I love it when I happen to come across a perfect illustration like the one above that so neatly sums up why anti-austerity campaigners like Owen Jones, Russell Brand and Charlotte Church have everything still to learn. What we're seeing from them is something very similar to conspiracy theory, where economic growth and the concomitant inequality are seen as a bogey from which the government needs to rescue us.
It's unsurprising people
are so cautious about economic growth - our evolution primes us to be cautious
by nature. Suppose you're a distant ancestor still making sense of the world -
you will gain by false positives, but you are liable to lose a lot if you get things
wrong. A rustling in the bushes may be the wind, but it may be a predator. It's
less costly to assume it's a predator and find out it's the wind than to assume
it's the wind and find out it's a predator. So over the years we have been
primed for false positives - to sense potential dangers and ascribe them to
something predatory, even when such things are not there. The anti-austerity
crew are like people seeing a tiger in every rustling bush - except in this
case they are seeing conspiracies against the poor in every instance of
economic growth.
The big fallacy that's
behind so much of the left's thinking is what's called the fixed pie fallacy -
the mistaken assumption that wealth is like a pie, where if I have a slice of
it, it leaves less for you. But as the pizza illustration shows, the economy
isn't fixed. If the economic pizza is larger, then the slice sizes increase for
everyone too, even the poorest people with the smallest pizza slices.
Anyone who actually cares
about the incomes of the poor would favour faster economic growth, not lament
the increase in inequality that is so often a product of increased economic
growth. With a growing economy everyone's absolute gains increases, even if the
gains at the top increase exponentially greater. To be averse to this means you
should not to be praised for being caring, you should be reproached for being
envious.
It’s ironic that the
richest in society bear the brunt of the left’s opprobrium, because what makes
the whole of the pizza grow is primarily the top entrepreneurs and investors
(usually the wealthiest) - they are the ones doing the most to make life better
for everyone else in absolute terms.
Instead of the faulty
fixed pie metaphor, economic growth is a bit like knowledge. Knowledge is not
pie-like, because it is not zero-sum. Jack can increase his knowledge without
decreasing Jill's. In fact, the more Jack increases his knowledge, the more
chance Jill has of increasing hers too. The same is true of wealth - it can
keep expanding - and as recent history indicates, it probably will continue to
do so.
