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On Thursday of this week, Professor Boudreaux of George Mason University had an opinion piece on the Pittsburg Live website (associated with the Pittsburg Tribune). In the piece, he lays out an explanation of how wealthy the average American actually is by more objective standards than just in comparison with the Joneses down the street.
My students think me mad. "I'm not rich; I'm middle-class,"... Fortunately, though, to be middle-class in America today means to be superrich by historical standards.
He is not apologetic, and does not bemoan our wealth and try to make the reader (or his students) feel guilty for our wealth (like my economics prof did), and he explains the cause for this great wealth we enjoy. It is refreshing, frankly, to read a piece describing our luxury and comfort from a non-primitivist standpoint. But neither does Prof. Boudreaux's piece argue for more technological progress. The focus of this piece is the reason why we are so wealthy.
What caused this great wealth explosion? The most common answer is technology. This answer is wrong.
What Prof. Boudreaux does not sufficiently explain is that it is a misunderstanding of technology that causes people to give the wrong answer. Technology is not the cause of wealth; Technology is wealth.
An excellent example of how people misunderstand technology's place in the discussion of wealth can be seen in the comment section that follow the blog article Twelve Myths at Cafe Hayek (Yes, Prof. Boudreaux writes for Cafe Hayek... you thought you recognized that name, didn't you?) But the most important post in that comment section is the one made by Coyote:
Gotta add a big one, the one that is close to number one on my list (of economics myths):
Economics and wealth are zero-sum. If someone gets rich, someone of necesity must be getting poorer.
The zero-sum concept is an easy one, but a wrong one. It is easy because it is how the world seems to work when we first look at it on the surface. Momma has some cookies for the kids. Johnny takes too many and now the rest of us have fewer. Johnny is cookie-wealthy and the rest of us hate him. He tells us to shut up and be happy we have any cookies at all - starving kids in China don't.
Johnny is like Bill Gates, right?
The thing is, that's not how the world really works. Look at all of the material wealth in the world - the cars, the plumbing, the computers, the shoes, the medicine, the Robogrips (Christmas hint), etc. If Johnny's greater wealth means the rest of us are more poor, ask yourself this question: Who had all of this incredible wealth 2,000 years ago? The Egyptians? The Aztecs? The Chinese?
Nobody did. The wealth had to be created over the years, not distributed. The reason I have indoor plumbing and hopefully a Robogrip is not because we have redistributed the wealth of the Pharohs. It is because people want technological advances to make their work easier, and to make their lives safer, and to make their families healthier, and to make their leisure last longer. Technology begets technology, but it doesn't make anybody wealthy without the ability to use a free market to distribute it in fair trade (a point missed by those at Cafe Hayek's comments page who cite the printing press example).
Basic economics teaches that free and fair trade is mutually advantageous. But how can both parties be advanced in a zero-sum game? They cannot - throw out your Oreo way of thinking.
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