Richer than Rockefeller?
This is the longest time I’ve gone without posting, other than when I’m on vacation at my cottage in Canada in August. I was traveling and my computer was being repaired after I got back.
I gave a talk at UNC Wilmington on Monday night. The talk was titled “Seven Myths about Free Markets.” One of the myths is that with free markets, the rich get richer and the poor get poorer. I pointed out that it’s half right: the reality is that with free markets, the rich get richer and the poor get richer.
I then walked them through, Don Boudreaux and Brad DeLong style, the number of labor hours a worker would have to work to buy various things now vs. 1975 (Boudreaux and his Sears catalog) and vs. 1895 (Brad DeLong and his 1895 Montgomery Ward catalog.)
I then asked them who the richest man in America was a century ago. One person yelled out “Andrew Carnegie.” “Too long ago,” I said. A few other people yelled out “Rockefeller.” “Right,” I said.
Then I said:
Think about what you have that Rockefeller didn’t. He couldn’t watch TV, play video games, surf the Internet, or send e-mail. During the summer, he didn’t have air conditioning. For most of his life, he couldn’t travel by airplane. He didn’t even have a 1G cell phone. [Here I held up my cell phone.] And here’s the big one. If he got sick, he couldn’t use many medicines, including penicillin. [This is adapted from Greg Mankiw’s economics textbook.]
To drive that last point home, I noted that while Calvin Coolidge was president, his son, after developing a blister while playing tennis, died, and that would be extremely unlikely to happen today because now virtually every American has access to antibiotics.
Then I said:
So imagine that you could choose to be you today or John D. Rockefeller a century ago. Raise your hand if you would prefer to be Rockefeller.
In an audience of about 350 people, about 35 raised their hands. Then I said:
Raise your hand if you would prefer to be you today.
Over 200 people raised their hands. There were probably about 60 or 70 non-voters. I told them that when we got to Q&A, I might ask people who voted to be Rockefeller what their reasoning was.
We got to Q&A and I remembered to ask. I first asked a young black man at the front of the room why he had voted to “be Rockefeller.” He said that if he were, he would get the respect of his family and of people around him.
I then asked a young white man further back and he said that he would have the best of everything. Just to clarify, I said, “You mean that you would have the best of everything then even though most of it is lousy compared to today, right?” “Yes,” he said, laughing.
I found these responses interesting, which is why I’m sharing them. In the comments I get on Econlog when I write about inequality, there are always a few people who emphasize that relative situation is more important than absolute situation, and here were two people who agreed.