Benefitting from Prosperity. (Originally “The Poor get Poorer”): A Blast from the Past

So Freshman Congresswoman has apparently claimed that the majority of people in the US don’t benefit in our national prosperity.

What, is she smoking?  Seriously.  The stupidity of that statement stands out among a litany of stupid statements.

As it happens, I answered that ridiculous claim January a year ago when someone else was making equally ridiculous claims:


People of a certain political persuasion say that the rich get richer while the poor get poorer.  Let’s take a look at that.

Imagine if you could go back 100 years.  You’d have to live life 100 years ago but you would have the wealth of the richest American of the day.  As it happened, Forbes created its first “Rich List” in 1918, 100 years ago, and listed John D. Rockefeller as far and away the richest American with a net worth of $1.2 billion then (roughly equivalent to $21 billion today).  Number two on the list was Henry Frick at $221 million.

So, Rockefeller’s $1.2 billion but in 1918 instead of today.  Would this be a trade you would make?

For the vast majority of us you’d be a fool to take that deal.

Consider:  I’m diabetic not insulin dependent (thankfully) but still diabetic as are a lot of Americans.  Insulin to treat diabetes was not invented yet.  So diabetes meant an agonizing death.

I have cholesterol issues–diet doesn’t touch it.  Believe me, I’ve tried.  If not treated, that’s a quick route to high blood pressure, heart attack, stroke, and an early death.  Medication to control cholesterol was still decades away.

Well, if we can’t control cholesterol perhaps we could control the high blood pressure resulting from the failure?  Nope.  Sorry.  It was an “essential malady” and not a treatable condiction.

Now, maybe you’re one of the lucky ones and diet and exercise can prevent these issues, or push them back as far as they can be for me with modern medicine, but are you really willing to gamble your life on that?

Wealth doesn’t do you a lot of good if you are left immobile from a stroke, or dead from a heart attack.

But, hey, with the wealth of Rockefeller  you could spend money on fancy, and fast, cars, right?

The Indy 500 was not held in 1918 (or in 1917 for that matter) because of World War I.  But if we peek ahead at 1919 we can get a look at what some of the fastest cars in the world could do and…

The winning car averaged just a hair over 88 miles per hour.  The cheapest beater I have ever owned (and I’ve owned some dogs) would have blown that car away, and do so with more comfort, more luxury than the fanciest Touring Car (air conditioning!).

And speaking of automobiles and medicine, a modern ambulance had more ability to keep you alive–saving only actual surgery–than even the hospitals of 1918.  And the only thing the ambulance would actually need to compete with those hospitals on surgery would be a surgeon and anesthesiologist–both of whom would be far, far more capable than the surgeons and anesthesiologists of 1918.

But…you could travel to exotic places with Rockefeller’s wealth in 1918.  Well, I’ll give you that one if you don’t mind taking forever.  You couldn’t hop in your car for a road trip down to Disney World (leaving aside that Disney World didn’t exist).  The modern network of highways with fuel stations every few miles did not yet exist.  Okay, there were a few airlines in operation but they were small and limited in operation.  Perhaps their expense wouldn’t matter with the wealth of Rockefeller at your beck and call, but there just aren’t that many places you can go by air.  Transoceanic flights don’t exist (Lindbergh is still years in the future) and neither do transcontinental.  The big thing in aviation at this time is “air mail”.  And that’s still chancy with things getting lost when the planes crash. (Look at that again and maybe think twice about that air travel.)

Train or ship, that’s pretty much your only option for long distance travel at any kind of speed at all, and those take days where in the modern day we travel in hours.

And if you want to just relax at home and maybe listen to music?  No Radio stations.  First commercial broadcast is still years away.  You can go out to listen to a live performance–in a public venue with neither adequate heat nor air conditioning (I’ll get to that shortly).  Or perhaps you can listen to a device like this:

If you’re lucky, you might actually have a couple dozen records.

I’ll take MP3’s [Ed:  and into several hundred and growing now] on my cell phone, thank you very much.

Individual rooms in your house are probably heated with wood or coal burning stoves.  The first patent for central heating isn’t for another year and forced air central heating isn’t for another 17.

Air conditioning?  Yes, it’s been invented.  You, having the wealth of Rockefeller might have one of the early gigantic “air conditioners” that were just appearing but they really didn’t start getting into homes for another decade.

Well, I could go on and on and on, there’s so much available to the poor today that all Rockefeller’s wealth could not have bought him 100 years ago.

This is without going into the computer technology revolution, portable computers, and cell phones that contain within them more computing power than existed in the world as recently as a few decades ago.

Even many if not most of today’s poor in American know wealth that the John D. Rockefeller of 100 years ago could not even have dreamed that, if you were to describe it to him, would just be so much noise because the concepts were just too alien to the time.

The poor of today, far from getting “poorer” compared to the poor of times past, know wealth beyond the dreams of Midas.

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2 thoughts on “Benefitting from Prosperity. (Originally “The Poor get Poorer”): A Blast from the Past”

  1. Certainly the poor have long been getting richer in Christian Capitalist civilization. And the rich, too.

    But tax regimes are not “fair”, nor market based. There has long been a good argument to tax income at a higher rate than capital, so as to more rapidly accumulate capital, which more rapidly increases the total wealth.

    The capital gains tax, now at 14%, and the income tax rate (avg?), now at 24%, should be equal. At a revenue neutral point, maybe 20% (maybe 22%? 18%?).

    It might be that increasing the capital gains & reducing the income tax results in slower growth (disincentive to invest); it might be faster growth (bigger incentive to work). In any case, it shifts the tax burden some toward those getting more capital gains (the rich living off of capital) over those making high incomes (the rich getting paid so well).

    The goal should be changing the income and wealth changes so that, over time, the after-tax income of the median taxpayer increases faster than that of the top taxpayers (90%? 80? 99?). There is no “fair” system, but this kind of change would be “more fair”.

    In all cases, the US gov’t has a problem in spending — spending too much. Of Other People’s Money. I don’t see that changing, unfortunately.

    Like

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