Greed is good

When I was at Berkeley, I had only a few decent professors.  One of them (who was really wonderful) taught a British history class covering the period from 1760 to WWII.  He taught us that the Industrial Revolution, though it started in England, petered out.  It lacked the ferocity and longevity that characterized the American version of that same Revolution.

The professor’s explanation for this phenomenon was the class system. Since British workers could not raise themselves out of their class — since they could not live in the fancier neighborhoods or wear the “upper class” clothes — their acquisitiveness quickly maxed out.  Getting together a small nest egg, making sure the roof didn’t leak, having enough food, and being able to go to the pub for a pint were their goals, and those goals were fairly quickly satisfied.  With the vast majority of citizens neither buying nor striving to buy, the pure capitalism of America, which allows people to work and acquire to their heart’s content, just never kicked in.

Certainly when I moved to England some time later, my own observations bore out this same principle, and that was despite the fact that I lived there in the 1980s, not the 1880s.  Working class kids didn’t want champagne, they wanted fake orange drink.  They didn’t want fine leather shoes, they wanted punk boots.  They didn’t want to travel the world, they wanted to binge at the pub.  Their tastes remained simple, so they had little need to work hard or invest or to be innovative.  Add to that the fact that the Government readily provided enough funds for these limited tastes, and you had complete stagnation.

I’m waffling on about this point because of a wonderful batch of paragraphs in an IBD editorial taking apart Obama’s Marxist economic views:

In arguing for a heavier mix of government, he assumes that capitalism unfairly favors the rich, almost exclusively so, and fails to spread prosperity.

“The rich in America have little to complain about,” he carps. “The distribution of wealth is skewed, and levels of inequality are now higher than at any time since the Gilded Age.”

Obama cites data showing a yawning gap between the income of the average worker and the wealthiest 1%. He thinks it’s government’s job to step in and close it — “for purposes of fairness” — by soaking the rich, among other leftist nostrums.

“Between 1971 and 2001,” he complains, “while the median wage and salary income of the average worker showed literally no gain, the income of the top hundredth of a percent went up almost 500%.”

But such a snapshot comparison would be meaningful only if America were a caste society, in which the people making up one income group remained static over time.

Of course that’s not the case. The composition of the rich and poor in this country is in constant flux, as the income distribution changes dramatically over relatively short periods. Few are “stuck” in poverty, or have a “lock” on wealth.

As I see it, aside from being fundamentally wrong, Marxism, to the extent it has a smidgen of rightness in it, applies only to Europe and other stratified societies.  It has absolutely no place in the social fluidity that is America.  I guess this rather obvious point is one more reason explaining why Obama’s European junket was so well received abroad, but left him with fewer fans at home.

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  • BrianE

    I was having a similar discussion just the other day with a young person, who I would assume to be conservative, complaining that there were no opportunities in America.
    Her anecdote was a Liberian friend, a former teacher, who had immigrated to this country, and was “barely making ends meet” working in a door factory.
    The man was “very smart” and here he was a factory worker, barely able to support his family.
    I couldn’t convince her that America is still the land of opportunity, especially compared to the class or caste structure of nearly every other country in the world.
    Which brings me to another point, that the y generation (she was in her mid-twenties) has bought into the nanny state propaganda. I think the indoctrination of two generations has been completed, and these young people are the ones that will soon be running the country– and they are naturally receptive to the message of Obama.
    To prove my point about opportunity in America I headed to the internet, yahooing “social mobility” and found three or four hits that pointed to a study that proved just the opposite.
    The findings of the study– repeated in various forms, was the statistic that there is an “infinetesimal” chance that a person in the bottom 20% of society would ever migrate to the top 5% in terms of wealth. Case closed– America is class based, without mobility.
    Wow, I thought, what a damning statistic– until I stopped and thought about it for, oh, about 30 seconds.
    What if a reasonable percentage of Americans moved from the bottom 20% to say the middle 20%? Maybe they aren’t rich but they have definately moved to the middle class.
    Only those people whose politics are stuck on class envy wouldn’t think this is a good thing.

  • David Foster

    I think it’s true that the remnants of the British class system have done considerable harm to that country. But did the British industrial revolution really “peter out?” Before WWII? They might not have gone as far with mass production / Taylorization as did the US, but on the eve of WWII they had a pretty substantial industrial base in shipbuilding, aircraft production, and textiles, to mention a few segments.

    The class barriers did seem to have been permeable, at least to a few individuals with extreme talent and drive. The Bill Gates of the metalworking or textile industry could have made it…some did…even though he would never have had quite the same social acceptance as the Etonian. It was the people who were talented, but not super-talented, who were kept from realizing their potential and being rewarded for it properly.

    What worries me is that the class barriers in the US are being raised by the increasing credentialism. Here’s a story that I thought was a little spooky:
    Stephen Hardis, then chairman & CEO of Eaton Corporation, said that he often experimented at cocktail parties — comparing the response he gets when he introduces himself by talking about his educational background (positive), vs. as the head of a big industrial company (negative)
    (Eaton is a very substantial company with a market capitalization of about $10 billion. ) Hardis attributed the results of the experiment to a “disdain” for the industrial sector of the economy, and I think this was certainly part of it, but equally important was the exaggerated reverence for anything called “education.”

  • benning

    I think both analyses were right. As for Obama being well-received in Europe … well, he’s somewhat anti-American, so why not?

  • Allen

    One can have freedom, or one can have the state. Just a small example, I’ll be harvesting the vineyard when the sun goes behind the Sierras soon.

    We’ve tried the state (prohibition) but I would bank on my friends and family, who I give the wine to, that they will have the sense to use the product of my work wisely.


  • expat

    I think it is a mistake to use the top 5% income group as a measure of social mobility or equality in a society as wealthy as ours. We certainly have our inherited wealth groups who have contributed little, although some of the wealthy try to use their money wisely and to the benefit of society as a whole. However, I don’t think most Americans care that much about making it to the top 5%. They care about having a comfortable life and financial security, but they also care about what they do and how they live.

    Does anyone believe that Bill Gates initial motivation was to be the richest man in the world? I don’t. I think he wanted to play the game of who would win in the world of computers: the hardware guys or the software guys. Then he got hooked on wanting to see how far he could take the software thing. He wanted to win the game.

    The biologist or historian is motivated by figuring out the next piece of the puzzle. The restaurant owner may find the most satifaction in greeting his regular customers and helping their kids plan their wedding receptions. Even the new immigrant may find his bottom-of.the-ladder job OK if it buys chances for his kids.

    There are so many opportunities for people in America to find a niche that suits them. I doubt that many would trade their niche for the opportunity to party with Paris. And I think that most people like having something to dream about, a new challenge or adventure. That is why we are not so likely to be envious of the person who followed his dream and hit it big.