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The Bully Pulpit

~ (n): An office or position that provides its occupant with an outstanding opportunity to speak out on any issue.

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Tag Archives: economics

How Thomas Friedman Gets China Wrong

04 Friday Dec 2015

Posted by jrbenjamin in Freedom, Interview, Journalism, Politics

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Benito Mussolini, Capitalism, Charles Lindbergh, China, Chinese Politics, Communism, democracy, economics, Fascism, history, Hoover Institution, innovation, interview, Iran, Japan, Journalism, New York Times, Nuclear Weapons, Pakistan, Peter Robinson, Russia, Taiwan, technology, Thomas Friedman, Uncommon Knowledge, Victor Davis Hanson

Peter Robinson: New York Times columnist Thomas Friedman writes that,

One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages… It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power.

What do you make of this “Beijing Consensus,” this view that maybe they are better suited for the future than our form of government.

Victor Davis Hanson: If you gave me ten minutes and the internet, I could give you an almost verbatim quote from what left-wing people said about Mussolini in the twenties, and what right-wing people like Charles Lindbergh said about Germany in the thirties. They make the trains run on time…

But China has a rendezvous with radical pollution problems and clean up; demographic problems, a shrinking population that will grow old before it grows rich; one male per family, imbalance between the sexes. Somehow their brilliant foreign policy cooked up a nuclear Pakistan, a nuclear North Korea, a nuclear Russia, a soon-to-be nuclear Iran, and maybe, in the future, a nuclear Taiwan and Japan — all right on their border.

So I don’t get this fascination that, just because you fly into the Shanghai airport and everything looks great in a way that Kennedy doesn’t, suddenly they’re the avatars of the future.

What Thomas Friedman would need to do is get on a bicycle, cross rural China, then compare that with biking across rural Nebraska to see which society is more resilient and stable.

Victor Davis Hanson

__________

A counterpoint made by VDH in his interview with the Hoover Institute’s Peter Robinson several years ago. To read more, you can take a look at Hanson’s much praised study of nine of history’s most pivotal battles, Carnage and Culture.

Or you can read on:

  • VDH outlines how a Greek conception of human nature can shape your politics
  • Thomas Sowell discusses the “obvious problem with a ‘living wage'” in his interview with Robinson earlier this year
  • Martin Amis dissects how Britain, Germany, and France have each reconciled their 20th century legacies

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Thomas Sowell: The Obvious Problem with a “Living Wage”

28 Tuesday Apr 2015

Posted by jrbenjamin in Political Philosophy

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Basic Economics, Capitalism, Conservativism, economics, Fair Wage, Finance, Free Market, Hoover Institution, Living Wage, Macroeconomics, Microeconomics, Peter Robinson, Salaries, Thomas Sowell, Wages

Thomas Sowell

“Wages and salaries serve the same economic purposes as other prices — that is, they guide the utilization of scarce resources which have alternative uses, so that each resource gets used where it’s most valued. Yet because these scarce resources are human beings, we tend to look on wages and salaries differently. Often we ask questions that are quite emotionally powerful, even if they are logically meaningless. For example: Are the wages ‘fair’? Are the workers ‘exploited’? Is this ‘a living wage’?

Such questions seldom get asked about the prices of inanimate things, such as a can of peas or a share of stock in General Motors. But people are believed to be entitled to pay that is ‘fair,’ even if no one can define what that means. ‘Exploitation’ and ‘a living wage’ are likewise emotionally powerful expressions without concrete meanings. If a worker is living, how can he be receiving less than ‘a living wage’ unless he is, as some have said thoughtlessly, ‘living below subsistence’?

No one likes to see fellow human beings living in poverty and squalor, and many are prepared to do something about it, as shown by the vast billions of dollars that are donated to a wide range of charities every year, on top of the additional billions spent by governments in an attempt to better the condition of less fortunate people. These socially important activities occur alongside an economy coordinated by prices, but the two things serve different purposes. Attempts to make prices, including the prices of people’s labor and talents, be something other than signals to guide resources to their most valued uses, make those prices less effective for their basic purpose, on which the prosperity of the whole society depends. Ultimately, it is economic prosperity that makes it possible for billions of dollars to be devoted to helping the less fortunate.

Nothing is more straightforward and easy to understand than the fact that some people earn more than others, for a variety of reasons. Some people are simply older than others, for example, and their additional years have given them opportunities to acquire more experience, skills, formal education and on-the-job training — all of which allows them to do a given job more efficiently or to take on more complicated jobs that would be overwhelming for a beginner or for someone with only limited experience or training. It is hardly surprising that this leads to higher incomes. With the passing years, older individuals may also become more knowledgable about job opportunities, while increasing numbers of other people become more aware of them and their individual abilities, leading to offers of new jobs or promotions. It is not uncommon for most of the people in the top 5 percent of income-earners to be 45 years old and up. […]

These and other common sense reasons for income differences among individuals are often lost sight of in abstract discussions of the ambiguous term ‘income distribution.’ Although people in the top income brackets and the bottom income brackets — ‘the rich’ and ‘the poor,’ as they are often called — may be discussed as if they were different classes of people, often they are the very same people at different stages of their lives. An absolute majority of those Americans who were in the bottom 20 percent in income in 1975 were also in the top 20 percent at some point over the next 16 years. This is not surprising.”

__________

Excerpted from Thomas Sowell’s Basic Economics, a modern conservative’s primer on money and the market economy.

Below, watch the affable 84-year-old discussing the release of the fifth edition of Basic Economics with the Hoover Institution’s Peter Robinson last December.

And there’s more:

  • How Jefferson fostered compromise on the national debt
  • David Ricardo outlines the principle of comparative advantage
  • Arthur Brooks on earning money versus creating value

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In a Real Democracy April 15th Would Be a Day of Mass Celebration

13 Monday Apr 2015

Posted by jrbenjamin in Interview, Political Philosophy

≈ Comments Off on In a Real Democracy April 15th Would Be a Day of Mass Celebration

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April 15th, Class Warfare: Interviews with David Barsamian, David Barsamian, economics, Noam Chomsky, Personal Finance, political philosophy, Tax, taxation, taxes

Noam Chomsky

“Look at our political institutions. You have, say, the New Hampshire primary. In a democratic society, what would happen is the people in a town in New Hampshire would get together in their own organizations, assemblies, groups, whatever they are, and take off a little time from whatever careers or other activities that they’re engaged in and say, ‘Alright, let’s work out what we would like to see in the next election.’

And they’d come up with some sort of program: we’d like to see this. Then, if some candidate says, ‘I would like to come to town to talk to you,’ they would respond, ‘Well you can come if you want to listen to us.’ And the candidate could come and they would explain to him what they want…

What happens is totally different.

Nobody meets in the town. The candidate and his media representatives announce that he or she is coming to New Hampshire and they gather people together. The people sit there and listen to the candidate saying, ‘Look how wonderful I am, I’m going to do all these great things,’ and nobody believes a word and then they go home. Well, you know, that’s the opposite of democracy.

In fact, we see it all the time. Take, say, April 15th. In a functioning democratic society that would be a day of celebration, the day you hand in your taxes. You would be saying: ‘Alright, we got together, we worked out some plans and programs that we think ought to be implemented and we’re now participating in providing the funding to get these things done.’ That’s a democracy. In the United States it’s a day of mourning. It’s a day when this alien force, you know, the government, which comes from Mars or somewhere is arriving to steal from us our hard earned money and use it for their own purposes, whatever they are. That’s a reflection of the fact that the concept of democracy is not even in people’s minds anymore. Now, I’m exaggerating. It’s not quite this sharp, but it’s pretty close.”

__________

Noam Chomsky, speaking in ‘Part IV: Political Institutions’ of The Chomsky Sessions on ZNet. You can find extended interviews with Dr. Chomsky in the always challenging Class Warfare: Interviews with David Barsamian.

In the United States, April 15th is statistically shown to be the second most stressful day of the year, as 56% of American adults say the tax-filling process is “stressful” and 18% say it is “very stressful.” (Data from a Zogby poll shows peak tornado season to be the most stressful day of the year.) Three quarters of Americans say money is “a significant cause of stress in [their] lives,” leaving us unsurprised that the day a large stack of that cash is handed over would be an especially anxious one. You are also far more likely to be injured in a car accident on April 15th and 16th, given each sees statistically significant spikes in incidents of road rage (Super Bowl Sunday is the second most dangerous day to be on the road, according to The Journal of the American Medical Association).

Don’t agree with Noam? You’re still in some good company:

  • Calvin Coolidge puts forward a simple definition of when taxes are tyrannical
  • Philosopher Robert Nozick succinctly argues that taxes are a form of slavery
  • One of my absolute favorite recent rants: Stefan Molyneux tells a story about the tragedy of taxes — namely, that only the fruits of virtue can be taxed

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H. L. Mencken on Capitalism

25 Tuesday Nov 2014

Posted by jrbenjamin in Political Philosophy

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Capitalism, democracy, economics, economy, Finances, H. L. Mencken, Macroeconomics, Markets, Minority Report, Regulation

H. L. Mencken

“What we confront is not the failure of capitalism, but simply the failure of democracy.

Capitalism has really been responsible for all the progress of the modern age. Better than any other system ever devised, it provides leisure for large numbers of superior men, and so fosters the arts and sciences. No other system ever heard of is so beneficial to invention. Its fundamental desire for gain may be far from glorious per se, but it at least furthers improvement in all the departments of life. We owe to it every innovation that makes life secure and comfortable.

Unfortunately, like any other human institution (for example, Holy Church), capitalism tends to run amuck when it is not restrained, and democracy provides inadequate means of keeping it in order. There is never any surety that democracy will throw up leaders competent to discern the true dangers of capitalism and able to remedy them in a prudent and rational manner. Thus we have vacillated between letting it run wild and trying to ruin it. Both courses are hazardous and ineffective, and it is hard to say which is more so.”

__________

Entry #310 in H. L. Mencken’s notebooks (collected and printed as Minority Report).

Read on:

  • Calvin Coolidge clearly summarizes when taxes are appropriate and when they’re exploitive
  • Thomas Piketty poses the question Did inequality cause the financial crisis?
  • Mencken’s unforgettable defense of liberty as the primary political ideal

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Thomas Piketty: Did Inequality Contribute to the Financial Crisis?

21 Monday Apr 2014

Posted by jrbenjamin in Political Philosophy

≈ 3 Comments

Tags

American Society, Arthur Goldhammer, Capital, Capital in the Twenty-First Century, economics, Finance, Inequality, Political Economy, The One Percent, Thomas Piketty

Thomas Piketty

“In my view, there is absolutely no doubt that the increase of inequality in the United States contributed to the nation’s financial instability. The reason is simple: one consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States, which inevitably made it more likely that modest households would take on debt, especially since unscrupulous banks and financial intermediaries, freed from regulation and eager to earn good yields on the enormous savings injected into the system by the well-to-do, offered credit on increasingly generous terms.

In support of this thesis, it is important to note the considerable transfer of US national income—on the order of 15 points—from the poorest 90 percent to the richest 10 percent since 1980. Specifically, if we consider the total growth of the US economy in the thirty years prior to the crisis, that is, from 1977 to 2007, we find that the richest 10 percent appropriated three-quarters of the growth. The richest 1 percent alone absorbed nearly 60 percent of the total increase of US national income in this period. Hence for the bottom 90 percent, the rate of income growth was less than 0.5 percent per year. These figures are incontestable, and they are striking: whatever one thinks about the fundamental legitimacy of income inequality, the numbers deserve close scrutiny. It is hard to imagine an economy and society that can continue functioning indefinitely with such extreme divergence between social groups.

Quite obviously, if the increase in inequality had been accompanied by exceptionally strong growth of the US economy, things would look quite different. Unfortunately, this was not the case: the economy grew rather more slowly than in previous decades, so that the increase in inequality led to virtual stagnation of low and medium incomes.”

__________

From the book that reviewers are calling “watershed,” “magisterial,” “a bulldozer of a book,” and at least a few economists are already crowning as the best economics book of the last decade: Capital in the Twenty-First Century by Thomas Piketty.

Though I’ve only been flipping around its 700-plus pages — and my economics-minded friends have expressed to me some qualms with the methodology and approach of its author — I can confidently recommend Capital. I’ve been engrossed by not only chart after chart of Piketty’s rigorous and wide-ranging data analysis, but also his refreshingly light and fluid (though translated, by Arthur Goldhammer) exposition and writing. The book is long, especially for a bestseller, but as you tread through its pages you’ll be surprised by how rarely you have to slog through the dense weeds of pedagogical jargon. Even for dilettante economists and laymen looking to understand the state of the economy today, the book is not just comprehensible and illuminating — it’s fun to read.

More economics:

  • David Ricardo’s famous description of comparative advantage
  • Robert Nozick compares taxes to enslavement
  • Calvin Coolidge warns against excessive and unnecessary taxation

Chart: US Income Inequality

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Calvin Coolidge on Taxes

15 Wednesday Jan 2014

Posted by jrbenjamin in Politics, Speeches

≈ 3 Comments

Tags

America, American History, An Economy in the Interest of All, Budget, Calvin Coolidge, economics, economy, Freedom, Government, politics, Presidential Speeches, Prosperity, Speeches, taxes, U.S. history

Calvin Coolidge

“We are often told that we are a rich country, and we are. We are often reminded that we are in the best financial condition of any of the great powers, and we are. But we must remember that we also have a broader scale of existence and a higher standard of living. We have a freer Government and a more flexible organization of society. Where more is given, more is required…

Our own Constitution requires that revenue bills should originate in the House, because that body is supposed to be more representative of the people. These precautions have been taken because of the full realization that any oppression laid upon the people by excessive taxation, any disregard of their right to hold and enjoy the property which they have rightfully acquired, would be fatal to freedom. A government which lays taxes on the people not required by urgent public necessity and sound public policy is not a protector of liberty, but an instrument of tyranny. It condemns the citizen to servitude.”

__________

From President Calvin Coolidge’s speech “An Economy in the Interest of All”, given on June 30, 1924, just five years before the onset of the Great Depression. Find it in Amity Shlaes’s excellent biography of Coolidge.

Read about another moment in American history where budget negotiations took an urgent tone:

Thomas Jefferson engraving after painting by Rembrandt Peale.

How Jefferson Fostered Compromise on the National Debt

For left-wingers, check out a post which I wrote about how the imperial project threatens our financial standing.

Mideast Iraq One Year On

The Engines of America’s Endless Wars

And for the libertarians/conservatives out there, read one of the best modern formulations of the philosophy that taxation equals tyranny:

Robert Nozick

Robert Nozick on Taxation

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How Jefferson Fostered Compromise on the National Debt

22 Tuesday Oct 2013

Posted by jrbenjamin in Biography, History, Politics

≈ 4 Comments

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Alexander Hamilton, American History, Biography, compromise, debate, debt negotiations, economics, founding, founding fathers, Government, history, James Madison, Jon Meacham, Monticello, national debt, partisanship, Patsy Jefferson, politics, public debt, Thomas Jefferson, Thomas Jefferson: The Art of Power, U.S. history

Thomas Jefferson engraving after painting by Rembrandt Peale.

“Hamilton had argued for a national financial system in which the central government would fund the national debt, assume responsibility for all state debts, and establish a national bank. Money for the federal government would be raised by tariffs on imports and excise taxes on distilled spirits… The assumption proposal, however, instantly divided the nation.

Jefferson knew matters were dire. The Congress seemed paralyzed…

The beginning of wisdom, Jefferson thought, might lie in a meeting of the principals out of the public eye. So he convened a dinner. Jefferson believed things could be worked out, he said, for ‘men of sound heads and honest views needed nothing more than explanation and mutual understanding to enable them to unite in some measures which might enable us to get along.’

No deal meant disaster. It was clear, Jefferson wrote, ‘that if everyone retains inflexibly his present opinion, there will be no bill passed at all for funding the public debts, and… without funding there is an end of the government.’…

The final result, Jefferson believed, was ‘the least bad of all the turns the thing can take.’ It was true that he hated the financial speculation that would result from the Hamiltonian vision of commerce. ‘It is much to be wished that every discouragement should be thrown in the way of men who undertake to trade without capital,’ Jefferson said. ‘The consumers pay for it in the end, and the debts contracted, and bankruptcies occasioned by such commercial adventurers, bring burden and disgrace on our country.’

Yet Jefferson also believed in compromise. He advised his daughter Patsy to approach all people and all things with forbearance. ‘Every human being, my dear, must thus be viewed according to what it is good for, for none of us, no not one, is perfect; and were we to love none who had imperfections this world would be a desert for our love,’ Jefferson wrote in July 1790. ‘All we can do is to make the best of our friends: love and cherish what is good in them, and keep out of the way of what is bad: but no more think of rejecting them for it than of throwing away a piece of music for a flat passage or two.’ It was sound counsel for life at Monticello—and at New York.

In December 1790, a Virginian wrote Jefferson about the state General Assembly’s official protest over the debt assumption. ‘One party charges the Congress with an unconstitutional act; and both parties charge it with an act of injustice.’

So be it. Jefferson had struck the deal he could strike, and, for the moment, America was the stronger for it.”

__________

From the end of chapter 23 in part VI (“The First Secretary of State: 1789-1792”) of Jon Meacham’s new biography Thomas Jefferson: The Art of Power.

Gordon Wood called The Art of Power, “probably the best single-volume biography of Jefferson ever written.” Pick it up if you’re interested in the man, or take a look at additional posts about Thomas Jefferson.

Check out another text from American history which is especially relevant to the recent debt-ceiling/government shut-down machinations in Washington, DC. In this one, Abraham Lincoln considers political compromise on the eve of the Civil War:

Lincoln

A Shallow Pretext for Extorting Compromise

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David Ricardo on the Principle of Comparative Advantage

07 Wednesday Aug 2013

Posted by jrbenjamin in Political Philosophy

≈ 2 Comments

Tags

Adam Smith, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, comparative advantage, David Ricardo, economics, economy, free trade, global economy, Ha-Joon Chang, innovation, On the Principles of Political Economy and Taxation, taxation, taxes, The Wealth of Nations, trade

David Ricardo by Thomas Phillips, oil on canvas, circa 1821

“The same rule which regulates the relative value of commodities in one country, does not regulate the relative value of the commodities exchanged between two or more countries.

Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world. It is this principle which determines that wine shall be made in France and Portugal, that corn shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England.

In one and the same country, profits are, generally speaking, always on the same level; or differ only as the employment of capital may be more or less secure and agreeable. It is not so between different countries. If the profits of capital employed in Yorkshire, should exceed those of capital employed in London, capital would speedily move from London to Yorkshire, and an equality of profits would be effected; but if in consequence of the diminished rate of production in the lands of England, from the increase of capital and population, wages should rise, and profits fall, it would not follow that capital and population would necessarily move from England to Holland, or Spain, or Russia, where profits might be higher.”

__________

David Ricardo, writing in chapter seven of his seminal 1817 work The Principles of Political Economy and Taxation.

As is the case with many great scientific and philosophical theories, the law of comparative advantage looks so self-evident in retrospect. How did no one come up with this sooner?

Adam Smith was the first to roughly outline the notion of comparative advantage in international trade, writing in The Wealth of Nations, “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” But Ricardo shaped Smith’s idea into a nuanced and workable economic model.

Using the example of England and Portugal, Ricardo situated the law in a practical context. In Portugal, Ricardo wrote, production of wine and cloth requires less labor than in England; however, clearly the relative cost of producing those two goods differ in each of the two nations. In Portugal, both are possible to produce, and produce with ease. In England, it is extremely difficult if not impossible to produce wine, but not so difficult to produce cloth. Thus while it is easier to produce cloth in Portugal than in England, it is more sensible for Portugal to produce excess wine, and hence trade it for a surplus of English cloth. This becomes a mutually beneficial relationship, given that England benefits from the trade as well. The price it requires to produce cloth has not risen, while it has gained the ability to procure a coveted staple (wine) which cannot grow from Anglo-soil.

The Korean development economist Ha-Joon Chang, in his book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, explains Ricardo’s brilliance but also how Ricardian-style free trade negatively impacts economies which are, unlike the cases of Portugal and England, underdeveloped or relatively undeveloped in our modern world:

Before Ricardo, people thought foreign trade makes sense only when a country can make something more cheaply than its trading partner. Ricardo, in a brilliant inversion of this commonsensical observation, argued that trade between two countries makes sense even when one country can produce everything more cheaply than another. Although this country is more efficient in producing everything than the other, it can still gain by specializing in things in which it has the greatest cost advantage over its trading partner. Conversely, even a country that has no cost advantage over its trading partner in producing any product can gain from free trade if it specializes in products in which it has the least cost disadvantage. With this theory, Ricardo provided the 19th-century free traders with a simple but powerful tool to argue that free trade benefits every country.

Ricardo’s theory is absolutely right — within its narrow confines. His theory correctly says that, accepting their current levels of technology as given, it is better for some countries to specialize in things that they are relatively better at. One cannot argue with that.

His theory fails when a country wants to acquire more advanced technologies so that it can do more difficult things that few others can do — that is, when it wants to develop its economy. It takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competition during this period of learning. Such protection is costly, because the country is giving up the chance to import better and cheaper products. However, it is a price that has to be paid if it wants to develop advanced industries. Ricardo’s theory is, thus seen, for those who want to accept the status quo but not for those who want to change it.

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It Has to Be Earned: Arthur Brooks on Creating Value

25 Thursday Jul 2013

Posted by jrbenjamin in Freedom, Interview, Politics

≈ 3 Comments

Tags

AEI, American Enterprise Institute, Arthur Brooks, charity, economics, economy, free enterprise, Government, happiness, Marvin Olasky, politics, wealth

Arthur Brooks“Financial status is the way we demonstrate to others (and ourselves) that we are successful—hence the fancy watches, the expensive cars, and the bespoke suits. We use these things to show other people not just that we are prosperous, but that we are prosperous because we create value.

There is nothing strange about measuring our success with money; we measure things indirectly all the time. I require my students to take exams not because I believe their scores have any inherent value, but because I know these scores correlate extremely well with how much they have studied and how well they understand the material. Your doctor draws your blood to check your cholesterol not because blood cholesterol is interesting in and of itself, but because it measures your risk of having a heart attack or a stroke. In the same way, we measure our professional success with green pieces of paper called ‘dollars.’

What scholars often portray as an ignoble tendency—wanting to have more than others—is often evidence that we are driven to create value. Wanting to create value is a virtue, not a vice. The fact that it also brings us happiness is a tremendous blessing.

Have you ever wondered why rich entrepreneurs continue to work so hard? Perhaps you’ve said, ‘If I had a billion dollars, I’d retire.’ This is what Mack Metcalf [a forklift driver who won a $65 million Powerball Jackpot, and died 4 years later from cirrhosis of the liver] actually did when he won the lottery. But if he had earned that money doing something creative and productive, things would almost certainly have gone differently for him. People who succeed at what they do tend to keep doing it. The drive to succeed, as opposed to just having more money than others, explains why the super-rich—who already have so much more than virtually everybody—continue to work.

Take the case of billionaire Larry Ellison, founder of Oracle. The world’s 14th-richest man, he would need to spend more than $30 million per week, or $183,000 per hour, just to avoid increasing his wealth. Further, he would have to spend it on items with no investment qualities, meaning that, unless he sets his money on fire, or (better yet) gives it away, he simple cannot not be filthy rich. Yet he continues to slave away, earning billion after billion. Being rich, and having more than the average Joe, simply cannot be driving Larry Ellison. It is the will to succeed and create value at greater and greater heights.

Who enjoys the benefits created from the slaving of Bill Gates, Warren Buffett, and all of America’s other success-addicted, ultra-rich entrepreneurs? We all do: As long as fortunes are earned—as opposed to stolen, squeezed from governments, or otherwise extorted from citizens—this is good for all of us.

Oracle has not made Larry Ellison a rich man without any benefit to society. The firm currently has tens of thousands of employees, people with well-paying jobs to support their families. The company has introduced technology that has benefited all parts of the economy, and it has paid billions to its shareholders. And we can’t forget that Oracle has rendered generously unto Caesar, year after year: In 2007 alone, it paid $1.2 billion in corporate taxes, totally apart from the personal taxes paid by Ellison and his employees.

Money is a measure of success, and a handy one at that. But there is a dark side to this fact: People tend to forget that money is only a measure. Some people focus on money for its own sake, forgetting what really brings the happiness…

In 1978, for example, researchers presented a sample of adults with a list of 24 big-ticket consumer items (a car, a house, international travel, a swimming pool, and so on). They were asked how many of these items they currently possessed; they were also asked, ‘When you think of the good life—the life you’d like to have—which of the things on this list, if any, are part of the good life as far as you are personally concerned?’

Inevitably, people felt that the ‘good life’ required more things than they currently possessed. Among the people between 30 and 44 years old, the average number of items owned was 2.5, while the ideal number was 4.3. The same people were interviewed 16 years later, in 1994, and presented with the same list. Naturally, most people had more items; the ones formerly in their 30s and early 40s (now in the next age category, 45 to 59 years old) had 3.2 items, on average. They were closer to the good life, right? Wrong. Their requirements for the good life had now shifted, to 5.4 items. In other words, after 16 years and lots of work, the ‘good life’ deficit had stayed almost exactly the same. The more stuff you have, the more you want.”

__________

From Arthur Brooks’s article Can Money Buy Happiness?.

Tomorrow is my last day working at the American Enterprise Institute, of which Arthur Brooks is the current president.

Following his graduation from high school and a brief stint at the Annapolis Brass Quintet in Baltimore, Brooks moved by himself to Spain to become the principal French hornist of the City Orchestra of Barcelona. While eating lunch in the AEI dining room the other day, I overheard Brooks recount this personal story too improbable for any novel, which he capped off by saying he was leaving the table to head to catch a flight — to western India to meet with the Dalai Lama. Needless to say, he’s a pretty compelling case.

Below is an excerpt from Marvin Olasky’s recent interview with Arthur Brooks:

How many French hornists have become presidents of the American Enterprise Institute? One.

What are the similarities between playing the French horn and being president of AEI? Creativity… the working out of ideas that are of interest to other people… and the privilege of having audiences enjoy your work. The only barriers in front of you are those put in place by your own imagination.

Why did you decide to move from a prestigious orchestra position to academic work? Things were going well … and I wasn’t happy. What I wanted to be was an economist. I wanted to do that analysis of how the gears turn in society. I hadn’t even gone to college, so at 28 I had to go to college and get a graduate degree.

When you told your dad about your new plan, what did he say? I said, “Dad, I want to become an economist.” After a silence he said, “Why would you want to do that? You’re at the top of your career.” I said, “Because I’m not happy.” He said, “What makes you so special?”

A Harvard economist once told me he did not plan to have any children because he figured that every child would cost him a book, and he wanted to publish books rather than have children. You have three children, and you’ve published lots of books. Does having children inspire you to publish more? I do believe the world will benefit more from my children than it will from my books, but there is a connection. My wife and I had had our two sons biologically. I was writing this book about charity and finding that when people give to charities their lives improve dramatically. I wrote a chapter on it, and everything I write my wife Esther reads.

That’s wise. For sure. She’s spiked a lot of my stuff. Susan probably spikes your stuff too sometimes, right?

Yeah. A couple times that she hasn’t I wish she had. Exactly. So I brought home this chapter that shows charitable actions make you happy and healthy. Esther ruminated on it for a while, then said, ‘We ought to use the information in this book to change our lives a little bit. I think we should give more.’ I said, ‘OK, I’ll write a check.’ And she said, ‘I think we should adopt a baby.’ I said, ‘It’s only a book!’ Then of course I had no argument, so we did. We adopted our daughter from China. She’s now 8 years old.

Two questions: First, how should we define fairness? Seventy percent of Americans believe that true fairness means rewarding merit and creating an opportunity society, which is exactly what the free enterprise system is designed to do. The fairest system is one in which people have an opportunity to rise. That doesn’t mean they shouldn’t have a safety net, but a safety net is not middle-class welfare. It’s not spreading the wealth and getting rid of risk: It’s simply making sure that people don’t have the most abysmal poverty and starve.

Second question: “Earned success” is a key concept in your book. What does that mean? Earned success is the idea that you’re creating value with your life and value in the lives of other people. It’s not money per se: It’s the value you create with your life. You can denominate it with souls saved, or neighborhoods that are habitable, or clean drinking water in Africa, or lots of money, or beautiful works of art, or having children who are honest and have good values, or whatever. People who say they’ve earned their success are the happiest people. It has to be earned. 

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