Myths and fallacies?
After reading (and thoroughly disagreeing with) Don Boudreaux's post comparing statism and creationism, I decided to check out some of his other posts under his "Myths and Fallacies" category. Ironically, it seems to me that some of these posts, intended to debunk other people's fallacies, contain a fair number of fallacies themselves.
Today, he writes that he finds it strange that our culture celebrates self-interest if its consequences only apply to yourself (exercise, eating healthily), but looks down on self-interest if its consequences apply to others (the profit motive, which helps business run smoothly and provide useful goods and services).
This seems to me to get it exactly backwards. Yes, the profit motive benefits others - sometimes. But sometimes it harms others. I'm not talking about the simplistic idea that the free market is a zero-sum game, so if you win, I must lose. Really, self-interest can actively harm others. For example, carelessness in maintenance (which saved on operation costs) led to Bhopal, the worst industrial disaster in the history of the world. In contrast, self-interest that concerns only yourself may not benefit anyone else, but it also won't harm anyone else. (I don't think it really counts as "harm" to say that by being slimmer and healthier, you'd harm others by out-competing them in the dating game.)
Boudreaux also ignores the role that intent plays in forming moral judgments. A self-interested company doesn't intend to help anyone by providing useful goods and services (after all, that's the beauty of self-organizing markets). This is therefore not morally good in the same way that an act of charity is morally good (an act of charity that actually does some good, that is). In contrast, the intent to be careless in factory maintenance is an aggravating factor in our moral condemnation of Union Carbide's selfishness in Bhopal. (Negligent homicide, anyone?)
Meanwhile, here Boudreaux ignores what is for me the most salient part of the letter he was responding to. The letter complains that the minimum wage has remained constant since 1997 while CEO compensation has skyrocketed. Boudreaux responds that the minimum wage is a government-imposed floor on wages and distorts the market mechanism for setting wages. But he misses the key similarity in the contrast between the minimum wage and CEO compensation: CEO compensation actually has no relation to job performance. CEO salaries have skyrocketed not because demand is so high for the tiny supply of qualified individuals, but because CEO salaries are set by the CEO's friends in an opaque, corrupt process that distorts the free market of salaries. So both minimum wages and corporate governance distort the free market. The injustice, then, is that one anti-market mechanism has been used to rase the salaries of the fantastically rich, while another anti-market mechanism has not been used for 7 years to raise the salaries of the desperately poor. A classic libertarian fallacy - overlooking the coercive power of private parties and only seeing the coercion of the state.
Finally, this. Boudreaux provides examples of poor people who became rich (mostly from the late 1800's) as evidence against the assertion that the rich get richer and the poor get poorer. For an economist, Boudreaux seems strangely willing to ignore any sort of statistical evidence and rely purely on anecdotes. To address his point directly: yes, it's true that under capitalism, poor people can get rich. This is good. But that doesn't refute the idea that overall, the wealth gap is growing. Moreover, it's extremely bizarre to cite historical examples of successful entrepeneurs to counter the claim that it's currently getting harder for poor people to become rich.
A friend of mine told me that due to the changing structure of the American economy, it really is getting harder to "climb up the income ladder." Once upon a time, blue-collar workers in factories could rise up the ladder by becoming the floor foreman, then moving into management, and so on. But those manufacturing jobs are disappearing from the economy, being replaced with service jobs. Service jobs, unlike manufacturing jobs, are relatively sharply divided into unskilled labor (retail, food service) and skilled labor (software engineer, scientist, professor). The education gap between the two means it's actually very hard to transition from unskilled to skilled. Thus poor people really are stuck being poor. Now I'm not an economist so I don't know if this is an accurate description of the American labor economy. But it seems that if Boudreaux wants to say that the wealth gap isn't growing, he should address claims like these rather than using anecdotal evidence.
By the way, Steve Jobs coming from a modest background is very different than Steve Jobs coming from a poor background. He had the education and skills to start a successful computer company. Would he have done if he were a sweatshop laborer?