Luca Cachia-Morena is a co-founder at Elephant & Cross, a start-up that works alongside world leading course providers and universities in order to connect people with the best courses for their needs
I went back to Comino recently. The swim was lovely, but I took a particular interest in the kiosks. These aluminium food trucks are arranged linearly, starting from the jetty, and ending some 150m further up the road. Walking up and down the row, ears ringing from the Pitbull songs thundering out from their speakers, I noticed two distinct categories of kiosk.
The first is the food kiosk. This caters almost exclusively for burger enthusiasts and can be found at any Maltese festa attracting more visually prominent clientele. The second, and by far the most popular kiosk-concept, is what I shall refer to as the “pineapple van”. Their main business is serving cocktails in hollowed out pineapples, sometimes with a small plastic umbrella, to visitors looking for a well-rounded Instagram story. This has become so popular that most of the paths on the island now appear to be made of rotting tropical fruit.
After some research, I discovered that the pineapple idea was invented by the Blue Lagoon Cocktail Bar, who claim “the others follow”. The others certainly did follow, and in their numbers too. This reminded me of a concept in economics – perfect competition – something anyone who’s done a class in the subject will be at least vaguely familiar with. Put simply, it describes a market where new competition can enter (or leave) easily to supply an identical product at an identical price. In our case, the Instagram user has many choices of pineapple-based cocktails served out of a van, all essentially homogenous.
I can imagine the events following the invention of the pineapple cocktail and its roaring success. Other vans would have entered the market almost immediately. What the pineapple vans neatly show us is that profit, or success, invites others. If nothing stops them, competition will enter and try to take a slice of the fruit. Success in a functioning system is always accompanied with the risk of being knocked off one’s perch, or at least having to share it.
In a healthy economy wealth is destabilising. That is, its creation is inherently turbulent: it acts as a signal to others that they should either copy you or invent something better. We should see flows of people moving across income levels (both up and down), as innovation and competition creates new industries and destroys old ones.
This is something mathematician Nassim Taleb calls dynamic equality – or more formally: the lack of an absorbing barrier (you can never be guaranteed to remain rich or poor). It contrasts with the current naïve view of inequality as some static object, measured at a single point in time with flawed metrics like Gini. For example, a recent study, that was angrily received online, informed that the richest 10% of Maltese own over 50% of the wealth. The study alone provides no insight into the true state of inequality. Crucially, it does not inform us if the richest 10% have ever moved.
Is it static inequality that really bothers us (the fact that some x% of the population owns y% > x% of the total wealth)? Or is the true problem a distortion in the system allowing the rich to accumulate wealth without facing downside risk? This explains why we tend to admire well-off restaurateurs but not high-salaried executives who lose nothing if the business fails.
Consider the fluidity of American wealth. Statically they are more “unequal” than us, but a more nuanced view is that more than half of all Americans will spend a year in the top 10%! Look again at the very richest Americans: only 10% of them were there 30 years ago.
Contrast that to Malta, where the same dynasties have been on top since anyone remembers (they’re not going anywhere). It’s much the same story across Europe with families retaining wealth for centuries. What’s clear is that, here, once a threshold level of wealth is reached, you cannot be moved.
Equality is not about resource concentration; it is about the level of absorption within economic levels. This is not simple economic mobility: I should not only be able to become rich, but I must also never be certain to stay rich.