulations that we can find.” Lawyers are taught to look at the existing rules and regulations, and find a gap where the client can slip through. The really sophisticated ones know how to bend some of it.
It would be impossible to aim for the pillars, because these are parts of the case where their actions are clearly seen as illegal. Their goal is to fit new things in the gaps between the scaffolding. It’s taking the phrase “know the rules so you can break them” to a whole new level.
One poignant revelation in their discussion was Katharina’s explanation that the law can never really be complete. This leaves our legal system vulnerable to malicious actors in positions of power who are capable of exploiting the gap for private gain—reducing the law to a mere barrier in their climb to the top. It is truly a threat to both the rule of law and to democratic governments.
Where do we draw the line and who gets to do it? Having access to legal coding is the key to wealth. This isn’t just about physical or material assets; it’s also applicable to ideas as well. One key turning point in the discussion is their perspective on whether such a trend would carry over to digital assets, such as cryptocurrencies as well.
Katharina pointed out the irony in how Bitcoin only became valuable once it was centralized, and urged people to think of alternatives where real people can participate in the arrangement without having to delegate all their power to figureheads that may not align with the interests of the masses.
The legal code is a collective commitment to stand behind a particular use of the collective means of coercion.The community designs who has access to that centralized needs of coercion and under what conditions. Under this definition, it would certainly carry over to digital assets too. Now, it’s up to us to push for an environment where social mobility and wealth creation is available for all.
There is clearly an impetus for a platform where everybody has an equal playing field; a safe space for ordinary people to build a portfolio in transacting with today’s hottest asset, which is data.
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