Tuesday, May 18, 2010

Vintage Thomas Sowell

Enough Money by Thomas Sowell

One of the many shallow statements that sound good-- if you don't stop and think about it-- is that "at some point, you have made enough money."

The key word in this statement, made by President Barack Obama recently, is "you." There is nothing wrong with my deciding how much money is enough for me or your deciding how much money is enough for you, but when politicians think that they should be deciding how much money is enough for other people, that is starting down a very slippery slope.

Politicians with the power to determine each citizen's income are no longer public servants. They are public masters.

Are we really so eaten up with envy, or so mesmerized by rhetoric, that we are willing to sacrifice our own freedom by giving politicians the power to decide how much money anybody can make or keep? Of course, that will start only with "the rich," but surely history tells us that it will not end there.

The French Revolution began arbitrary executions among the hereditary aristocracy, but ended up arbitrarily executing all sorts of other people, including eventually even leaders of the Revolution itself, such as Robespierre.

Very similar patterns appeared in the Bolshevik Revolution, in the rise of the Nazis and in numerous other times and places, where expanded and arbitrary powers were put into the hands of politicians-- and were used against the population as a whole.

Once you buy the argument that some segment of the citizenry should lose their rights, just because they are envied or resented, you are putting your own rights in jeopardy-- quite aside from undermining any moral basis for respecting anybody's rights. You are opening the floodgates to arbitrary power. And once you open the floodgates, you can't tell the water where to go.

The moral bankruptcy of the notion that third parties can decide when somebody else has "enough" money is matched by its economic illiteracy. The rest of the country is not poorer by the amount of Bill Gates' fortune today and was not poorer by the amount of John D. Rockefeller's fortune a century ago.

Both men were selling a product that others were also selling, but more people chose to buy theirs. Those people would not have voluntarily continued to pay their hard-earned money for Rockefeller's oil or Gates' software if what they received was not worth more to them than what they paid.

The fortunes that the sellers amassed were not a deduction from the buyers' wealth. Buyers and sellers both gained from these transactions or the transactions wouldn't have continued.

Ida Tarbell's famous muckraking book, "History of the Standard Oil Company," said that Rockefeller "should have been satisfied" with the money he had acquired by 1870, implying greed in his continued efforts to increase the size and profitability of Standard Oil. But would the public have been better off or worse off if Rockefeller had retired in 1870?

One of the crucial facts left out of Ida Tarbell's book was that Rockefeller's improvements in the oil industry brought down the price of oil to a fraction of what it had been before.

As just one example, oil was first shipped in barrels, which is why we still measure oil in terms of the number of barrels today, even though oil is seldom-- if ever-- actually shipped in barrels any more. John D. Rockefeller shipped his oil in railroad tank cars, reducing transportation costs, among other costs that he found ways of reducing.

Would the public have been better off if older and more costly methods of producing, processing and shipping oil had continued to be used, leading to prices far higher than necessary?

Apparently Rockefeller himself decided at some point that he had enough money, and then donated enough of it to create a world-class university from day one-- the University of Chicago-- as well as donating to innumerable other philanthropic projects.

But that is wholly different from having politicians make such decisions for other people. Politicians who take on that role stifle economic progress and drain away other people's money, in order to hand out goodies that will help get themselves re-elected. Some people call that "social justice," even when it is anti-social politics.

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