We are ruled by poor logic

Speaking about Walter Williams, his latest column, Should the Rich Be Condemned?, is worth a read.

The whole column is so good that I put it under the fold.  Here’s one key paragraph:

President Barack Obama, in stoking up class warfare, said, “I do think at a certain point you’ve made enough money.” This is lunacy. Andrew Carnegie’s steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already “made enough money.”

Exactly!  When it is reasoned that the rich have enough and we should take more from them, we don’t realize that we are really taking it from ourselves.

We say, oh well, so they’ll have one less car in their 50 car garage.  That may be true.  But it is equally likely that we don’t get a better a light bulb, a new vaccine or some other thing that may improve our lives. And I never hear that considered in the ‘take more from the rich’ logic.

For me, it’s the same poor logic that produces massively harmful things like the housing policy.

For example, the poor logic: “Home ownership makes people responsible, so let’s make it easier for folks to own homes by lowering the bar of responsibility.”

Better logic: “Responsible people buy homes.  So, let’s encourage responsible behavior.”

With rich people, “They have a lot money and it doesn’t seem fair, especially while others are struggling.  Let’s take more from them.”

Rather than, “For the most part, wealthy people earned their wealth by finding ways to add value to the lives of others.  So, let’s encourage people to find ways to add value to the lives of other.  Then we all come out ahead.”

Walter Williams’ whole column:

Thomas Edison invented the incandescent bulb, the phonograph, the DC motor and other items in everyday use and became wealthy by doing so. Thomas Watson founded IBM and became rich through his company’s contribution to the computation revolution. Lloyd Conover, while in the employ of Pfizer, created the antibiotic tetracycline. Though Edison, Watson, Conover and Pfizer became wealthy, whatever wealth they received pales in comparison with the extraordinary benefits received by ordinary people. Billions of people benefited from safe and efficient lighting. Billions more were the ultimate beneficiaries of the computer, and untold billions benefited from healthier lives gained from access to tetracycline.

President Barack Obama, in stoking up class warfare, said, “I do think at a certain point you’ve made enough money.” This is lunacy. Andrew Carnegie’s steel empire produced the raw materials that built the physical infrastructure of the United States. Bill Gates co-founded Microsoft and produced software products that aided the computer revolution. But Carnegie had amassed quite a fortune long before he built Carnegie Steel Co., and Gates had quite a fortune by 1990. Had they the mind of our president, we would have lost much of their contributions, because they had already “made enough money.”

Class warfare thrives on ignorance about the sources of income. Listening to some of the talk about income differences, one would think that there’s a pile of money meant to be shared equally among Americans. Rich people got to the pile first and greedily took an unfair share. Justice requires that they “give back.” Or, some people talk about unequal income distribution as if there were a dealer of dollars. The reason some people have millions or billions of dollars while others have very few is the dollar dealer is a racist, sexist, a multinationalist or just plain mean. Economic justice requires a re-dealing of the dollars, income redistribution or spreading the wealth, where the ill-gotten gains of the few are returned to their rightful owners.

In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for — and therefore please — their fellow man. People voluntarily took money out of their pockets to purchase the products of Gates, Pfizer or IBM. High incomes reflect the democracy of the marketplace. The reason Gates is very wealthy is millions upon millions of people voluntarily reached into their pockets and handed over $300 or $400 for a Microsoft product. Those who think he has too much money are really registering disagreement with decisions made by millions of their fellow men.

In a free society, in a significant way income inequality reflects differences in productive capacity, namely one’s ability to please his fellow man. For example, I can play basketball and so can LeBron James, but would the Miami Heat pay me anything close to the $43 million they pay him? If not, why not? I think it has to do with the discriminating tastes of basketball fans who pay $100 or more to watch the game. If the Miami Heat hired me, they would have to pay fans to watch.

Stubborn ignorance sees capitalism as benefiting only the rich, but the evidence refutes that. The rich have always been able to afford entertainment; it was the development and marketing of radio and television that made entertainment accessible to the common man. The rich have never had the drudgery of washing and ironing clothing, beating out carpets or waxing floors. The mass production of washing machines, wash-and-wear clothing, vacuum cleaners and no-wax floors spared the common man this drudgery. At one time, only the rich could afford automobiles, telephones and computers. Now all but a small percentage of Americans enjoy these goods.

The prospects are dim for a society that makes mascots out of the unproductive and condemns the productive.

3 thoughts on “We are ruled by poor logic

  1. Pingback: Unintended Consequences | Our Dinner Table

  2. Pingback: How do you know? | Our Dinner Table

  3. Pingback: Ruled by poor logic II | Our Dinner Table

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