Economic Inequality: An Inescapable Phenomenon
The call for the redistribution of wealth through government action is the universal demand of the Left.
More than any other political slogan, the call for greater economic equality is the defining mark of the leftist and the revolutionary. This goes back to the Roman Republic. It was the demand of the brothers Gracci. Yet wherever leftist policies have been inaugurated by the government, economic inequality has either remained about the same or has increased.
The call for economic equality is the most utopian of all political slogans in the West. This is why it cannot be placated. This was the slogan of the French Revolution: liberty, equality, and fraternity. None of the three was attained by the French Revolution. They could not have been attained. Liberty and equality are incompatible. F. A. Hayek wrote this in The Constitution of Liberty (University of Chicago Press, 1960):
From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them unequally. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time. Equality before the law and material inequality are therefore not only different but are in conflict with each other; and we can achieve either the one or the other, but not both at the same time. The equality before the law which freedom requires leads to material inequality (p. 87).
Economic inequality is the inescapable outcome of the biblical doctrine of the rule of law. The rule of law is most clearly stated in Leviticus 19:15. "Ye shall do no unrighteousness in judgment: thou shalt not respect the person of the poor, nor honor the person of the mighty: but in righteousness shalt thou judge thy neighbour."
The leftist movements known as the social gospel and liberation theology have come before the public in the name of Christianity. Both movements are implacable in their opposition to the biblical defense of the rule of law and therefore economic inequality. In the name of Jesus, the promoters called for the abolition of the biblical doctrine of the rule of law. They are wolves in sheep's clothing.
THE NEW TESTAMENT
The commitment to inequality is affirmed in the New Testament. In the first chapter of the Gospel of Luke, we read the most famous poetic passage in the New Testament. This is known as Mary's Magnificat. She magnified the Lord.
Her words are comparable to one of the more eloquent psalms. There is nothing else like this in the New Testament.
Mary's Magnificat was a response to the declaration of her relative Elizabeth, who was six months' pregnant with the baby who became known as John the Baptist. Elizabeth's declaration has been recited by Roman Catholics for centuries: "Blessed art thou among women, and blessed is the fruit of thy womb." Mary responded:
And my spirit hath rejoiced in God my Saviour. For he hath regarded the low estate of his handmaiden: for, behold, from henceforth all generations shall call me blessed. For he that is mighty hath done to me great things; and holy is his name.And his mercy is on them that fear him from generation to generation. He hath shewed strength with his arm; he hath scattered the proud in the imagination of their hearts. He hath put down the mighty from their seats, and exalted them of low degree. He hath filled the hungry with good things; and the rich he hath sent empty away (vv. 47-53).
This announced God's system of distribution. In this case, it was the distribution of honor. This system of distribution is not based on any concept of equality. It rests on a concept of permanent inequality.
Mary knew that she was blessed more than any other woman in history. There had never been any woman like her; there would never again be any woman like her. She was uniquely blessed. This was a fundamental inequality.
She showed great theological perception. She fully understood that God's special blessing of her was representative of his blessing to his people throughout history. God is in charge. He has demonstrated this in history. How has he done this? He has scattered the proud in the imagination of their hearts. He has put down the mighty from their seats, and exalted those of low degree. In other words, he has replaced the unrighteous with the righteous in the seats of authority.
There is no trace of a doctrine of inequality here. There is no hint that the hierarchy of authority will ever be replaced. On the contrary, it will persist throughout history. What will change, she said, will be those who occupy the seats of authority. The manifestation of God's sovereignty in history, she asserted, will be manifested in a great reversal. Those who are on the bottom will be on the top. Those who are on the top will be on the bottom. There will still be a bottom, and there will still be a top.
This declaration had nothing to do with the redistribution of wealth through politics. It had everything to do with the long-term triumph of righteousness in history. What matters is ethics, not power.
PARETO'S LAW AND PRICE'S LAW
Inequality is basic to the social order. There can be no social order apart from inquality.
You should be aware of what is known as Pareto's law. Vilfredo Pareto was an economist in the late 19th century. In 1897, he published the results of his studies of the distribution of property ownership in European nations. He found in every nation that the distribution was this: approximately 20% of the landowners owned 80% of the land. This has become known as the 20/80 rule. it has been found to operate in many occupations and many institutions. It is known as a power law. It is like a pyramid. The same percentage applies all the way up the pyramid.
20% own 80%.
4% (20% of 20%) own 64% (80% of 80%).
0.8% (20% of 20% of 20%) own 51% (80% of 80% of 80%).
Price's law is also a power law: the same shape all the way up. It is even more comprehensive. It is named after its discoverer, Derek de Solla Price. He was a physicist. He died in 1983. There is a Wikipedia entry on him. Here, we learn:
Price's square root law or Price's law pertains to the relationship between the literature on a subject and the number of authors in the subject area, stating that half of the publications come from the square root of all contributors. Thus, if 100 papers are written by 25 authors, five authors will have contributed 50 papers.
Jordan Peterson discussed this in one of his lectures. Here is a six-minute extract.
What I found most interesting in this lecture was his reference to classical music. Five composers dominate the performances of orchestras. Of the five composers, 5% of their total compositions dominate. I would like to see a published study on this. What I would like to know is this: how many classical composers were there in this 300-year period? How were the percentages distributed? I have no doubt about the five composers in the numerator. I would like to know how many people are in the denominator. I would also like to know about the methodology that determined how many people are in the denominator. But these are quibbles. Jordan's basic point is correct: only a tiny fraction of performers in every field are significantly productive.
This fact sticks in the collective craws of the defenders of government-imposed wealth redistribution. I have discussed their motivation in my chapter on redistribution in Christian Economics: Scholar's Edition. You can read the chapter here.
THE GREAT BOOKS
What Peterson pointed out regarding the great composers of classical music also applies to the great ideas and the great books of Western civilization.
When I was in graduate school, there was still great respect for what was known at the time as the great books. This had been true in the United States for generations. The most famous president of Harvard University, who dominated in the late 19th century, was Charles Elliott. Early in the 20th century, he put his name on a collection of books that were supposedly the keys to understanding Western civilization. Elliott had said in a speech that a person could get a liberal education by reading three feet of books. He later revised this to five feet. They were marketed to the general public, and sales were high. It was a profitable venture. They were known as the Harvard Classics.
These days, such a claim is dismissed by vocal but undistinguished professors in the humanities. They say that such a claim is preposterous. There is no canon of Western civilization, they say. That is because the canon was written by white males. I do not take these people seriously. But they are correct about the dead white maleness of the people whose works made possible the development of Western civilization.
Western civilization used to be a required course in the better universities. I was a teaching assistant who taught Western civilization in my graduate school days. These days, the course is not even offered in most universities. This is why, in putting together the Ron Paul Curriculum, I hired Dr. Tom Woods to teach two years of Western civilization, and I taught a parallel pair of courses in Western literature. This is what all lower division college students should be required to take, but since they are not so required, I require it for high school students.
What is my point? This: in the long run, Price's law is understated. The longer that a civilization develops, the smaller the percentage of key thinkers whose ideas led to the establishment of this civilization.
Why is this? It is because of the limitation of time in the lives of everyone. The longer that time goes on, the less it is possible for even the brightest of scholars, philosophers, and opinion-makers to pretend to have read all of the classics. Time constraints are list constraints. The number of must-read but rarely read authors remains constant because people have only 24 hours a day and only about 80 years to pretend to have read them. New names are added to the list in the five feet of books, and therefore some people must be taken off the list.
In terms of the total number of people who have ever written a book, which increased exponentially after the development of movable type by Gutenberg, almost all of them have had no traceable influence. Today, with print-on-demand publishing and e-books, we are experiencing another exponential increase in the number of authors and books. But the five-foot shelf of books is not going to grow.
ECONOMIC INEQUALITY
We are told by the nonprofit Oxfam organization every January when the World Economic Forum meets in Davos, Switzerland, that about 2,000 multi-billionaires possess more wealth than 60% of the world's population. I have no doubt that this is true. Oxfam gets a lot of publicity for this annual public relations stunt, but only once a year. This publicity does not lead to any legislation that could possibly change this distribution.
Peterson was probably correct in his presentation. There is nothing that legislators can do to change this distribution. The legislation will change who occupies the highest seats of wealth, but it will not change the shape of the distribution. We really don't know this for certain. But if this distribution does change, it is likely to change more in the direction of inequality.
As population grows from today's 7.5 billion to 2050's expected 10 billion, most of this growth is going to come from sub-Saharan Africa. These people have been part of Western civilization for about 120 years. They have been making their own decisions politically since about 1960. Their decisions were shaped by the tribalism of their societies, and this tribalism was fused with Marxism and Keynesian welfare state economics. These societies have been run by shamans: tribal witch doctors and urban doctors in Keynesian economics from Cambridge and Oxford. Therefore, the four dozen countries in sub-Saharan Africa have not experienced sufficient economic growth to bring the masses of the population into the late 20th century, let alone the 21st century. But this is changing rapidly because of smart phones. The catch-up is going to be rapid.
There was an unprecedented increase in per capita wealth in South Korea, 1953-1990. We have seen something comparable but on a vast scale on mainland China since 1979. A massive movement of young people living in rural societies in China and India have led to a remarkable increase in per capita wealth, especially in cities.
Nevertheless, sub-Saharan Africa has a lot of catching up to do. The educational systems are poor. The ability of young people to get good educations is limited. There is not a single great university in sub-Saharan Africa, at least not outside of South Africa. But online education is going to level the playing field.
So, for a few more decades, the superrich in the West are probably going to increase their percentage of the world's total wealth. But when hundreds of millions of villagers in India, China, Latin America, and sub-Saharan Africa move to the cities, and when free market's institutional arrangements enable entrepreneurs to rise to the top by serving the masses, the hierarchy of international wealth is likely to become less pronounced. I doubt that it is ever going to get less pronounced than Pareto's 20/80 distribution.
THE LEFT'S POLITICAL HIERARCHY
Because political liberals dominate the mainstream media, the constant wailing that we hear about economic inequality is unlikely to cease. But, we can be confident that economic inequality, if it changes at all over the next generation, will change in the direction of even greater inequality. The outraged cries of the ever-shrinking number of liberal journalists will no doubt get even louder, because permanent frustration produces cries of despair. I call this the Greta Thunberg phenomenon. She gets ever-more shrill as she realizes that nothing that she has demanded in the name of world youth over the last year has changed anything in environmental legislation. Soon, she will disappear from the scene. She will be replaced. Critics come and go. The system of rewards remains fairly constant.
The critics of inequality come and go, but inequality remains in every area of life. This inequality is built into the social institutions of mankind. There have been critics of economic inequality for as long as we have records of social critics. Their criticisms have had no effect on the shape of the distribution of wealth and power. Their criticisms, when enacted by civil law, have changed only the legally enforceable rules of the competitive process in which a tiny minority of productive people move up the pyramid.
The great economic advantage of the free market social order is this: it enables the broad masses of humanity to participate in the process of wealth creation. Those who wish to get rich must serve the demands of consumers. The 2,000 multibillionaires at the top of the world's wealth pyramid must meet the demands of the billions of people who occupy the bottom 80% of this pyramid. They are not rich individually, but collectively they determine what is going to get produced and at what price.
Money is the most marketable commodity. Sellers of goods and services want money. Consumers are dominant in the production process because they own money. They determine the winners and the losers among competing producers. They determine who is going to become a multibillionaire and who is going to go out of business.
The Left resents this. The Left wants politicians and permanent government bureaucrats to determine which producers win and lose. They want producers to come, hat in hand, to politicians who have adopted a leftist worldview. They want producers to fear the state, not fear consumers. They want the hierarchy of economic authority based on political power, not on productivity that serves the demands of consumers. In the name of benefiting helpless consumers, the Left wants to make producers helpless in the face of political power. Then they will be able to tell producers what to produce and consumers what to consume. This was the basis of the economics of the Soviet Union until it finally collapsed in December 1991. This is the basis of economics in Venezuela, Cuba, and North Korea.
There is a reason why Mao was chubby and the Chinese weren't. He was on top politically. Meanwhile, the Chinese masses bordered on starvation. There is a reason why Kim is chubby, and the North Koreans aren't. The reason is the same. The Left's program of wealth redistribution always produces this kind of inequality. There is inequality, but there is no liberty. There is inequality, but there is no fraternity. And always there is inefficient agriculture.
CONCLUSION
Inequality is inescapable. The question is this: on what basis do successful people rise to the top? It is this question: what are the criteria of success? The supreme criterion has to do with service. Do men serve the state, or do they serve consumers? Who imposes the economic sanctions: politicians or consumers? In the free market economy, which is the inevitable outcome of the biblical rule of law, producers must serve consumers. Consumers have the money. They decide what they want to do with it.
This fact enrages the Left. It violates the concept of authority that places the state at the top of all pyramids. Theirs is the social theory of the Pharaoh of the exodus. If you have any doubt about this, volume I of my economic commentary on the book of Exodus covers it: Authority and Dominion.