Quotation of the Day…

by Don Boudreaux on August 16, 2016

in Growth, Innovation, Standard of Living, The Economy

… is from Leonard Read’s 1956 essay “Unearned Riches” (original emphasis):

Others – society past and present – place within his reach [that of an ordinary worker in modern society] goods and services and knowledge in such an array and abundance that he could not himself produce in thousands of years that portion of it which he consumes in a single day.  And he obtains all of this in exchange for his own meager efforts.

The astounding thing is that it is possible for him to gain without any change in his efforts, his skills, his knowledge.  Let others become more inventive and more productive, and he may receive more in exchange for what he has to offer.  Parenthetically, it is also possible for him to lose out entirely, as might happen if he persisted in offering nothing in exchange but buggy whips.

There is a fact still more astounding.  Our wage earner may think of his plight as hapless when compared to the one who inherited his millions.  True, the millionaire has gained much from the doings of others.  But the wage earner himself owes his life to the doings of others.

Do not forget William Nordhaus’s estimation that the overwhelming bulk – nearly 98% – of the benefits of capitalist innovation are reaped, not by the innovators, but by consumers.  (Nordhaus’s calculations are for the non-farm U.S. economy over the years 1948-2001.  But there’s no reason to believe that this slice of modern economic history is unique in this regard.)  Talk about income – or material-benefits – redistribution!

This reality is one among the many reasons why I oppose any government-granted basic income guarantee.  Everyone living in a modern economy – such as in America’s portion of today’s global economy – is already guaranteed easy access to an abundance of material wealth of a like and magnitude that would have left the richest rentier in pre-industrial times speechless with wonder and lime-green with envy.

Indeed, even American billionaires of just 100 years ago were not as materially prosperous as are ordinary Americans today.

Life in a market-oriented, bourgeoised modern society already practically guarantees to each of its denizens enormous material riches – or, at least, it guarantees access to such riches that is so easy as to make, in my mind, the economic and ethical case for a basic guaranteed income very weak indeed.

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