Metaphors, to use an overused metaphor, are a double-edged sword: sometimes they clarify, sometimes they confuse. One metaphor responsible for a great deal of confusion is that of wealth as a pie — a metaphor that shows up again and again in debates over income inequality.
“No matter how you slice it, when it comes to income and wealth in America the rich get most of the pie and the rest get the leftovers,” writes a critic of income inequality. “[T]he people who are in the top 1 percent today earn a larger share of the income pie than the people who were in the top 1 percent 25 years ago,” notes economist Russ Roberts, a non-critic.
One implication of the pie metaphor is that wealth is a zero-sum game: there is a fixed amount of houses, cars, medicines, etc., to go around, and the more Steve Jobs gets the less is left for the rest of us. That may have had some plausibility 250 years ago when most wealth was in the form of land. But today, when an iPhone 3G verges on outdated technology, it’s impossible to miss the fact that wealth grows. Roberts puts the point this way: “[T]he pie is not constant. So your well-being can grow even when your share of the pie falls if the pie is getting sufficiently larger.”
Wealth grows. True. But the pie metaphor carries with it another implication, which Roberts doesn’t challenge. It treats wealth as owned by society. We happen to find ourselves in possession of a pie. How did it get here? That’s never made too clear, but it’s here, and now we have to decide how to divide it up fairly.
In accepting the pie metaphor, we concede a moral point that should not be conceded. Wealth does not arise from an amorphous social process; “society” owns no pie.
Wealth is created by and morally belongs to the individual creator. As Rand observes, since “man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave.”
Let’s break that down a little. Suppose Robinson Crusoe is tired of trying to scoop up fish with his hands and figures out how to turn a tree branch into a spear, increasing his daily catch tenfold. Can Friday, who never thought to make a spear, properly complain that Crusoe has received an “unfair distribution” of fish?
Whatever the complications and intricacies involved, the basic issue is the same whether we’re talking about a remote island or a complex division of labor economy like America’s: a man uses his mind and his existing property (i.e., previously created wealth) to bring new wealth into existence. He doesn’t gobble down an already-baked pie — he produces.
Richard Branson, for instance, got his start selling record albums out of the back of his car. The albums? They were his property. The money he made by selling them? His property. Branson used that money to implement his ideas for making records cheaper, phones more user-friendly, air travel less annoying. He didn’t grab a bigger piece of some socially produced pie any more than Crusoe did: he brought new wealth into existence. (The fact that he worked with other people to create his products doesn’t change the essential issue: each Virgin employee brought wealth into existence as an individual — and was paid accordingly.)
That’s a rather inconvenient truth for critics of income inequality. If, as New York Times columnist Bob Herbert puts it, the “already very wealthy” mysteriously and nefariously “amass an ever increasing share of the nation’s economic benefits,” then spreading the wealth around might seem fair. But what if there is no pie? What if the “economic benefits” Herbert intends to spread around were created, not by “the nation,” but by the “already very wealthy” themselves? Is it any fairer to make them surrender their wealth to us than to make Crusoe surrender his wealth to Friday?
The Bob Herberts of the world, no doubt, would still maintain “yes.” And, to be sure, there is much more to be said about income inequality. But that debate will get nowhere so long as our thinking is obscured by pastry metaphors.