Justplainbill's Weblog

May 20, 2016

Income Distribution

[I have been recommending books on various subjects for over 30 years, now. I do this because I often find myself in disagreement with those who think that they are entitled, or because as an attorney, I am advocating a position or cause for which I have been hired to argue. This blog has as its first posting, an essay on the climate change hoax. Elsewhere are two postings on petrochemicals primarily because over 95% if everything around us has or requires a distilled petrochemical in its making or as an integral component. Plastic, tar, asphalt, paint, electricity, aspirin, clothing, &c., all require some form of petrochemical as a component either directly or in its manufacturing process. Hillary, Barry, and Bernie notwithstanding, try living without it all.

There are several posts on economics. A point not made in them is that of John Maynard Keynes’ biography. Keynes’ data source is the XIXth Century. His basis does not include the common use of electricity and, in fact, predates The Great Depression and commonplace birth control. His theories have all been debunked by the likes of Hazlett, Hayek, Freidman, von Mises, et al.

There are several more original posts mixed in with those by others whom I think it worth your time to read and contemplate. The conclusions are mine, but the source material led me to those conclusions.

My point in this prologue, is that there is a post of a recommended reading list. I have not updated it since its posting, but it is still valid and from which most of my work originates. Leffler’s works on petrochemicals, Solomon’s on climate change, Hayek & von Mises on economics, Sun Tzu on war & business, Foote’s on The War of 1861, and so many others.

A book not on the list, but which I have been recommending for years, is Thomas Sowell’s, Ph. D., “The Vision of the Anointed; Self-Congratulation as a Basis for Social Policy”. I have posted excerpts on the blog, and now choose to add another. Barry, Hillary, and Bernie at the top of the heap are screaming about income inequality and how unequal it is. I now accent Dr. Sowell’s opinion by quoting from his above noted work, pp 211-213.

I cannot strongly enough recommend his works.

Posted 20 May 2016

BTW, today’s TWSJ p 11 has an op-ed on minimum wage which falls right into this discussion.]

“INCOME DISTRIBUTION”

Despite a voluminous and fervent literature on “income distribution,” the cold fact is that income is not distributed: It is earned. People paying each other for goods and services generate income. While many people’s entire income comes from a salary paid to them by a given employer, many others collect individual fees for everything from shoe shines to surgery, and it is the sum total of these innumerable fees which constitutes their income. Other income is distributed from a central point as social security checks, welfare payments, unemployment compensation, and the like. But that is not how most people get most income.

To say that “wealth is so unfairly distributed in America,” as Ronald Dworkin does,43 is grossly misleading when most wealth in the United States is not distributed at all. People create it, earn it, save it, and spend it.

If one believes that income and wealth should not originate as they do now, but instead should be distributed as largess from some central point, then that argument should be made openly, plainly, and honestly. But to talk as if we currently have a certain distribution result A which should be changed to distribution result B is to misstate the issue and disguise a radical institutional change as a simple adjustment of preferences. The word “distribution” can of course be used in more than one sense. In a purely statistical sense, we can speak of the “distribution” of heights in the population, without believing someone in Washington decides how tall we should all be and then mails out these heights to different individuals. What we cannot do, either logically or morally, is to shift back and forth between these two very different conceptions of distribution. Newspapers are distributed in one sense – they are sent out from a printing plant to scattered sites to be sold to readers – but heights are distributed only in the other sense.

Those who criticize the existing “distribution” of income in the United States are criticizing the statistical results of systemic processes. They are usually not even discussing the economic fate of actual flesh-and-blood human beings, for the economic positions of given individuals vary greatly within a relatively few years. What is really being said is that numbers don’t look right to the anointed – and that this is what matters, that all the myriad purposes of the millions of human beings who are transacting with one another in the marketplace must be subordinated to the goal of presenting a certain statistical plateau to anointed observers.

To question the “fairness” or other index of validity of the existing statistics growing out of voluntary economic transactions is to question whether those who spent their own money to buy what they wanted from other people have a right to do so. To say that a shoe shine boy earns “too little” or a surgeon “too much” is to say that third parties should have the right to preempt the decisions of those who have elected to spend their money on shoe shines or surgery. To say that “society” should decide how much it values various goods and services is to say that individual decisions on these matters should be superseded by collective decisions made by political surrogates. But to say this openly would require some persuasive reasons why collective decisions are better than individual decisions and why third parties are better judges than those who are making their own trade-offs at their own expense.

Again, no one would seriously entertain such an arrogant and presumptuous goal, if presented openly, plainly, and honestly. They may, however, be led in that direction if the anointed are able to slip undetected back and forth between one definition of “distribution” and another, as the exigencies of the argument require.

[“The Vision of the Anointed”, Sowell, Thomas Ph. D., © 1995 Basic Books ISBN-13: 978-0-465-08995-6 pp 211-213]

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