Tuesday, November 04, 2014

Green Eyed Monsters

Inventor Dude has a neat idea. He decides to take a big risk. He invests his own money and time, or maybe borrows, and turns his idea into a product and sells it on TV. You look at it and say, "Hey! That's a really great idea! And it's a bargain, too!" So you buy one at $9.95, get a free slicer-dicer with it and you think it's incredibly fair.

Then a couple of million of other people buy the same product at the same price with the same incentives, and with the exception of a few who got refunds, they all thought it was incredibly fair. The product become wildly successful! That risk... the chance he took... has paid off.

Then somebody looks at Inventor Dude's bank account, notices it has a lot of money in it, and concludes that it's an "unequal share"... despite the fact that the customers were treated fairly and got a good deal; the manufacturers got a good deal, the distributors got a good deal, and the television station got a good deal from selling ads. Everybody on the list is better off, and nobody on the list was forced into it.

Nevertheless, a few of the "99%" start whining and crying and convince others to join them in protest over how badly they've been "cheated".

But here's what they can't explain: At what point in this process was anybody ripped off? At what point is the Inventor Dude's profits not earned? At what point are you owed even a single penny of it? You already got a great product at a great price, and now you want the profit, too? That's easy enough to fix... you go do what Inventor Dude did. Then you tell us how easy it is, and how your profits aren't earned. You give your profits away to make things more equal... because unless you are, "more equal share" sounds a lot like a jealous rant.

What's sad is that you know you got a good deal. Walmart is the largest retail company in the world. They got that way not by being greedy bloodsuckers, but by offering decent products at a price that is affordable for people of modest means, like us. Poor people shop at Walmart preferentially because they're not gouging us. Then having chosen to shop there because it's a bargain, we hypocritically complain about the big ol' greedy corporation! If you want to talk about dishonesty, start with the guy in the mirror!

Some of the people complaining about "obscene profits" are folks like Student Dude, here on the left, who traded $25,000 for a college education that he felt was worth far more than $25,000 at the time of the transaction. He had a choice to attend a lower priced local state-funded university or community college that would quite frankly have done just about as much for his future earnings, but he chose his university and his debt. He applied for it, he stuck his neck out for it, and he made promises for it, despite having lower-cost options. Since he couldn't afford it at the time, he got government-backed loans so he could pay it back over time, after he got the full value of the education and started reaping the rewards. He chose it, and he begged for it. Sadly, the education he's receiving isn't comprehensive enough to imbue him with an understanding of how this transaction works, and why it's not unfair to him; how he is already receiving like value for the value he has promised to return in the future. This is basic economics, and it is the fairest human activity as yet devised. And this guy, right here, in the picture, doesn't appear to understand that. 


Yeah, I know Vince isn't the
inventor, he's the pitch-man.
Guess what? That's the service
he's selling. Understand?
If one guy makes a million people happy and gets only a dollar per satisfied customer, then he's going to have a million satisfied customers and that one guy will rake in a million dollars. He didn't rip anybody off: it's the result of a million fair exchanges. The "equal share" was exchanged at the time of the sale. It just doesn't look that way to you because somebody's hornswaggled you into thinking that all of that value must be expressed in cash to be "equal". Well, it doesn't. You get a lifetime of chopped veggies and Vince gets a one-time payment for the Slap-Chop. If you'd rather have the money than the convenience, then don't buy the Slap-Chop! Sell something of yours instead.

The fact that the income gap is widening is frankly irrelevant, because on the average it still rises for everyone. YES, the entrepreneurs got a bigger slice because theirs is an aggregate slice of millions of transactions as we've described above. That's a million transactions that they made that you didn't. But the whole pie got bigger, too. And in the course of growing the pie the rest of us got gadgets and conveniences and our standard of living improves across the board. After only a few years of exclusivity, Inventor Dude's patents expire and the entire world can use that invention for free. So a few years of market exclusivity result in a permanent rise in the standard of living for all humanity.

Inventor Dude's success in the market does not impact my ability to also be creative and successful. In fact, I can take him as an example or role model and compete with him directly. Or I can take the principles of free enterprise that made him successful and apply them to other products and services in other markets.

The only people who are taking my money and leaving me with "less and less" are the government. For everyone else in a free market economy I have a choice to buy or not to buy. Only the government mandated a tax code where the last time I got a raise I started taking home less money. Only the government mandated a healthcare system where my premiums doubled and my deductible increased by a factor of seven so I could pay more with less. And contrary to popular myth, everybody has a chance at education and betterment. You don't absolutely need college for a decent job... my roof was crowded yesterday with Mexicans who somebody hired because they were willing to do honest labor for an honest wage. Today another batch of Mexicans put up gutters, a decent and respectable blue-collar job abdicated by many Norte Americanos. The plumber who was in my basement last week makes as much per hour as my doctor. And even if it's a college education that you need... and I don't know what state you're in... I have a receipt sitting here in front of me for enough public aid, grants, and student loans to cover my youngest son's tuition with some beside. You don't have to go deep into debt to get a degree. He took on some modest debt that will be paid back with the "betterment" that both he and the lender took a chance on. That's the exact opposite of "no chance".

Remember that the wealthy got that way by making opportunities. They engaged in numerous transactions that you didn't. And it's not just the number, but the type of transactions that they made that are important. All transactions are value-for-value. But they're trading [product or service] for [cash]. Nevertheless it's still value for like value. They're just doing a lot of it, because they're taking chances on opportunities that you aren't.


But "Oh!" you say, "The 1% didn't invent anything! They inherited their wealth and get more by rigging the system!"


First of all, when someone inherits wealth it means he got it from his parents, not from you. Furthermore, it was a gift, not theft. Furthermore, you are in no way part of that equation, and at no time have you ever had a claim to any of the wealth in question. Don't be a greedy jealous bastard.

Secondly, rich people who don't produce lose money quickly. The list of the world's richest people has new names in it every single year. Every. Single. Year.

Look at Bill Gates. He was born into a rich family, but he invented and produced and grew his own personal wealth much greater than that of his father's. He still started out in a rich family, but he saw opportunities and took real risks, including dropping out of college when he saw that a Harvard education was not as important a factor to his success as the opportunities he could leverage by dropping out. He began with a lot of his own labor but ultimately had no hand in coding most of what Microsoft produces; rather, he hired people who could do that work. He gave thousands jobs in exchange for the use of their expertise and skills... fair exchanges for the most part, though his business practices regarding the marketing of Windows have often come into question in a number of courts. He's now running the Bill and Melinda Gates foundation and gives a shit-ton of money because he has it to spare and he's generous.

Now look at David H. Koch. He, too, was born into a rich family. Like Bill, he didn't sit on his ass and count inherited money. He stayed in college... MIT... and earned bachelor’s and master’s degrees in chemical engineering. He took that knowledge back to his family's company, Koch Industries, and put it to work in a new direction. Koch Membrane Systems efficiently produces clean water out of wastewater. He grew the family business and became an executive vice president and a member of the board. And yes, he had a leg up, because it is a family business... their name is on the door. That means it's not your business. But he took his risks, he came back, added value, continuing to make those numerous transactions that increase cash. Despite not being the richest guy in the world, he's still pretty rich, and didn't wait for retirement to start giving away a shit-ton of money out of generosity.
A long-time philanthropist, Mr. Koch has given generously to a variety of organizations and programs. In his lifetime, he and the David H. Koch Charitable Foundation have pledged or contributed more than $1.2 billion to cancer research, medical centers, educational institutions, arts and cultural institutions, and to assist public policy organizations.  -- KochFamilyFoundations.com
When it comes to your perception of these two men, the biggest difference between them is your personal politics. George Soros is wealthier than the Kochs and gives more to political PACs than the members of the Koch family combined. But that's neither here nor there... it is no more our business to care where these people give money to than it is their business to care where we give ours. But your politics would have you demonize one while lauding the other; though economics insists that their wealth was fairly obtained. Your politics is biased, and so is your perception.

Boromir gets a footnote!
See the postscript
It amazes me how political hacks can prey upon your insecurities and jealousy and bring out the very worst in you. Rather than being inspired by success to try to emulate it and become successful in your own right, you're encouraged to believe that the rich could only have gotten that way by cheating: obviously no one who plays fair (like you) could have amassed that kind of money fairly.

(Corollary: you're never going to be rich. So they shouldn't be rich either. Except for accident of birth, the money could have been yours, it should be yours, it is yours. You need to take it back because you can do so much more with it.)

I know. You don't think you're like that. But you are.


Instead, I'm sure you think you're more like Robin Hood. There's actually a "Robin Hood Tax" that's seriously proposed by the "Occupy" crowd. The allusion is of course, to the famous character who "robbed from the rich to give to the poor". Except... you probably haven't really thought much past that. Here are some things to remember about that story:
  • The upstart government is clearly depicted as "the bad guy".
  • Robin Hood inherited his money (he's the Earl of Loxley, or in some versions Huntingdon), and the government confiscated it. This is clearly depicted as unfair.
  • Robin Hood fights the government to return to the people that which was taken through burdensome taxation. The people that he robs aren't merely rich; they're cronies of the government. In those days taxes were privately collected by those who managed the estates and taxes were always transported as cash and goods.
  • At the end of the story, the old guard returns, undoes the evil of the upstart heavy taxers, and returns private property even to the landed gentry like Loxley, who championed the idea that people should retain that which is theirs. This is clearly depicted as a happy ending.
Remember, Robin Hood fought to relieve the people from the onerous burden of taxation. He didn't rob due to some socialistic ideology, and he wasn't living in Sherwood Forest by choice: his house was confiscated by the government of Prince John. Story aside, in the real world it is this same John (called "Lackland") who succeeded Richard I ("the Lionheart") and was so ingloriously reigned in by his own rebellious barons, who forced him to sign the Magna Carta, to limit the power of government and assert the rights of the people.

Maybe the story of Robin Hood doesn't mean what you think it means.

Postscript: a commenter on Facebook took issue to my usage of Boromir to illustrate my point. To wit:
Boromir wasn't motivated by envy. he was motivated by fear-- for the fate of his people-- and the promise of survival if he compromised and used the corrupting power of the Ring
To which I respond that I don't pick my metaphors lightly.

Motivations are not so simplistic as that. "This is a gift," says Boromir of the One Ring. At his core Boromir wanted the survival of his people. He also wanted their adulation. He also wanted his father's approval. He also wanted power and independence. "Gondor needs no king," he disdainfully announced to Aragorn. All these things at once, and more. But given that complex mix of motivations, my Critic seems to think that it was his choice to compromise. It wasn't. The One Ring was already exerting influence upon him and his human weaknesses in an attempt to rejoin Sauron, and surely this was more likely in the hands of emotionally torn Boromir than in Frodo's hands.

Envy is the nature of the corruption exerted by the One Ring upon him. It tempted him with the promise of all he needed. Boromir saw an object of great power that he felt was being wasted in the hands of others. Surely Boromir thinks he himself could wield it better.

Here is the incident (link to YouTube) as depicted in Peter Jackson's movie adaptation. Note Boromir's statement (and I'm quoting here from J.R.R. Tolkien's book, The Fellowship of the Ring):
"'It is by our own folly that the Enemy will defeat us,' cried Boromir. `How it angers me! Fool! Obstinate fool! Running wilfully to death and ruining our cause. If any mortals have claim to the Ring, it is the men of NĂºmenor, and not Halflings. It is not yours save by unhappy chance. It might have been mine. It should be mine. Give it to me! '
Here, Boromir is deceived into believing that the one viable course to action is folly. He will not extend his thinking to encompass the solution that addresses root causes, and is deluded into thinking his plan to attack those symptoms that directly affect his own immediate interests is the better way. From there, he rationalizes he has the better claim, despite the fact that this is a claim to power that belongs to neither of them and should never be used. From there, he concludes that his claim is proven and beyond argument. This leads to jealousy and anger that others are keeping him from "his" due. This is the very thought process utilized by every advocate of wealth redistribution, ever. They sometimes, though very rarely, express it more eloquently but underneath it all, this is always what we find.

Don't imagine that those who want to redistribute wealth or power do it out of mere envy. I'm sure that they honestly believe they are better qualified to use the power represented by the money, despite being ill-equipped to earn it. They do truly believe that their way is better. Like Boromir, they are deluded. However, Envy is at the heart of every "Occupier" and precisely what is deliberately cultivated by every populist panderer who would prey upon them for political gain. Envy is the tool with which they gather the power they crave.


  1. You are SO brilliant. Honestly Dave, you should be writing stuff like this for a major blog or paper or SOMEthing, and getting PAID for it too!

    1. Well, that's flattering, thanks. If anybody actually read it I'd consider it ;)