It’s important to remember that this is not a technocratic conference. We are not here primarily to discuss the “hows” and “whys” and “ifs” of Chinese economic development. On those subjects, more powerful people than we will have more important discussions than this. We are here to discuss ideas.
And the most important idea we are discussing is collectivism. I do not mean collectivism as it specifically applies to Chinese socialism. I mean collectivism as a general premise of almost all political systems in the world.
The foundation of collectivism is simple: There should be no important economic differences among people. No one should be too rich. No one should be too poor. We should “close the wealth gap.”
This is a very powerful idea.
This is a very common idea.
This is a very bad idea.
“Gaps” – differences – are innate to mankind. Do we want to close the “beauty gap” and make every woman look like Margaret Thatcher? Do we want to close the “talent gap” and field a World Cup football team starring, for example, the people on this panel?
In a world without gaps we’d all be the same. We’d all be the same sex. Who’d get pregnant? We’d all know the same things. What would we talk about? We’d all have the same work. Some job that would be. We’d all get the same vacation. Five point seven billion people playing a game of volleyball – 2.85 billion to a side. The idea of a world where all people are alike – in wealth or in anything else – is a fantasy for the stupid.
But proposing to close the “wealth gap” is worse than silly. It entails a lie. The notion of economic equality is based on an ancient and ugly falsehood central to bad economic thinking: There’s a fixed amount of wealth. Wealth is zero‐sum. If I have too many cups of tea, you have to lick the tea pot. But wealth is based on productivity. Productivity is expandable. Otherwise there wouldn’t be any economic thinking, good or bad, or any tea or tea pots either.
Since the beginning of the industrial revolution human productivity has proven to be fabulously expandable. The economist Angus Maddison has been studying economic growth since the 1950’s. In 1995, under the auspices of the Organization for Economic Co‐Operation and Development, he published a book, Monitoring the World Economy 1820 – 1992. The earth had fewer natural resources and no more farm land in 1992 than it had in 1820 and in that period the earth’s population multiplied by five. But, in 1990 U.S. dollars, the value of everything produced in the world grew from $695 billion in 1820 to almost $28 trillion in 1992 and the amount of that production per person went from $651 to $5,145.
A collectivist can hear these figures and claim they are just averages, claim they don’t show who actually got that money. The collectivist can recite the old saying: “The rich get richer and the poor get poorer.” But there is no statistical evidence of this. The United Nations Population Division’s “World Population Prospects: 1996 Revision” contains past and present statistics on infant mortality and life expectancy at birth. And these figures don’t present the same averaging problems as per capita world product. No matter how rich the elite of a country is, its members aren’t going to live to be 250 and distort the averages. And if the few rich babies in a country live and the mass of poor babies in a country die, that country will not have a “normal” infant mortality rate but a very bad one. Infant mortality and life expectancy are reasonable indicators of general well‐being in a society.
Besides giving figures for individual countries, the U.N. consolidates averages into three groups: “More Developed Regions,” “Less Developed Regions,” and “Least Developed Regions.” The last meaning countries that are damn poor – Laos, Madagasgar, Chad. In the early 1950’s the richer countries in the world had an average of 58 deaths per 1000 live births. They now have an average of 11. Over the same period the poorest countries went from 194 deaths per 1000 to 109. The “gap” was 136 dead babies 40 years ago and the “gap” is 98 dead babies now. This is still too many dead babies, of course, but the difference isn’t increasing. The rich are getting richer but the poor aren’t becoming worse off. They’re becoming parents.
The same trend is seen in life expectancy. In the early 1950’s people in rich countries had a life expectancy of 66.5 years. Now they live 74.2 years. In the poorest countries average lifespans have increased from 35.5 years to 49.7 years. The difference in life expectancy between the world’s rich and poor has decreased by 6 1/2 years. The rich are getting richer. The poor are getting richer. And we’re all getting older.
So, if wealth is not theft, if the thing that makes you rich doesn’t make me poor, why don’t collectivists concentrate on the question, “How do we make everyone wealthy?” Or better, “How have we been managing to do this so brilliantly since 1820?”
Why, instead, do collectivists concentrate on the question, “How do we redistribute wealth?”
And it is especially the collectivists in the non‐socialist West who do this. Bill Clinton is more concerned with redistribution than anyone in the Chinese government.
Such collectivism is, I think, not only silly and untruthful but immoral.
The Ten Commandments in the Old Testament of the Bible are very clear about this.
Now the Bible might seem to be a strange place to do economic research – particularly for a person who is not very religious and here in a country that is not predominately Jewish or Christian.
However, I have been thinking – from a political economy point of view – about the Tenth Commandment.
The first nine commandments concern theological principles and social law: thou shalt not commit adultery, steal, kill, etc. All religions contain such rules. But then there’s the tenth commandment: “Thou shalt not covet thy neighbor’s house, thou shalt not covert thy neighbor’s wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor anything that is thy neighbor’s.”
Here are God’s basic rules about how the Tribes of Israel should live, a very brief list of sacred obligations and solemn moral precepts, and right at the end of it is, “Don’t envy your friend’s cow.”
What is that doing in there? Why would God, with just ten things to tell Moses, choose, as one of them, jealousy about the things the man next door has? And yet think about how important to the well‐being of a community this commandment is. If you want a donkey, if you want a meal, if you want an employee, don’t complain about what other people have, go get your own. The tenth commandment sends a message to collectivists, to people who believe wealth is best obtained by redistribution. And the message is clear and concise: Go to hell.
Collectivism is silly, deceitful, a sin. It’s also cowardly. We fear the power others have over us. And wealth is power. So we fear the rich.
But how rational is this fear? Take a midnight stroll through a rich neighborhood then take a midnight stroll through the U.S. Capital. Yes, you can get in a lot of trouble in Monte Carlo. You can lose at roulette. But you’re more likely to get robbed in the slums of Washington.
Not that we should begrudge the crimes of those poor people. They’re just practicing a little “free‐lance collectivism.” They’re doing what the U.S. Government does, in their own small way. Because the real alternative to the power of the rich is not the power of the poor but plain, simple power. If we don’t want the world’s wealth to be controlled by people with money then the alternative is to have the world’s wealth controlled by people with guns. Governments have plenty of guns.
The theory of this is quite good. The robber puts down his pistol, picks up the ballot box and steals from rich people instead of from you. But the reality is different. Witness the track record of collectivism in this century: The holocaust, Stalin’s purges, the suffering caused by the Great Leap Forward here.
We should quit thinking about the “wealth gap” and start thinking about wealth. Wealth is good. Everybody knows that about his own wealth. If you got rich it would be a great thing. You’d improve your life. You’d improve your family’s life. You’d purchase education, travel, knowledge about the world. You’d invest in wise and worthwhile things. You’d give money to noble causes. You’d help your friends and neighbors. Your life would be better if you got rich. The lives of the people around you would be better if you got rich. Your wealth is good. So why isn’t everybody else’s wealth good, too?
Wealth is good when many people have it. It’s good when few people have it. This is because money is a tool, nothing more. You can’t eat money or drink money or wear money. And wealth – an accumulation of money – is a lot of tools.
Tools can be used to do harm. You can hit somebody over the head with a shovel. But tools are still good. When a carpenter has a lot of tools we don’t say to him, “You have too many tools. You should give some of your saws and planes and nails and chisels to the man who’s cooking omelettes.” We don’t try to close the “tool gap.”
Wealth brings great benefits to the world. Rich people are heros. They don’t usually mean to be but that’s their moral problem not ours. Most of the world now admits that free enterprise works. Economic liberty makes people rich. But in our residual collectivism and our infatuation with equality we keep trying to get rid of rich people.
There’s a joke President Reagan told about the way collectivist politicians treat rich people: A traveling salesman stays overnight with a farm family. When the family gathers to eat there’s a pig seated at the table. And the pig has three medals hanging around his neck and a peg leg. The salesman says, “Um, I see you have a pig having dinner with you.”
“Yes,” says the farmer. “That’s because he’s a very special pig. You see those medals around his neck? Well, the first medal is from when our youngest son fell in the pond, and he was drowning, and that pig swam out and saved his life. The second medal, that’s from when the barn caught fire and our little daughter was trapped in there and the pig ran inside, carried her out and saved her life. And the third medal, that’s from when our oldest boy was cornered in the stock yard by a mean bull, and that pig ran under the fence and bit the bull on the tail and saved the boy’s life.”
“Yes,” says the salesman, “I can see why you let that pig sit right at the table and have dinner with you. And I can see why you awarded him the medals. But how did he get the peg leg?”
“Well,” says, the farmer, “a pig like that – you don’t eat him all at once.”