If you’re a worker you’re an importer. Nothing could be more basic than the previous truth. Your “imports” could come from across the street, or from the other side of the world, but your work is an expression of a desire to get things, to import.
Much the same, if you’re a consumer you’re a worker first; that or you’ve been handed the consumptive fruits of work by some other worker. Work is just demand for goods and services in disguise. Without supplying a market good first, you can’t buy things.
The only way to understand “demand” in the marketplace is to understand the supply that precedes it. Supply is the expression of demand without which there’s no means to buy anything. In Cairo, IL workers aren’t supplying much, and as a result they have very few supplying them. In New York City, its hyperfocused workers supply in abundance, which explains why they’re showered with the world’s plenty. Where there’s lots of production there are lots of “imports” to meet the needs of the productive. Say’s Law is very basic.
Which brings us to recent commentary from Max Boot and Oren Cass. Until recently, Boot was a very prominent member of the right, only for him to “come out” as it were on the left. Cass is the policy theorist du jour on the right, but this is not your father’s right. While conservatives used to be for limited government, Cass has fans at the most established outlets of conservative commentary precisely because he’s promoting government compassion as the path to rising wages and happiness. He can also claim fandom at the New York Times editorial page. Wage subsidies for workers allegedly left behind by globalization are very popular on the right and left at the moment, plus Cass checks the boxes of a right wing that developed extraordinary paranoia about China seemingly overnight. Both Boot and Cass would profit from an introduction to Say’s Law, but for different reasons.
In Boot’s case, his rebranding as a lefty sadly includes all the baseless disdain for capitalism that we’ve long come to expect from the crowd he’s joining. In other words, Boot is communicating to his doubtless fawning Washington Post readers that he actually disliked capitalism all along. As he put it in a recent column about the apparently lamentable Industrial Revolution, it transformed “society beyond all recognition” since it “created immense fortunes for the Rockefellers, Carnegies, Goulds and other ‘robber barons’” in concert with “great misery for millions of ordinary people who had to leave the countryside to live in grimy cities and work in backbreaking factories.” Oh dear….
Implicit in what the historically wise Boot can’t possibly believe is that life was grand and Mayberry-like in the countryside before the so-called “robber barons” began mass producing life’s former luxuries. Which is exactly what they did. While John D. Rockefeller didn’t invent the kerosene lamp, he did mass produce kerosene at prices that kept falling such that he quite literally lit up the night for the common man. Just the same, Henry Ford didn’t invent the automobile the existence of which was once rarer than incredibly rare millionaires in the early 20th century; rather he mass-produced this former luxury. Notable there is that gasoline refined by Rockefeller powered many of the autos driven by the average American.
Boot contends that “millions of ordinary people had to leave the countryside” for “grimy cities” in order to work in “backbreaking factories,” but that’s not serious. In truth, they moved as Americans “restless amid abundance” (de Tocqueville) always have because opportunity in the cities was much greater. Market signals are pregnant with information, and none more pregnant than the flow of people. You see, enterprising Americans wanted the goods and services that were increasingly on offer thanks to the entrepreneurial genius of the capitalists whom Boot newly despises. Their move to the cities was an expression of demand, and as evidenced by how rich the “robber barons” became meeting the needs of the masses, it’s apparent that wages in the cities were much greater than the prevailing wages in a countryside that Boot laughably suggests was idyllic.
The main thing is that early 20th century fortunes were an effect of rising wages such that increasingly productive workers could be served by Rockefeller et al. Workers supplied with great gusto, and because they did, entrepreneurs became extraordinarily rich supplying them.
That’s what’s so funny and sad about Boot’s assertion that the modern “Information Revolution” is “creating vast fortunes for the Gateses, Bezoses, Jobses and Zuckerbergs while impoverishing millions of blue collar workers.” No, that’s incorrect. Missed by Boot is that the larger and more valuable the business is, the greater the odds that its sales and service model is focused on the masses. If readers doubt this, just look at any ranking of the most valuable companies in the world.
It’s not that one can’t get rich serving a small sliver of society (the rich), but the odds of amassing billionaire style wealth are much greater the more that capitalists meet the needs of everyone. What the previous truth tells us is that Boot’s zero-sum whine about the wealth of the billionaire class “impoverishing millions of blue collar workers” is a total falsehood. If the common man were impoverished by the billionaires, there would be no billionaires. Better yet, the shares of Microsoft, Amazon, Apple and Facebook would be in freefall to reflect the rising impoverishment of their customers and users. That those four companies have largely led a multi-year stock-market rally is the surest sign that the common man is not only not impoverished, but is actually doing very well.
In Cass’s case, he acknowledges that working-class Americans “can buy even more cheap stuff,” but remarkably dismisses the extraordinary import of the previous truth. This isn’t nothing. That the average American has a supercomputer in his pocket is certain sign that the rewards from work (supply) stretch further and further. Members of the right want to believe that the American worker is hurting, Cass fans their overdone worry, but his dismissal of the iPhones in our pockets is a certain sign that hurt is a relative term. To the extent that Americans are allegedly “forgotten,” they are amid immense abundance. Their frustration plainly isn’t born of starvation or lack of comforts that would have blown away the richest of the rich long ago, rather it’s born of how much plenty that’s on offer at the moment. Crucial about all this is the fact that there’s so much plenty within the grasp of seemingly every American. That so much is within their grasp, that a new billionaire is seemingly minted every day, is a certain sign that the outlook for the typical American worker is getting better and better with each passing day.
If readers doubt any of the above, they need only consider yet again why so many Americans have the word “billionaire” attached to their name. The latter is the surest sign that the economic chances of the typical American are growing by leaps and bounds. We supply in order to get things, but we’re also supplied to precisely because we’re already supplying a great deal to the marketplace. There are more and more billionaires in our midst precisely because there are more and more well-compensated average workers for the talented to serve.
Rather than celebrate the productivity of American workers such that they’re plainly courted by businesses and entrepreneurs offering them all manner of comforts, Cass and his many fans oddly search for enemies. Goaded on by noted policy theorists Donald Trump and Peter Navarro, conservatives have developed an overnight dislike of the Chinese. While the division of labor and open lanes to trade have driven immense specialization and wealth creation in the U.S. since its founding, Cass seems to say it’s different this time now that the Chinese want to live as we do. Apparently the American worker suffers competition from “key industries” subsidized by Chinese government officials. Funny there is that conservatives used to properly recoil at government subsidization of business for the strings that are always attached to the subsidies logically weakening the business. Furthermore, conservatives have long noted (properly) that governments can’t “pick winners” as is. Implicit in their overnight paranoia about the Chinese is that they’re different, that government support of their businesses somehow strengthens the Chinese despite harming those who aren’t. Also, the Chinese (presumably for being Chinese) are apparently a thieving people too. One wonders what they would steal when we remember how many of Jeff Bezos’s ideas fail, but Trump and Navarro say the Chinese are “ripping us off.” And conservatives remarkably nod along to something that coincidentally never crossed their minds before Trump and Navarro entered the picture. In fairness to Cass, he no doubt influenced Mitt Romney’s embarrassing “get tough on China” rhetoric in 2012. His paranoia is longstanding, thus calling his economic theories into question even more.
And theories Cass has. Eager to make it possible for the typical worker to “participate meaningfully in the labor market,” Cass wants worker subsidies. And members of the right are swooning. Not only does their excitement ignore the obvious correlation between surging billionaire wealth and rising wages, it ignores something conservatives used to understand very clearly: short of reaching into someone else’s pocket (what Cass seemingly prefers), wages cannot be decreed. They’re an effect of investment. Always. Investment is what’s left over after life’s necessities have been purchased, which is why the rich are particularly crucial when it comes to higher wages. To be blunt, you can’t have higher wages without reducing the burdens foisted on those most capable of saving: the rich. This all rates comment simply because Cass makes no mention of reducing the taxation burden on those with the most. Neither do his fellow conservatives as they continue to cheer on the passage of a blatantly Keynesian tax bill from 2017 that, by their own admission, was aimed at reducing the already low tax burden faced by the middle. Cass also doesn’t talk about a stable dollar that would further reduce the risks that come with putting money to work in the form of investment. In short, Cass’s expressed desire to improve the lot of the typical worker has no policy basis. Cass wants redistribution of wealth. Nothing more. Conservatives are cheering. The world is upside down.
Back to reality, the somewhat interchangeable Boot and Cass can’t have it both ways. They can’t lament great wealth and the living standards that come with it while moaning to their flocks about the downtrodden worker. Sorry, but great wealth is an effect of meeting the needs of the typical worker. That billionaires are increasingly common is a certain sign that the lot of the American worker has never been better. Boot and Cass will understand this truth once they acquaint themselves with Say’s Law, as will conservatives once they re-learn what used to so wisely animate their policy mix.