Adam Smith on Prosperity requiring Poverty – the Archimedes Principle
Posted by Dave Bath on 2011-02-15
How often can we find the words of Adam Smith giving justification to a lefty wealth redistribution agenda, even if Smith never intended his words to be used this way?
Whenever there is great prosperity, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.- Adam Smith
"An Inquiry into the Nature and Causes of the Wealth of Nations"
I wonder if what would be the income determined by Adam Smith’s 500:1 rule based on the poverty line? Is the poverty line too low, our notion of "very rich" wrong?
The plutocrats and their tame mainstream politicians around the world understand this all too well, but will never proclaim this to voters.
You’ll find the Smith quote in "Poverty Enlightenment: Awareness of Poverty over Three Centuries" at Vox (2011) – a site mainly authored by Economics professors and researchers from both left and right, this particular paper from Martin Ravallion, Director of World Development Research at the World Bank, hardly an institution beloved of lefties!
Of course, this understanding does not imply care for the poor. Trickle-down economic theory and "rising tide raises all boats" platitudes are propounded by rich dissemblers, their lickspittles in politics, or their well-intentioned dupes.
If Adam Smith is correct, the 500 living in indigence might be in the same nation as the prosperous, or in another nation – there is certain to be misery somewhere.
I’m also pretty sure that the wealthy, looking at the figures, aim for their own self-interest even more, consider a mere 500 to be a failure of ambition and will, wanting the invisible hand to squash a greater proportion of people down even further – wanting to drive into misery not mere hundreds, but thousands or even millions into indigence.
More is better, greed is good.
How many of the rich, do you think, contemplate the equation with the object of decreasing their wealth to oppress fewer people?
If we think about rising tides for but a moment, Archimedes’ bath must come to mind." If he had held other people under the water, he’d have been able to shout "Eureka!" and run down the street much sooner, without first getting naked and even without getting his toes wet, especially if, like the modern wealthy, he’d had tame politicians to hold the unfortunates under.