In the United States today there is a major dispute going on about the appropriate conditions for rejuvenation of the working class, whose livelihood has been outsourced and whose income has regressed to the minimum wage, a process that started with Ronald Reagan and Bill Clinton. This regression is causing an increase in the income and asset disparity between Americans, which is being exacerbated by the algorithmic control of the economy (e.g., Amazon, Facebook, Google, Uber) employed to create a new form of serfdom called techno-feudalism (Varoufakis 2023). Stephen Bannon, the architect of the MAGA movement, has acknowledged that techno-feudalism is with us and that the only way to remedy this problem is to charge the elites a 44% personal income tax (Spross 2017). However, Donald Trump (the MAGA president) has decided to impose tariffs on imported products instead, which is a regressive tax that disproportionately affects those at the lowest income, but Trump believes that industries will return to America to hire the working class to avoid the consequences of his tariffs.

Economists work at maximizing incentives so that the working population is productive. To achieve this, having unregulated economies (i.e., the ability to hire and fire at will and with few safety nets) is preferred so that companies achieve unconstrained growth to build monopolies (Thiel 2021). Nevertheless, as the income disparity between the rich and the poor increases, a point is reached beyond which the aggregate incentive level of society begins to decline (see Fig. 1). Primitive societies (pre-12,000 BCE) that were composed of populations of under 100 individuals and dependent on a hunter-gatherer subsistence had minimal wealth disparity and can be considered communist and could never have achieved the productivity of a modern society (Fig. 1, hunter/gatherer; Smith et al. 2010). And modern societies with populations in the millions whereby the majority have a homeless existence and governed by one dominant plutocrat also have no incentive to improve their livelihood (Fig. 1, majority homeless). Thus, every society must find their optimal level of income disparity to maximize their aggregate incentive.

Currently, there are two economic models to achieve an optimal level of income disparity to yield high GDP (gross domestic product). Stephen Bannon/Donald Trump believes that industrial production must be returned to the United States to restore dominance of its working class to pre-1970 levels, and the way to do this is through tariffs and the expulsion of undocumented immigrants who often are being paid below minimum wage. Socialist China, on the other hand, has adopted a classical system of economics (which differs from America’s neoclassical approach) whereby the state controls rent-seeking behavior and production is subjected to the fiercest competition to produce the most competitive products (Hudson 2023; Norton 2024; Varoufakis 2023). Which model, the neoclassical or the classical, will achieve the optimal disparity function to maximize aggregate incentive (Fig. 1) and hence productivity will be determined as the United States and China compete for economic dominance.

Figure 1: Aggregate incentive is plotted as a function of increased disparity. The peak of this function indicates the optimal disparity of income in society. The figure is derived from an understanding of the Gini coefficient. See text for details. (file: bible_016.gif)