Saturday, 12 September 2015

RICH PLOTTING AGAINST POOR

The truth about one of history’s most enduring catchphrases

We have all heard it said many times that the rich are getting richer and the poor are getting poorer. But when did we first hear that? How quickly is it happening? Is it a plot by big business and/or government to make 99% of the population poor so the other 1% can be better off?
Luddites smashing machines during
the Industrial Revolution

Let’s look at the origins of this often repeated catchphrase, the rich are getting richer and the poor are getting poorer. It’s difficult to pinpoint an exact place in history where it began because many similar utterances have been recorded, and some meaning one thing may have been altered to mean something else. For example, in 1625 Francis Bacon is said to have said, ‘Money is like muck, not good unless it be spread,’ which is really the opposite of, ‘The rich are getting richer and the poor are getting poorer,’ because the latter implies that the muck is not being spread.

Percy Bysshe Shelley in 1821 put it thus, ‘To him that hath, more shall be given; and from him that hath not, the little that he hath shall be taken away.’ In 1832, US President Andrew Jackson, may have been the first to coin the great inequality adage in words close to today’s form. He said, ‘When the laws undertake to make the rich richer and the potent more powerful, the humble members of society have a right to complain of the injustice.’ Then William Harrison spoke of, ‘All the measures of government are directed to the purpose of making the rich richer and the poor poorer.’ That was on 1 October, 1840, in a campaign speech that helped launch his successful bid for the US presidency in 1841, and the catchphrase has been an election winner ever since.
American unemployed during the Great Depression

So there you have it. The rich have been getting richer and the poor have been getting poorer since 1840, and possibly a long time before that too, if you believe the line. But many of the people making these rich/poor claims today will tell you that it is new and no generation has been worse off than the people struggling to survive now. But some people are so economically pessimistic when they look for light at the end of the tunnel they only see an oncoming train. Others are like a blind person in a dark room looking for a black hat which was never there.

The fact is that the Industrial Revolution (1760-1840) triggered an era of prosperity, economic expansion and a higher standard of living for more people than ever before in history. It was the most important step forward for mankind since the domestication of animals and the invention of the wheel. For the first time in history ordinary people were able to enjoy luxuries previously only available for the rich. How did that happen? Mechanization made products cheaper to make, competition kept prices down, and capital and labor became available for new products and new industries, thereby creating new employment for those displaced from older industries.

Before the Industrial Revolution most people lived in poverty and squalor. The most common causes of death were violence and starvation. Life was hard and short, and often the choice was between starvation and crime. 
Nathaniel's Bloodline

At first the benefits of the revolution were slow to become evident to many people, and a few people even now think that it was a retrograde step for living standards. A second industrial revolution starting about 1870 took production, GDP and living standards to a new all-time high. Steam power, machine tools, electricity, mass production and increasing international trade confirmed that more people were able to lift themselves out of poverty and have some discretionary spending power.

The Industrial Revolution started in England and spread quickly to Europe and North America, and for the first time in those countries population and life expectancy started to increase more rapidly. For the first time, more people were able to afford medicines, better housing, and better clothing. However, personal transportation was still only affordable for the rich. Bicycles were available from about 1840 but were generally too expensive for working class people. Only the rich owned horses.

While this was happening, Karl Marx (1818-1883) described the situation between workers and those in power as the Law of Increasing Poverty. Marx was certainly right about poverty and the power of the ruling classes at that time, but completely wrong about poverty increasing. Poverty, in general terms, had been decreasing since the beginning of the Industrial Revolution, and continues to do so. Marx believed that communism alone could end class struggle, and that capitalism was doomed to eventual failure. In the post-Marx period numerous countries opted for his remedy, and all failed to end class struggle or make workers better off.
Karl Marx

As voting power was extended to include all workers and women, governments became more a mixture of capitalism blended with social policy; pensions, unemployment insurance, public housing, free or subsidized health care, and free education. Pure capitalism and communism became irrelevant as political parties found greater support for middle-of-the-road policies.

The twentieth century was really another industrial revolution that has continued into the twenty-first century. New products first off the production lines in the twentieth century were cars and phonographs followed by radios, refrigerators, vacuum cleaners, washing machines, televisions, and microwave ovens to mention just a few products that would have been unaffordable for almost everyone, if they had been launched any earlier. The telephone dates from the 1880’s, but even in the first half of the century few people had one because of cost.

Time pieces have been around in various forms for thousands of years, but the first personal wrist watch is believed to have been worn by Elizabeth I in 1571. Robert Hooke invented the pocket watch in 1675, but until the twentieth century most people had to walk to the town hall to check on the time. A personal watch, wrist or pocket, was a status symbol and beyond the reach of all except the very rich. Household pendulum clocks were also available from this time, but they too were beyond the reach of most ordinary people.

The twentieth century started as the age of the Wright Brothers and their Wright Flyer, trans-continental and trans-oceanic flight, the jet age, space age, and the age of travel for more and more people followed quickly. In the developed world, for the first time, only a minority of people lived out their entire lives without visiting at least one other country. During this century, again for the first time, travel had become so cheap and fast that a few people got to visit every country on the planet.

But even in the twentieth century most people believed that they were worse off than earlier generations. In 1921, when the economy was ticking over quite nicely for the time, Gus Kahn and Raymond Egan wrote the lyrics to Ain’t We Got Fun and before long everyone with a phonograph was playing it:  

They won’t smash up our Pierce Arrow (a luxury car), 
We ain’t got none, 

They’ve cut my wages, 

But my income tax will be so much smaller, 
When I’m paid off,
I’ll be laid off,
Ain’t we got fun.


Franklin Delano Roosevelt (the only US president to be elected for four terms) knew how to put a spin on political rhetoric. In 1933 at the height of the Great Depression (the most severe of the 20th century) he said, ‘We have always known that heedless self-interest was bad morals, and now we know that it is bad economics.’ Government had known that for a long time, but the time had arrived when government could do something about it without getting thrown out of office.

Business leaders became aware that the market for their goods and services had been limited by low wages for the masses, and there wasn’t much point in investing in products that most people could not afford to buy. The problem that business faced was how to get out of the quandary without being ruined by competitors. The formation of trade unions, although bitterly opposed by employers, provided the answers that business needed. Everyone had to benefit from improvements in production. The unions fought for and won better wages and conditions, and bit by bit the wealth started to trickle down, and the wealthy got wealthier too. Now, when the rent and food bills are met, more and more people are finding that they have a little left over for luxuries and leisure. And when they spend that little extra they give it right back to the industrialists and government coffers, and create employment for yet more people.

Another popular catchphrase is that soon 99% of the world’s wealth will be owned by 1% of the population and that that is the way those in power want it. That proposition will never stand up to scrutiny. For that to happen society would have to revert to the conditions that existed long before the Industrial Revolution. Even then, if 1% controlled 99% of everything, everything would be worthless and the world would be in a permanent and absolute economic depression. We would all be hunter-gatherers again, including the 1%.

‘The rich are getting richer and the poor are getting poorer,’ will always be a popular, election-winning catchphrase, and while it may have had some relevance in times past, it is today largely an anachronism. Having said that, the gap between rich and poor may not be closing when Wall Street is compared with camel route in the Sahara Desert. The same may also hold true when one decade is compared with another, but when century is compared with century, there can be no doubt that life just gets better all the time for more and more people.

I certainly wouldn’t want to change my lifestyle for that of a hunter-gatherer.