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Top headline Comments 6-24-14 | Main | Tuesday Morning News Dump
June 24, 2014

Wealth as an end and wealth as means to an end

A quick word before I dive into the murky waters of the dismal science, my groovy babies. I have been AWOL from the HQ for a long while, and I feel compelled to apologize. I recently uprooted myself and moved across the country, from the arctic tundra to warmer climes; I have decided to actually read the books that have been sitting in my Kindle's queue rather than just think about reading them; and I have found myself struggling for new things to say. Yet I suppose there are only so many ways to damn my enemies as knaves and fools, so the following screed will no doubt echo many others I have written. So it goes.

Greg Mankiw has an interesting piece up on the NYT called "How Inherited Wealth Helps the Economy", and it's worth a read, especially when compared with a response by Fortune's Chris Matthews (not the MSNBC guy): "Inherited wealth: does it help the average worker?" (In case the gist of this second article isn't clear, consider the subhed: "Taxing wealthy heirs could be an easy and harmless way to raise revenue.") The Matthews article is yet another broadside on a topic the left has been frothing about (especially since the publication of the much-discussed but little-read Piketty book Capital in the Twenty-First Century): inequality.

Both articles have to do with inherited wealth, yet the liberal position on each is very revealing in terms of what they consider a "just" and "fair" use of other people's money.

The left has a habit of framing "inequality" (their current social-justice hobbyhorse) in economic terms, which is fortunate because it makes debunking their nonsense easier. The left's fundamental bit of chicanery lies in their failure to define "inequality" in any rigorous way. This is very intentional, for it allows them to frame inequality however they please -- generally in the usual race/gender/class terms and using money as a yardstick. Rich white men have too much money; poor brown people (especially poor female brown people) have too little; therefore equality demands a reapportioning of the money so everybody has more or less the same amount. This is not socialism, they insist (bizarrely, given that this is pretty much the textbook definition of socialism). This is fairness.

I have written many times that it is a mistake to use "money" and "wealth" as synonyms. Money is not wealth (though it is often a signifier of wealth). Wealth is a concept far greater, deeper, and more complex than mere money can encompass. Money is a tool; wealth is a state of being, an environment, a continuum in which we conduct our lives. When the left speaks of inequality in purely monetary terms, they are engaging in a peurile and futile kind of reductionism.

Consider a man with a wife and three teenage daughters, who lives in a house with only one bathroom. This man wouldn't need a million dollars to feel wealthier; he'd just need a second bathroom. A chance to have a hot shower in the morning and have a clean space on the sink for his shaving gear. Wealth to this man is not the money it would take to build the extra bathroom; wealth is the time and comfort the new bathroom brings. Wealth is comfort he gains, his improved state of mind, the increased peace in his household, his improved quality of life. The marginal utility of the additional bathroom is great indeed (the utility of additional bathrooms would be less). The wealth of that additional bathroom is much greater, proportionally, than if this man and his family lived in a huge mansion with fifteen bathrooms. (In fact, the huge house might decrease his happiness due to the expense of upkeep and maintenance. Who knows?)

You don't make a poor person wealthy by giving them money; history is full of lottery winners who ended up just as poor as when they started, and many's the dissipated scion of a rich family who frittered away the family fortune. Wealthy people tend to have a lot of money because money is correlated with wealth (but does not cause it). Income, investments, assets -- all can generate money for a wealthy person.

But wealth is more than just stuff. A loving spouse and healthy, happy children are treasures. Running a successful business can mean more than just the profits it generates; there is deep satisfaction in conducting a successful enterprise. A deep love of art or music can enhance and enrich a life. The company of good friends is truly priceless, and something that wise people learn to value more as time goes by.

Money gives access to some of those things, but all the money in the world can't buy an appreciation of those things.

But to speak of wealth even in this broadened sense is misleading, for in America even "poor" people are wealthy beyond the dreams of people in many places in the world. And compared to people in most ages of the earth prior to the 20th century, there are no poor Americans. It's amazing to consider how much better life for an average person is now compared to past times. We have food in amazing abundance and variety. Every house has a big-screen television, central heating and air-conditioning, and a refrigerator and range. Everybody has at least one car. Everybody has a cellular phone, and most people have a computer. Few of us work more than eight hours a day to afford all these things, leaving plenty of free time to relax. Medical technology has extended our lifespans, and made our tour upon the earth far more pleasant than in former times. We live healthier, more active, more stimulating lives than at any point in our history -- wealthier lives.

This is why I think the left's meretricious focus on "inequality" as a purely economic phenomenon is not only misplaced, but completely wrong. Concepts like happiness, satisfaction, comfort, and fulfillment are properties of the individual (or at most the family). These concepts are meaningless in terms of the collective. Each person has their own preferences, wants, and needs. The left's vision of equality, of "social justice", is a ruthless leveling of everyone to a common denominator. It is a vision not of shared wealth, but of shared bitterness and misery. One man's heaven is another man's hell, but in the leftist's view, hell is preferable so long as everyone shares it equally.

Mankiw's piece concerns another bone of contention between the left wing and conservatives: the role of the family as opposed to the role of the State. Wealth, to many conservatives, is in part accrued so it can be passed down to the children as a legacy. Wealth thus has deferred utility to future generations. The wealth is redistributed, but to future family members rather than present-day strangers.

Here again we see the individual or familial aspects of wealth in terms of happiness, fulfillment, lifestyle, goals: a man builds wealth to provide for his family both now and in the future. Wealth thus becomes a tool for transmitting individual preferences and ideals forward in time.

Ultimately, the left's vision of "equality" is not an empowering vision; it is a cramped and stingy philosophy of reduced expectations and lowered hopes. The unspoken (but never unclear) theme is that it is the State, not individuals or families, who should own and dispense of wealth. A happy man, in the view of the left, is one who receives money from the State and then spends it on consumption with no thought given to the future (for the future belongs to the State). Legacy is what the State says it is. The citizen should always be a creature of the now, concerned with nothing but short-term needs and gratifications, and with no allegiances beyond the vital one to the State.

The old saw that money can't buy happiness is absolutely true. It can buy things that make life more pleasant, true, but a giant Scrooge McDuck pile of gold in a vault somewhere isn't an engine of perfect happiness. It's what a man does with that money that matters. Does the man improve the world he finds, and improve his own life in that world? Does he build a legacy for himself and his family? Does he make the most of the short time he is given?

The left inveighs against greed, but it is human nature to desire things. Are we greedy for the air we breathe or the food we eat? Are we greedy for the touch of our loved ones? For love, for respect, for honor, for happiness? Why then is greed for wealth -- a desire for a fuller and richer life -- so horrible? A lust for wealth can turn into a tremendously harmful thing, of course, but so can lust for a woman or lust for food. It requires wisdom to know how much is enough.

But here's the thing: wisdom is yet another property of individuals, not of the collective.

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posted by Monty at 07:30 AM

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