Brad DeLong's Distorted View of Wealth
By David Henderson
He [Thomas Piketty] saw five striking facts: First, ownership of private wealth–with its power to command resources, dictate where and how people would work, and shape politics–was always highly concentrated.
This is the second sentence of Brad DeLong’s “The Melting Away of North Atlantic Social Democracy.”
You might argue that Brad is simply reporting Piketty’s thoughts, and he is. But it seems from context that the idea that ownership of private wealth dictates “where and how people would work” is one that Brad shares. If so, then the title of this post is appropriate; if not, not.
In any case, I want to address whether the claim about wealth dictating “where and how people work” is correct.
Take the richest man of his time, John D. Rockefeller, whose wealth in today’s dollars would exceed the sum of the wealths of both Bill Gates and Warren Buffett. (For why this is a kind of ludicrous comparison–in any reasonable sense, John D. Rockefeller was poorer not only than Gates or Buffett separately, but also than me–see Donald Boudreaux’s excellent post on Rockefeller.)
Could Rockefeller, whose wealth was a larger percent of U.S. wealth than Gates and Buffett’s wealths combined, “dictate where and how people would work.” No. He could certainly affect where and how a small percent of the U.S. population would work. And he certainly, by bringing down the price of petroleum by 61%, made work easier for many people. But that’s hardly dictation.
Was there anyone back in, say, 1917 or 1918, when Rockefeller was still alive, who dictated where and how people would work? Well, yes there was. And his name was Woodrow Wilson. By implementing military conscription, he dictated where a few million American men worked and how they worked. He even, indirectly, caused over one hundred thousand of them to die while working.
But it’s hard to find an example of a private wealth owner who had the power that Brad DeLong claims.