Wednesday, February 26, 2014

Inequality And Human Nature

Some people become very rich and others do not.  Scott Fitzgerald attended Princeton and he was familiar with the super rich.  The books that he wrote reflected his experiences with wealthy families.  He once told Ernest Hemingway that the rich are very different from the rest of us.  Hemingway is reported to have replied in very Hemingway fashion.  He said "Yes they have more money".  Fitzgerald was probably more astute that Hemingway in his understanding of the rich.  They may be different from the less well off in other ways.  This leads to an interesting question.  Did the rich become rich because they are different, or are they different because they are rich?  Adam Smith, who is often regarded as the original champion of free market economics, had something to say about this issue that may be surprising:

"The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were perhaps, very much alike"

That is, the experiences that people have, including their education, and occupations, account for the differences that we observe in the rich and the less well off.  They probably were less different from each other when they were young and nature accounted primarily for the differences.  Inequality may not be caused by the natural differences between people.  Instead the differences that we observe may be a consequence of the inequalities that result from different life experiences.  The distribution of income is not representative of the distribution of innate capabilities which are more equally distributed by nature.  A lot of natural talent may be wasted by the divisions of labor and opportunity that exist in society. 

No comments:

Post a Comment