The Economy

Summary

Wealth must be created before it can be redistributed. Government attempts to give everyone a bigger piece of the pie can do more economic damage than good.

Apple pie! (Source: Wikipedia)

I begin with a metaphor, which, as all good metaphors do, relies on the first verse of the theme song from “The Jeffersons.”

Well, we’re movin’ on up
To the East Side
To a deluxe apartment in the sky
We’re movin’ on up
To the East Side
We finally got a piece of the pie

Wonderful! A piece of the pie! Who wouldn’t want a piece of the pie? (If it were a fruitcake, this metaphor wouldn’t work.)

The question that preoccupies Bernie Sanders supporters is how big everyone’s slice is. Bernie is constantly positioning the government in the role of pie slicer, making sure that nobody’s piece is any bigger than anyone else’s. But he can only have direct influence over the American Pie, whether or not he drives his Chevy to the levee. The rest of the world often looks at the World Pie and complains that America has too big a piece.

Not enough people are paying any attention to the size of the pie.

At one point early in the Obama administration, the president suggested ending the tax deduction for charitable giving for people making more than $250,00 per year. (I’m proud to say that this idea was derailed by legislation sponsored by my father in the Senate.) I took to Facebook to lament the fact that this would result in fewer dollars for charity, many of my friends made a number of comments that illustrate that, for them, they’re far more concerned with the size of the pieces, not the pie itself.

“Since wealthy people wouldn’t be able to create wealth without the commons and infrastructure,” wrote Scott, “it seems logical that they should contribute accordingly.”

Jen opined that “the economy’s soo better spread around that way really…yowzah!”

And Kim said, in response to my concern that those over $250,000 will no longer get a tax deduction for contributing to charity, “Wow, that would be great to be making more than $250,000.”

So Scott thinks the rich aren’t paying enough for their pie. Jen thinks the pie’s better when it’s spread around in even amounts. And Kim, like so many of us, longs for a piece bigger than the one she currently has.

The problem is that none of this matters if the pie itself is shrinking. The American Pie, the World Pie, all of it – when, in times of economic distress, there’s less pie to slice up, and the more we squabble over the size of the pieces we have left, the smaller the pie gets. In fact, a pie is a terrible metaphor for the world’s wealth. It implies that the size of the economy is a static thing, finished and unchangeable, and that, like a pie, its overall status is unaffected by how it’s sliced.

That’s nonsense.

Slicing the pie ought to be a secondary consideration. We need to spend more time making the pie as big as possible.