07/17/2017

Wealth And Work

Russell Muirhead, City Journal

In the old economy, generating wealth required physical work, and lots of it—often backbreaking, dangerous, dirty, and exhausting work. Consider General Motors, a company that creates wealth the old-fashioned way: by making things. Last year, General Motors employed about 200,000 people. After making 10 million cars, it earned about $42,000 in income per employee.

Compare that with the Blackstone Group, a publicly traded asset-management firm that last year employed 2,200 people and made $490,000 per employee. With a hundredth of the workforce, Blackstone makes more than ten times more per worker than GM.

With the impact that automation and robotics will soon have on manufacturing and retail, one can imagine all firms radically improving their productivity through technology. As businesses become more like Blackstone and less like General Motors, the economy will generate more and more wealth—and, many worry, less work.

This transformation seems to challenge traditional understandings of economic justice. In the old economy, justice was about a give-and-take. Prosperity required everyone to contribute as one could, and the idea was that those who help create value should receive a fair share of that value. Exactly what counted as a fair share was a matter of argument, but the general premise that there should be some proportion between contribution and benefit was the foundation of traditional conceptions of economic justice.

What happens, though, if creating wealth no longer requires everyone to pitch in? Does the logic of reciprocity still hold when the economy needs only a few hands? Some would say that, regardless of whether everyone contributes, everyone should share in prosperity. One version of this idea is the universal basic income—where one is paid, in essence, for being alive. The idea here is not reciprocity, but compensation for the bad luck of not having the rarefied skills that the new economy needs.

This kind of thinking has a certain logic to it, but it is based on a profound mistake.

Read full article



You May Also Like:

For More go to the Home Page >>>

Search

SIGN OUR PETITION

FreeMarket Central

TELL CONGRESS: STOP THE POLITICS.

PASS A HEALTH CARE BILL THAT PUTS PATIENTS FIRST



Americans need a health care bill that serves needs of individuals—not those of Washington and big corporations.

 

Read more

Bookshelf

FreeMarket Central

Some titles recent, all recommended -

Special Video Feature

FreeMarket Central

Voices From The 2017 International Students For Liberty Conference

In Search Of History

When America Was Truly The Land Of Opportunity

For [early immigrants] America was truly the land of opportunity. For the first time in their lives, many were truly free to pursue their own objectives. That freedom released the human energies which created the United States. There were few government programs to turn to and nobody expected them. But also there were few rules and regulations. There were no licenses, no permits, no red tape to restrict them. They found, in fact, a free market, and most of them thrived on it. 

-- Milton Friedman,

Shadow Stats Snapshot


FreeMarket Central

ShadowStats alternate economic indicators are based on the methodology of noted economist John Williams, specialist in government economic reporting.

  • Unemployment:
    FreeMarket Central BLS: 4.44%
    FreeMarket Central Shadow Stats: 22.2%
  • Inflation:
    FreeMarket Central August Year-to-Year: 1.73% (CPI-U*)
    FreeMarket Central Shadow Stats: 9.4%

*[cpi-u is the Bureau of Labor Statistics inflation rate for all urban consumers]