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May 20, 2014
The Dismal Science
Let Them Eat Cake
by Adam Smith

Economics is the study of how scarce resources are allocated in an economy. Let’s take a stroll down economic history to see how those resources have been allocated in the past.

Ancient Egypt had the Pharaoh and other ruling families that lived lavish life styles. They were able to live that way because of the work done by the poor and slaves that were part of the Egypt economic system.

There were a very small fraction of rich, a small fraction of craftsmen and then all the rest. The chance that the poor or a slave could move up the economic ladder was almost zero.

What about Greece? The cradle of democracy (in Athens). In Greece, you had rich families who lived lavish life styles and had estates they owned. The poor and slaves worked the land so the rich did not have to work and were able to live the good life.

The Greeks would be absolutely perplexed by the work ethic that exists currently in the world. The chance that the poor or a slave could move up the economic ladder was almost zero.

Moving on to the Roman Empire. The Roman ruling families had more wealth than any other people had accumulated at any other time in history up to that point. They had living accommodations in Rome of course, but also had an estate out in the country. The land was worked by the poor and slaves (is there a pattern) so the rich were able to just enjoy life.

The chance that the poor or a slave could move up the economic ladder was actually better than in Egypt or Greece. Probably still less than one percent but closer to one percent instead of zero.

The middle ages were much the same. The aristocracy lived lavish life styles, a few craftsmen were marginally better off than the poor and slaves and the poor and slaves worked the land.

So what does this teach us?

First, there is always an elite or aristocracy that feel like it is there right to live in style and those beneath them have been created by God(s) to make their life good. The rich live off the work of others and the ability to move from poor to rich has been almost impossible.

Also, there has always been the 1% at the top. In the past, however, all the other 99% lived in poverty and endured physically and emotionally grinding lives.

Lastly, part of the make-up of the natural man is our desire to be superior to other people. This desire is most often is played out in the economic arena but we must not forget the Rameumptom.

This feeling of superiority leads people to become indifferent to the plight of the poor. Of all the educated people in antiquity, none came to the conclusion that slavery was bad. We are better than them and slavery is the correct station in life for them. Period.

As a country, have we moved past these historical norms?

We do have some families that like to think of themselves as aristocracy, but in reality there are many families that were rich that have become poor, and families that are poor become rich. People can move up and down the economic ladder for the first time in history.

We still have the 1% on the top, but the rest of us actually can live good, happy lives. Anyone that suggest the current 99% in any way equates to the 99% throughout all the rest of history is either ignorant of the facts or a deceiver. So I think that norm has been mostly corrected.

The last norm of people wanting to feel superior is interesting because it is part of who we are as humans, so overcoming this norm requires a personal commitment from individuals, and I think for this one norm in particular, we are not moving towards a good outcome but actually further away.

For most of U.S. history, this feeling of superiority was due to race. The white race is superior to blacks, browns, Asians (take your pick) so the oppressed should be happy with their station in life and most Americans did not care about the living conditions of the poor.

Finally, about 60 years ago, this started to change, and as a country we began to change our thinking so we judged people by their character and not by the color of their skin. This was progress.

But the progress would not last. This desire for superiority is very strong.

The current feeling of superiority is through causes. These can be political, environmental, or other causes. And just as it has been throughout history, those that feel superior put the deleterious effects of their causes on the backs of the poor. And just as in the past, there is no feeling for the poor.

The easiest example of this is the global warming or climate change cause. Those that espouse this cause are better and more “enlightened” than the stupid masses.

What do we know about climate change? The theory goes as follows — carbon dioxide is a greenhouse gas, and since humans are putting so much more carbon dioxide into the atmosphere through the burning of fossil fuels, then humans are going to cause the planet to burn up. So what are the facts?

  1. Carbon dioxide is a greenhouse gas. Everything else staying the same, it will make the planet hotter.

  2. It is also true that the effects of carbon dioxide (CO2) are at a decreasing rate. The next CO2 gas released into the atmosphere will have less impact than the previous CO2.

The fact of number 1 is why 97% of scientists agree that CO2 is a greenhouse gas. It is like getting scientist to agree that 2+2=4.

The fact of number 2 is why everyone is yelling at each other. Consider the following graph.

Line 1 is what would happen if fact 2 was at an increasing rate, not a decreasing rate. Line 2 is if fact 2 was linear. Lines 3 and 4 BOTH fit fact 2. Look at the difference in temperature over time from the two lines that fit fact 2. This difference is where the hostility comes from.

Those that espouse line 3 are the “informed” and “enlightened.” They are superior to others that do not see things their way even though there is not any evidence that their way is right. All of their recommendations to decrease the amount of CO2 increase the cost of energy.

For the rich, the increase cost is an annoyance. To the poor, it is and will be devastating. Again, this is an instance of someone wanting to feel superior on the backs of the poor.

The examples of this are everywhere.

So the last norm of the need to feel superior has not been corrected by our society. Only those at universities and in government now know what is best. Resting the cost of the superior class on the backs of the poor has a long and very undignified history.

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