"Wealth - any income that is at least one hundred dollars more a year than the income of one's wife's sister's husband."
--H.L. Mencken
On Fridays, I like to touch on things related to investing, analysis and asset management. Often, there are lessons from other disciplines that are applicable to our own. Sometimes I point out an especially insightful work. But most of the time, I like to highlight misguided, faulty or just plain dumb analysis.
The latter is our subject today: a dishonest and disingenuous argument that is technically correct, but cynical and misleading. It only takes a bit of thinking to realize the absurdity of the claim.
Writing in the Washington Times during last month's holiday week was this column from Richard Rahn of Cato Institute with the headline, "Common folk live better now than royalty did in earlier times. "
The entire enterprise is a fatuous and politically inspired attempt to minimize the issue of income inequality, because after all, the poor today live better than kings did centuries ago! There, all problems solved, Here's Rahn:
“The average low-income American, who makes $25,000 per year, lives in a home that has air conditioning, a color TV and a dishwasher, owns an automobile, and eats more calories than he should from an immense variety of food . . . Louis XIV lived in constant fear of dying from smallpox and many other diseases that are now cured quickly by antibiotics. His palace at Versailles had 700 rooms but no bathrooms (hence he rarely bathed), and no central heating or air conditioning.”
Let’s set about fisking this intellectual detritus:
Progress Is Humanity's Default Setting: Ever since our ancestors climbed down from trees and began walking upright across the savannah, the human animal has constantly struggled. The lithe humans bested their more-robust cousins thanks to greater intelligence, social cooperation and adaptability to a changing environment.
The net result of this has been a million years or so of progress. Community, development of language, agriculture, technology, the rule of law, a market-based economy, and much more is the result of this never-ending cycle.