Coming from one who is on record advocating “spreading the wealth around,” this paean to egalitarianism is not particularly surprising. But unfortunately that sentiment is common even among alleged defenders of the free market. They’re uncomfortable with the idea that some people are earning tens of millions (or hundreds of millions) of dollars a year. Even if they can point out the economic reasons why great producers earn so much, they can think of no admirable motivation that would lead someone who made twenty-million last year to want to earn thirty-million next year.Obama's quote is important because it starkly reveals the underlying philosophy of the left. In fact, this philosophy underlies most of modern economics as it involves the inversion of the role of production and consumption in human life. At root, it is the philosophy that is destroying the world.
According to Obama and/or Keynesian economists, wealth just exists. Some have it and some don't. This appears to be an injustice. After all, why should some simply have it and others don't? Oh sure, some people work a little harder than others, but what about the fact that some have an advantage over others in terms of genetic factors or their upbringing, aka, their "environment"? No one truly deserves what they have, they claim. It is mostly an accident of nature, and the state's role is to rectify this unjust distribution of wealth. To the left's academic adjuncts, the Keynesian economists, economics is merely the scientific study of this so-called "allocation of resources."
Since this "allocation of resources" appears arbitrary, it is easy to see why Obama would state that at some point one has enough money. An extremely wealthy individual possesses more than his fair share of the resources out there, he would say. Furthermore, since he believes the physical resources which represent wealth simply exist and are finite, one person's gain must be another person's loss. Consequently, the very act of acquiring wealth is a form of exploitation. Given this view, the acquisition of wealth is not a virtue but only something to be tolerated, until that is, one has made "enough."
Such a view represents a total inversion of reality.
First, wealth does not simply exist. It must be produced. Man's life requires production which requires rationality. In other words, one can not consume before one produces, an economic principle known as Say's Law (which I discussed in my post Cargo Cult Economics). In my post, Production and The Primacy of Existence, I wrote:
The idea that the purpose of economics is to study the problem of production or "productionism" rests on the observation that man must produce in order to survive. It recognizes that man's desire for wealth is unlimited but that he must produce that wealth. Fundamentally, this represents a recognition of reality. The idea of consumptionism is a total reversal. It starts with the idea that the "goods are here" and we must figure out how to "allocate" or "consume" them.When one properly understands the role of production in this hierarchy, it becomes apparent that the question of whether one can make enough money is the same question as asking whether one can produce enough of anything or whether one can be too happy. Would Obama say that a musician should stop when he has written "enough" good songs or a painter should stop when he has painted "enough" masterpieces, or an athlete should stop when he has won "enough" championships? Why doesn't he apply this logic to the businessman whose rewards, by definition, are measured in terms of money but whose achievement is also a form of creativity and production?
Watkins partially quotes Ayn Rand's answer to the question of why someone who is successful continues producing:
When I say man survives by means of his mind, I mean that man’s first moral virtue is to think and to be productive. That is not the same as saying: “Get your pile of money by hook or by crook, and then sit at home and enjoy it.” You assume rational self-interest is simply ensuring one’s physical luxury. But what would a man do with himself once he has those millions. He would stagnate. No man who has used his mind enough to achieve a fortune is going to be happy doing nothing. His self-interest does not lie in consumption but in production–in the creative expansion of his mind.The metaphysical idea that wealth just exists and the related issue of productionism vs. consumptionism in economics is an instance of a broader philosophical issue that Ayn Rand referred to as The Primacy of Existence vs. The Primacy of Consciousness.
To go deeper, observe that in order to exist, every part of an organism must function; if it doesn’t, it atrophies. This applies to a man’s mind more than to any other faculty. In order actually to be alive properly, a man must use his mind constantly and productively. That’s why rationality is the basic virtue according to my morality. Every achievement is an incentive for the next achievement. What for? The creative happiness of achieving greater and more ambitious values in whatever field a man is using his mind. For a man to conclude, “I have enough, so I don’t have to think,” would be the same as deciding, “I am rich now and can get around in a wheelchair, so why use my legs?”
The primacy of existence (of reality) is the axiom that existence exists, i.e., that the universe exists independent of consciousness (of any consciousness), that things are what they are, that they possess a specific nature, an identity. The epistemological corollary is the axiom that consciousness is the faculty of perceiving that which exists—and that man gains knowledge of reality by looking outward. The rejection of these axioms represents a reversal: the primacy of consciousness—the notion that the universe has no independent existence, that it is the product of a consciousness (either human or divine or both). The epistemological corollary is the notion that man gains knowledge of reality by looking inward (either at his own consciousness or at the revelations it receives from another, superior consciousness).If one starts with reality, it is obvious that production is necessary to sustain human life. It is obvious that a person's production, rather than representing a threat to be monitored and throttled, should be regarded as a profound benefit to all of mankind. It can also be seen that the production of wealth is not a zero sum game. A new innovation results in the production of more wealth than existed before. That literally means that less production is required to make the same amount as before. In this way, everyone can get rich in absolute terms even if a just gap exists between the most and least productive.
Based on the primacy of consciousness, Obama and the Keynesian's start with wealth as a given. The Keynesian economist focuses on spending and consumption urging the creation of paper money in a literal attempt to reverse cause and effect, or existence and consciousness. In my post, Cargo Cult Economics, relating South Sea Islanders attempts to replicate a control tower with Keynesian economics, I wrote:
Notice that the cargo cult economists try and imitate the form of a valid economic transaction by advocating the creation and expansion of paper money. When the government prints paper money and offers the paper dollars for goods and services, it appears that someone has produced wealth and is exchanging it for an equal value. After all, in the past, when the paper was backed by real wealth (gold), it was observed that there was a lot of paper money around. So, just as the cargo cults fabricated control towers and runways in the hope that it would bring real goods, the cargo cult economists believe that by creating paper money with fancy ink and stamping a large number on it, wealth will result. But just as the "planes don't land" for the islanders, creating paper money does not create goods.Politically, this inversion is devastating, as Obama attempts to seize the life sustaining capital of the productive directly through taxation or indirectly through inflation of the money supply. It can be seen in the Obama administration's hostile orientation towards businessmen which reflects his view that businessmen are guilty by definition since he believes they seek to exploit the masses by allegedly taking more than their fair share of the pie.
Culturally, such a view is equally devastating. Rather than encouraging the rational idea that if anyone works to produce, they will succeed, it fuels cynicism and hopelessness as it is implies that one can only acquire wealth by luck, criminal theft, or government theft - a concept Obama passes off as a just "redistribution of wealth" provided by his benevolent regime. Like the Cargo Cult reversal, notice that the gangster character in popular culture exhibits the trappings of wealth: fancy cars, expensive jewelry, etc., as if it is these materials that induce the virtues required to be productive rather than the other way around. Notice the knee jerk reaction to the Goldman Sach's fraud case in which most assume something nefarious occurred since money was made or the popular caricature of the megalomaniacal Robber Barron industrialist.
In an era in which more production is desperately needed, is it any surprise that a philosophy which attempts to flout the nature of reality would result in policies that overtly call for the limiting of production and wealth creation? I, for one, have had enough of the left's philosophy and their inversion of reality. I say, produce away, please!