Are the rich necessary?

The rich are basically parasites

A parasite is something that lives off another living thing without giving anything back. A tick on a dog. That is a harsh word, and this side means it.

Go back to the trench. The student did the digging. The owner made the money. If the owner had stayed home that day, the trench would still have been dug. If the student had stayed home, it would not have been. So who was actually needed?

It is not only a trench. Here is somebody who spent a summer working on a farm, watching the owner drive round the field while he did the work:

“He wasn’t working, but he was making the profits. It . . . didn’t . . . look fair . . . to me.”

A student who spent a summer working on a farm¹

Rich people are the reason poor people are poor

This one sounds like it must be wrong, and plenty of people say so. One writer answered it with a single line: people are not hungry in Mumbai because people are well fed in Boston.² The two cities have nothing to do with each other.

Fair enough. But do not throw this argument out yet, because there is a number behind it.

Half If the richest one per cent of Americans gave away half of what they earn after tax, and it went straight to poor Americans, poverty in America would end. Not shrink. End, by the government’s own definition of it.

Two honest things about that. Spread across the whole world instead, the same money would barely make a dent, because there are so many more poor people out there and they have so much less. But the basic fact stands: some people badly need money, and other people have more than they can spend.

It is not just that they do not share. It is that the money was taken

This is the strongest version of the case, and it is a different claim from the first two. It says the wealth did not appear out of nowhere and simply fail to get shared. It says it was pulled out of other people.

A French writer put it in three words: property is theft.³ The Book of Isaiah in the Bible says something similar, and much older: what is stolen from the poor is in your houses.⁴

Somebody ends up with a great deal of money

They made somethingNew value that did not exist before. Nobody else is worse off. This is the story the other door tells.

They took somethingValue that already existed, moved from other people to them. Somebody is worse off by exactly that much.

Everything on this page depends on which column is more common in real life. Nobody has proved it either way, which is why the argument is still going.

People keep discovering this idea for themselves. Abby Rockefeller was born into one of the richest families in America. Here is what happened when it occurred to her:

“That riches and poverty were interwoven, that one fed on the other, that the many suffered because of the few . . . this was new for me. It was compelling.”

Abby Rockefeller⁵

Whole countries make the same argument about other countries. A leader of Catholic bishops in Latin America wrote that the United States and Canada are rich because Latin America is poor, and built their wealth on top of it.⁶ Julius Nyerere, who led Tanzania for many years, said that when I am rich because you are poor, giving some of it back is not charity. It is something you owe.⁷

The economy needs rich people because they are rich

Go back to the trench at the top of this page. You could dig it with your bare hands. You could dig much more of it with a shovel. You could dig an enormous amount of it with a digger. Shovels and diggers are called capital, which just means tools that help you make things.

Now the awkward part. Somebody had to build that digger. While they were building it, they were not growing food or making shoes. So somebody else had to set aside enough food and shoes to keep them going while they worked. That setting aside is called saving. No saving, no digger.

1Somebody saves instead of spending

2The savings pay for the digger

3One person digs what fifty could not

4There is more to go round, for everyone

Break the chain at step one and none of the rest happens. So the question becomes: who does the saving?

Not poor people. They need every dollar for food and rent. Not really middle class people either. They save a bit for emergencies or for getting old, but they have a lot they need to buy, and the savings eventually get spent.

That leaves the rich, and here is the odd bit. They are not saving because they are especially good people. They are saving because they physically cannot spend it all. One economist made the point about dinner: a rich person has the same size stomach as everybody else.⁹ You can buy fancier food. You cannot eat forty dinners. So past a certain point the money just piles up, whether you meant it to or not.

A rich personRuns out of things they want. The rest gets saved almost by accident.

A governmentNever runs out of things to spend money on. And nobody can force it to save, because it is the one doing the forcing.

This is the answer this side gives to the obvious follow-up question. The Soviet Union taxed away private wealth and then spent enormous sums on weapons. That money could not also be building anything.

You cannot save too much, as long as it is invested well

Here is the natural comeback. If rich people are sitting on piles of money, that money is doing nothing. Would we not all be better off if they spent it?

That would be true if they kept it under a mattress. Almost nobody does, because money in a bank or a business earns more money. So it does not sit still.

Buy a yachtPeople get paid to build the yacht. Real jobs, right now. Then the yacht is finished.

Buy shares in a companyThe company builds a factory. People get paid to build it. Then people get paid to work in it, and it keeps making things.

In terms of jobs today, the two columns are about the same. The difference shows up later. One of them stops. The other one is still making things and paying people in ten years.

The same economist put the whole argument in one sentence: the wealth of the rich is not the cause of the poverty of the poor, but helps to reduce it.¹² He added something people on his own side do not always like. The best thing a rich person can do, he said, is live simply, skip the showing off, and put the money to work.¹⁴

The rich have a job to do, and if they do it badly they stop being rich

You might read reason two and think the rich just have to exist, like a decoration. Sit there, own the digger, let the money pile up. That is not what this side is saying.

Their job is deciding where the savings go. That sounds easy. It is not. Most new businesses fail. Somebody has to guess which of a thousand ideas is worth backing, and most of the guesses will be wrong.

Good guessesThe businesses work, more gets made, and they stay rich or get richer.

Bad guessesThe money is gone. Somebody else gets to do the guessing next time.

This is the part people miss. On this side of the argument, being rich is not permanent and is not supposed to be. Guess wrong enough and the system takes the money away, which is exactly what it should do.

This is not the same as saying money trickles down

You may have heard the phrase trickle-down. It means: make rich people richer first, and eventually a bit of it dribbles down to everyone else. It is usually said as an insult. One senator called the whole idea hogwash.¹⁵

People on this side split over it. One writer said trickle-down is a nasty name for a genuinely good process, and admitted that yes, the businessman does get an unfairly large share first.¹⁶ Another disagreed completely and said the whole picture is wrong, because the money goes to workers and suppliers on the way, before any owner sees a profit at all.¹⁷

Worth noticing that this side does not agree with itself here. That happens.