Tuesday, March 8, 2011

America is Rich: So Simple a Caveman Could Understand It

I have found a right wing forwarded email explaining why America is rich. I thought it was worth examining, because so many people have wrong ideas about wealth inequality. It is titled "So Simple a Caveman Could Understand it."

Since the Caveman version is really kind of long and rambling, I will try to edit it down to a manageable size, and then explain it so that a Teabagger can understand why it does not work.

Basically, this is a forwarded email explanation of why America is great and rich, in a way that it is easily understood by the conservatives or libertarians that have not taken a degree in economics. This explanation is not so easily understood by liberals, especially those who have travelled abroad and/or have some further education in how a country's economy works.

By and large, the answer given in the email is that America is capitalistic. Every other economic system is doomed to failure. And anything but pure unadulterated capitalism is also doomed to collapse. To quote from the forward:

"So we're off on a little all-American road trip, this time to figure out why our economy, when sick, is stronger than anyone else's, when healthy. To see if we can figure out how 300 million strangers, all the troublemakers and upstarts from every nation in the world, can come to one vast continent, be given more freedom than any people before or since, and manage to become the most prosperous, powerful, tightly-knit nation in history. And how come we invent everything, too? Must be something in the water out there."

I have to take issue with two things here: One is that some of those strangers were brought over unwillingly to the USA and forced to work under the lash, for no pay, to make the white slave owners rich. Two: is that the land the slave owners forced the slaves to work on was stolen from the Indians. And please, Americans did not invent everything, there were also trains, guns, and sailing ships. Invented by non-Americans. But that last point is not that important, so go on.

"I believe that there are three elements -- just three -- that we mix in just the right ratio to perform our national alchemy. Look around you at the rest of the world. Those who use none of these ingredients are disasters, basket cases, failed states where misery and poverty crush the life out of what is almost an indomitable human drive to create, to nurture, and to prosper."

"Stop guessing. Sorry, but it's not God, Guts and Guns. The Arabs have God, the Russians have Guts and the Colombians have Guns -- you want to live there?"

The first of these three pillars has several names: private property, the free market, enlightened self-interest. But the first essential element of the American Trinity, and the hardest to come to grips with, is Capitalism.

"Where you stand on the political spectrum, what you think of rich and poor people, and what you think about rich and poor nations and how they should act in the world, comes down, in my mind, to one single issue, and one only: Can wealth be created, or can it only be redistributed?"

So this is an interesting question, I suppose. What is wealth? Is wealth gold, or paper money? Or is wealth land, or is wealth natural resources such as oil, water, buildings, tools, weapons ????

If you believe, as I do, that wealth can be manufactured out of thin air, then there is no limit to the amount of wealth you can amass. And since you are creating it out of thin air, there is no moral onus on making money -- you work hard to create it and have stolen from no one. There is an expression for this: you earned it.

OK I got that one wrong. I found in Wikipedia that

"wealth is is context-dependent and there is no universally agreed upon definition. Generally, economists define wealth as "anything of value" which captures both the subjective nature of the idea and the idea that it is not a fixed or static concept."

Now obviously there are different ways to define value. For one thing, anything that is a necessity of life has value. Its exact value is determined roughly by how important it is to life, and by how scarce it is. Next, a more loose definition of value is "whatever people are willing to pay you for what you have". Obviously this is harder to pin down. Just try to auction off Justin Bieber's hair on eBay, and you'll see what I mean.

I am not that keen on things that only have value because of what other people are willing to pay (Bieber's hairs, diamonds, gold bars, paper money, GM Stock) and I have a lot more faith in things that have more inherent value (farmland, real estate, a house, tools, an education). Mind you, even for things that have inherent value, we often determine that value simply by what others are willing to pay. But if the entire economy was to collapse, which would you rather have? Survival skills, or Bieber's hair? Real Estate, or shares of Bank of America?

I suspect that most wealth that can be generated out of thin air has little or no real inherent value. Even if it is a really good idea like the wheel, or fire, or sliced bread, the idea itself is unlikely to reward the inventor. For sure any wealth generated out of thin air is not going to be stuff like tools, land, or shelter. So now lets continue with the right wing economics lesson for cavemen.

"Wealth can be created from thin air by human ingenuity and hard work."

I guess this was written before the 2008 global economic meltdown that debunked derivatives, and mortgage back securities. They were classical examples of wealth being created out of thin air. Unfortunately when wealth is created out of thin air it sometimes goes poof back into thin air. This happens so frequently in economics that there's even an economic term for it. It's called a "Bubble". Apparently every generation has to relearn this lesson again. Returning to the other lesson>>>

[The anger of Anti-imperialist protesters can be attributed to].. having chosen to believe that there is only so much wealth in the world, and that rich people and rich nations gain and maintain wealth by stealing prosperity from the weak.

This is so idiotic, so demonstrably false, that you really have to wonder why we are having this discussion.

The idea that the United States can steal 10 trillion dollars a year from dirt-poor nations that don't produce anything of value is absolutely insane, and yet, and yet, we hear it again and again and again from the professionally outraged who must be obtuse beyond human understanding to keep making such an absurd lie the basis of their entire philosophy.


Wait a minute, did I read "dirt poor nations don't produce anything of value"??? Isn't oil valuable? What about diamonds, gold, bauxite (aluminum ore), iron ore, rare metals, cocoa, coffee (second largest world trade item after oil), bananas, beans, hardwood trees, fish, and many others. All of these things are produced in dirt poor nations, and wind up in rich nations without the common people in the dirt poor nations seeing much benefit from it. It even seems like the more valuable resources that are found in dirt poor nations, the more the poor people actually suffer (environmental degradation, wars for the resources, toxic air). Then what about the sweat shops producing Nike running shoes. You may consider their work to also be of no value, just like you ignored the work of the slaves, but it has value in a way. It is human effort being expended into an enterprise where there is no reward, just work for survival. There are so many questions that can be raised about this inequality of pay between rich and poor countries. But the lesson is not over yet, so for the sake of argument let's go on with "wealth is produced out of thin air":


If we can prove that our core tenet is correct, that wealth is limited only by imagination and the desire to work hard, then not only does the left's economic theory come crashing down like a Statue of Lenin, but their entire view of US power has to be fatally flawed, as well.

Get this through your heads, you socialist ninnies! There is not a big, limited pot of wealth that is filled with the Magic Sweat of Authentic Third World Laborers, that America uses its military to steal from when we run out of wealth here at home.

Here's something even the dimmest hippy protester / poet should be able to wrap his mind around:

You buy a legal pad: $1.29
You steal a Bic pen from the counter at Kinko's: free.
You write the script for Weekend at Bernies 3: Bernie's Revenge!: free.
You hire someone to type it: $30.00
You have Kinko's print 5 copies: $62.20
You mail the 5 copies: $7.82
5 idiots in Hollywood love the idea: free
They enter a bidding war: free
You get a check for: one... million... dollars!

So let's see... that's $1,000,000, minus the $101.30 in expenses... uh... that means... You, the village idiot, have just raised the Gross Domestic Product by, uh, one million freaking dollars, and have made a personal profit of $999,898 dollars and 69 cents.

Where did the $999,898.69 come from? It came from thin air! You created it, out of nothing. You added value to the stock of paper and ink you started with. From the monumental talent you possess, the gift of intellect, the pen that made Shakespeare weep with envy, you have created WB3. You've given millions of people two hours of side-splitting hilarity, for which they will part with $8.00... and you have created wealth. What's more, when you go and blow it all on the pointless material crap that makes life so much fun, you'll be bringing in a little extra for the Sea-Doo distributor, the BMW dealer, the girls at Cheetahs in Las Vegas, and all the others. Not to mention putting -- I dunno -- maybe half a million freaking dollars into welfare, Social Security, Medicare, the National Endowment for the Arts and the world's first fusion-powered, laser-armed, flying stealth submarine, the USS George W. Bush.

You did not have to steal $999,898.69 from a farmer in Angola.


OK Here's where the lesson starts to get a little heavy handed. I don't know about you, but this is not the tone that my teachers took with me when I was in school. And I hope that I do not take that tone to others.

So to go over the business case that proves wealth is unlimited: I write a script to a movie, and it sells for one million dollars. Forget the price of copies at Kinko's, obviously these costs are so small we can just forget them. However there may be some costs that are substantial, that we have neglected to mention. What are they? An education, where you learn to write properly. And the leisure time to absorb all kinds of interesting ideas, that you can then translate into a clever script. (Do not expect a kid who has worked in a sweat shop all his life to write a movie script. OK maybe if it was a movie about sweat shops???) The education, and the leisure lifestyle, do they have a value? OK, more. What about a legal system that protects your copyright, and forces the big studios to pay you what the script is worth. Any value there? And what about the luck of being born in a country where millions of people can pay $8 each for a movie, and have the time to go and see it.

I suspect that first of all, the movie script is not something with real inherent value, it is more of a "Bieber hair" type of thing, the type of thing you cannot base a real economy on. It's a sideline, a quirk, an amusement. I'm not saying some people don't get rich through this kind of luck, just that it is in fact a zero sum game. Money comes out of other people's pockets (the ones who pay to see the movie), and into yours. This type of transaction also happens when you win the lottery, but I would not base my national economy on it. Because this type of transaction is the very definition of "redistributed wealth". Voluntary redistribution, to be sure, but still redistribution of the same total amount wealth. Yes, it may count toward increasing the Gross National Product, but if it does (I'm not sure about that), it is only because of the way that the GNP is calculated. Your million dollars has in fact made the movie goers a million dollars poorer (all together).

So, core tenet remains unproven. Time to stop, and we have not even found out what the other two pillars of wealth are yet.

By the way, writing a script for "Weekend at Bernie's III" for $1,000,000 does not count as working hard. I just wrote 600 blogs in three years for a total sum of $0.00. Per dollar, I bet I worked a lot harder at writing, but no riches.

Picture: 1982 Far Side panel by Gary Larsen from this blog about cavemen:


  1. I took the time to read the article you linked.

    As apologia for the 'American Dream' it is less articulate than most and brings nothing new to the discussion. It fails to persuade because of its reliance on untruths and unsupportable assumptions (a number of which you correctly point out) and because of its cherry picking of what little data is actually offered.

    While it cannot be denied that the U.S.A. is a 'rich' nation based on questionable metrics such as average income per person, it is concurrently an extremely unhealthy nation, a nation that is sick to its core.

    Regardless of the social dimension under consideration - poverty, violence, murder, obesity and diabetes, mental illness and depression, drug and alcohol addiction, teen pregnancy, infant mortality, incarceration rates, life expectancy - the 'wealth' of the U.S.A. consistently fails to deliver on the promise of the 'American Dream.'

    The writer also displays a (not uncommon among Americans) misconception of 'socialism.' 'Russians under Stalin, Chinese under Mao, Cambodians under the Khmer Rouge' have nothing to do with socialism - tyrants labelling themselves as 'socialists' does not make them socialists - any more than the 'National Socialist' party of the Third Reich was 'socialist.'

    Finally, I find it ironic that the writer should chose to illustrate his thesis through the entertainment 'industry' (i.e.his 'million dollar' script). In so doing, he (inadvertantly) puts his finger on one of the core pathologies of American society.

  2. I listened to the "Core Pathologies" link that you gave, Chris Hedges talking to Alan Gregg about the myths that Americans (and a lot of Canadians) make themselves believe in. This idea I poked fun at in my blog, "wealth out of thin air" was mentioned too. I apparently agree with Chris about it being delusional.

    Liberals are frustrated arguing against these childish myths. But the liberals' frustration is nothing compared to the fear and anger felt by a right winger clinging to their simple minded illusions of national superiority, and then having their illusions questioned. I think that may explain the bullying, threatening tone of the right wing forward.

  3. I noticed in the Wikipedia article you linked to (American Dream), a mention of "Easy Rider", one of my favourite motorcycle movies.

    It claims Easy Rider is an allegory for the American Dream, and I can certainly see it that way too. I might even write a blog about that topic one day.

  4. Speaking of 'riches' in America ... Michael Moore has his say in Wisconsin.