Bret Stephens who is a columnist at the Wall Street Journal,
and Paul Krugman who is a columnist at the New York Times are having a heated
discussion, and I am not interfering. What I am doing here is take issue with
Stephens on a point I would not have let a student of mine get away with if I
were still teaching.
Stephens made the point in an article that came under the
title: “About Those Income Inequality Statistics” and the subtitle: “An answer
to Paul Krugman.” It was published in the Journal on January 4, 2014. In fact,
this is an answer to Krugman who was responding to a column that was written
earlier by Stephens. I also responded to that column in an article I titled: “The Dimension Which Goes Beyond the Surface”
and published it on this website on December 30, 2013.
The point Bret
Stephens makes is that in America. the rich are not getting richer at the
expense of the poor. He explains what is happening this way: “The richer have
outpaced the poorer in growing their incomes, just as runners will outpace
joggers who will, in turn, outpace walkers. But, as James Taylor might say, the
walking man walks.” In fact, this was one of the points I took issue with in my
previous response, but it seems that there is a need to elaborate on it a
little more this time.
Stephens backs his point-of-view by citing numbers that were
issued by the Congressional Budget Office. He says this: “Between 1979 and 2007
income for poor households grew by 18%, for the middle classes by nearly 40%,
and for the top 81-99% by 65%. It's the top 1% who have made out very
handsomely, with a jump of 275% over nearly three decades.” So the question is
this: Does that mean the rich are getting richer at the expense of the poor, or
does it not?
Well, according to the semantics used by Stephens, the
answer seems to be no, the rich are not getting richer at the expense of the
poor. And this is the reality, he says, because everybody is getting richer
except that the more someone is rich, the faster they are liable to get richer
still.
Well, when you combine those numbers with that semantic, the
logic seems flawless but that's only because you're talking in the abstract.
When you start talking in concrete terms, you are forced to look past the surface,
and use the logic of mathematics to analyze real situations. And this is where
the seemingly flawless logic breaks down, and yields to another sort of logic.
So let's take the example of a mining town where people of
all income levels live. One day a prospector who used to lead a comfortable
life in the bracket of the middle class, discovers a new mine and becomes very
rich. Did he get rich at the expense of the poor? No, he did not. What he did
was add to the income of the town. The word add refers to the mathematical
operation addition. It means that the income of the town was augmented, out of
which the prospector exercised the right to subtract a portion and reward
himself. Even then, the man did a lot of good for the people of the town.
Let's now take the example of the farmer who employs a
number of people on his farm. One day, he discovered that by rotating the crops
in a certain way, he could double the yield of the land thus double the total
production. And he got richer as a result. Did he get rich at the expense of
the poor? No, he did not. In fact, it is very likely he will be giving a raise
to his employees because it is the right thing to do.
Let's now take the example of the industrialist who happens
to be named Henry Ford and makes cars. He discovered that making cars on the
assembly line was a tedious method of working but also an efficient way to
making things. He thus adopted the method and produced more cars; but he also
rewarded the workers by doubling their pay. Did he get rich at the expense of
the poor? No, he did not ... anymore than a Steve Jobs or a Bill Gates would
get richer at the expense of the poor decades later. These are the true
capitalists who make something where there was none before; or make something
better than it was made previously. They add to the wealth of the nation, and
keep a portion for themselves.