Thursday, January 30, 2014

Economics for Occupiers Part 11: The 1%

The foundation of the modern protests against capitalism is that it leads to a perceived inequality of wealth. The criticism is that wealth is concentrated in a very few individuals. The conventional wisdom is that this is unfair, and that the wealth of an economy should be distributed more evenly across society. One term used recently in a Rolling Stone editorial is "Horrific inequality." Critics demonize the inequality in such terms, assuming as a matter of course that it's not fair and that the world would be better if people who have more would just share.

Fallacy of the Zero Sum Game
The basis for this conception is the presumption that the total wealth is a zero-sum game, that if someone else has a bigger slice of the pie, then your slice must be correspondingly smaller. People who subscribe to this understanding haven't looked beyond their toes in this age of vast material wealth, this age of iPhones and jet aircraft, and asked themselves where all this wealth was a hundred years ago. Wealth is produced by the capitalist. Since the industrial revolution, durable production has far exceeded nondurable consumption, allowing wealth to accumulate in quantities never before seen in history. The question any critic of capitalist wealth needs to answer is when a capitalist entrepreneur becomes wealthy by means of his efficiency in production, who became poorer? At whose expense did the entrepreneur gain his wealth?

Read more about this in chapter 16 of Economic for Occupiers, now available on