Bill is a coal miner. His father was a coal miner, and his grandfather was too. He is him coming out of the mine one day, with his fellow workers in their hard hats, grinning, looking forward to lunch.
But last year, Bill turned 22, and began to think that the mines were not as safe as they should be for the men who worked in them. He thought that if they were designed differently, he might be able to reduce the number of cave ins, so he began to think like an engineer, and learned quickly that he didn’t know what he needed to know about mine design, so he decided to start an engineering degree at the local vo-tech college. He took out a few student loans, and finished his degree nights while working a few shifts to make ends meet.
Once finished, he worked in the engineering office as an apprentice for a couple of years, and eventually was able to craft some designs of his own that were indeed very helpful for the company, and as a result, he was hired as an engineer (which paid, by the way, a salary higher than the hourly he drew as a miner). As the company implemented his designs, there were fewer problems, and the company turned a greater profit. As a result, he was given a bonus from the owners, and even some stock in the company.
Later, with his own salary, he purchased more stock in the company, as he wanted to invest something back into the business that had given him a livelihood. (He could have invested in pork bellies, or aerospace, and might have made more money in the long run, but he didn’t know anything about them, and his heart was in mining). So after awhile, he found that he owned a good portion of the company that he was working for, and as a result, as the company prospered, so did Bill.
Here’s a picture of Bill at age 62, leaving from the board room after discussing with the board the best designs for some new mines. Mines they were able to purchase partly because Bill had made the company more efficient. The company’s profits were spent opening these new mines, hiring more miners, and raising the hourly rates of the best miners (they wanted to keep their best producers happy).
Let’s compare the two pictures. The first is of Bill, dirty but grinning, wearing a blue collar and helmet; a worker. And the second was of Bill, clean, wearing a white collar, and looking for all the world like “management.”
But it is the same person. He was only a member of a “class” of people when you see his life in still photographs. If you see his life as a movie, day to day, his life is quite different.
Why should we be told in our country that “The rich are getting richer” or that “the corporations are taking the profits” as though these things are bad things? The only way the rich get richer is if the business is profitable. The only way the business is profitable is if they have product and buyers. The only way they have product and buyers is if the company is producing, and the only way the company can produce is if jobs are assigned and each does his job well. The CEO all the way to the least experienced miner. And the only way that you can hire CEOs OR miners is if you pay them a salary commensurate with their abilities. That means that some will be paid more than others. If some are paid more than others, it means by necessity that there will be the well-paid (rich) and the lesser-paid (poor).
There is nothing insulting, sinful, degrading, or cruel about paying one more than the other. Bill was paid to dig coal by the hour when he started out, and was paid to design mines for coal workers to work in, and the two amounts were not the same. The difference in pay was simply a designation of the fact that the design work was considered more valuable by the hour than the digging (rather like a pound of diamonds are worth more than a pound of mulch). This was the result of the kind of gifts being exercised, and the rarity of those gifts. It really is the result of supply and demand: the supply of coal miners is larger than the supply of mine engineers, and the supply of those who have the ability to run the company are rarer still. The greater the supply, the lower the salary one can require. Likewise the demand: there is a demand for coal miners, otherwise none would be hired.
It is not the kindness or cruelty of the owner of the mines that many or few jobs are offered to miners — the demand for the coal dictates how much coal he needs to produce, and that dictates how many miners he needs to produce that amount. If the demand for coal suddenly went down, he would make less money with the company, and there would be no need for all the workers. On the other hand, if the demand goes up, the owner needs to hire more workers, and as the demand for workers goes up, so does the pay for a miner (meaning that the worker benefits when the company does well). If the owner were to keep all the profits for himself, he would not be putting the money into the pay for the miners, and they would not produce the amount of coal that he needs for the demand. This (like another still photograph of one moment in time) LOOKS possible, but it is only possible for a few moments before the company falls apart. The way the owner makes money is not by hoarding profits, it is selling the coal that he pays the miners to collect. If they don’t produce, he doesn’t have any profits to “keep.” If the demand for an excellent CEO or a trained mine engineer is high, there will be competition for their services at more than one company. The market-rate for hiring someone with that rare set of skills will go up, and the miner is a fool if he complains that those with greater or rarer skills are making more money than he is. It is part and parcel of the same system that pays him for the work he is doing. Destroy or interrupt the market’s influences on others and you will soon find that your own position is destroyed or interrupted as well. It is all the same piece of cloth.
In one picture, Bill looks like “the poor” in another he looks like “the rich” — but he is the same person. Conservatives are accused of protecting “the rich” while abusing “the poor” – as though they are protecting Bill the coal miner from Bill the stock-purchasing mine engineer. But they are the same person. What conservatives are actually trying to do is to remember that life is not a still photograph but a moving, living, breathing day-to-day life where people are in flux, and because of this, they think that the best way to proceed is to protect freedom for each and every person regardless of position when the picture is taken. This is the freedom that Bill benefitted from.
Attacking the rich to serve the poor only makes sense if you see the world in categories suggested in still photographs. The attack takes all those in one category and forces them to help those in the other. If you see life more as a movie, the result of this attack is only to discourage Bill from studying, improving his gifts and offerings, and contributing more to the need of the company and the community. The result is that Bill remains a miner all his life (which is not bad in and of itself) but because of that, he doesn’t improve the mines, which in turn leads to more injuries and deaths. It also leads to lower profits for the company in the long run which means that they are not able to buy more mines and employ more workers, and the miners that ARE working are paid less than they would have been. How is this better in any meaningful way?
This is the reason we have a stagnant economy right now.
Some would say that I am not an economist. They would be right. But what about my parable here is wrong? It may be an oversimplification of more complex issues, but I would rather have you think of it as principled. Where are the principles wrong? I will consider any argument on that level. Arguments that suggest simply that I have neglected the complications of economics because I am not an economist must first address how those added complications oppose or change the principles I am offering before they will carry any weight with an honest man.