On one side of the class war you have the folks who think the rich obtained their wealth by stealing from the rest of the world. Meanwhile, the rich accuse the poor and the middle class of supporting tax policies designed to take from the rich and give to the poor. Is this worldview - the view that others are trying to steal your stuff - an example of paranoia or economics or jealousy?

Obviously some rich people really are thieves, practicing insider trading, bribery, and other unsavory practices. And some poor people really are looking for a free ride. But I think we can agree that the bad apples in every wealth class are the exceptions.

I've met a lot of rich people, and as far as I can tell, they aren't addicted to money, power, or even prestige. I say that for the same reason you don't crave a ham sandwich at the moment you finish eating one. Once the rich become rich, their motives evolve.

My hypothesis is that the rich are often addicted to hard work itself. Once that hard work produces all that a person needs for personal use, the impulse for hard work doesn't go away. What happens instead is that the goal changes from becoming richer - which has a decreasing marginal benefit - to making the world a better place. People who are genetically inclined toward industrious behavior will keep working hard long after their persona needs have been met.  People don't change their basic nature just because their bank accounts expand. But people do routinely change their rationalizations, i.e. their stated goals.

If you travelled back in time and asked the 25-year old me why I worked hard, I would have said something about my dreams of someday becoming rich. If you ask me today why I work hard, I'll say something about making the world a better place.  That explanation might even sound reasonable, given that my comics and my side ventures are all designed to improve the world in small ways. But on some level I know all of my reasons are rationalizations. The core truth is that I'm genetically wired for hard work. It's simply my nature. I'm happier when I'm being productive.

I wonder if instead of dividing the world into poor, middle-class, and rich, we'd be better off sorting the world into people who create more wealth than they consume and people who consume more than they create. There might be a lot of power in that model. Let me explain why.

When we sort the public into wealth classes, we are lured into endless debates on who deserves what and who is stealing from whom. That can't lead to anything good. But imagine instead we focused on dividing people into net creators of wealth versus net consumers. The creators and consumers of wealth would be found in each wealth class. The goal would be to have more creators and fewer net consumers of wealth.

That might sound a lot like today's model, and perhaps it overlaps 90%. Obviously everyone wants a world with more creators of wealth and fewer net consumers of wealth. But I think this small mental change in how we sort people might change behavior.

By analogy, I remember seeing a study that said people use less energy at home when everyone in a neighborhood can see their neighbors' energy bills. As soon as you know you are being compared to your peers, you start turning off lights when you leave the room. Likewise, I think a focus on sorting people into wealth creators versus wealth consumers would change people's behaviors for the better.

Let me give you some examples of how this can make a difference. Suppose you are poor and a net consumer of wealth. Society has taught you to blame rich people for sending jobs overseas, blame the government for not doing enough, and blame your bad luck. That's not a productive view. Now let's say society agrees to define a person who is in school, or in any sort of training course, as automatically part of the creator class. That gives a poor person a clear path to upward mobility. Simply sign up for school or government-sponsored training and instantly become part of the creator class.

If you're a fat cat wealthy person who stopped producing anything of value long ago, how would you feel to be in the category of "Net Consumer of Wealth"? I think it would cause you to start investing your idle cash in something that would improve your social standing and make you a creator of wealth. To make things easier, let's assume we label as a wealth creator anyone who invests in a start-up, even if the start-up does not succeed.

What I'm suggesting might seem like a subtle or even trivial shift in how we look at the world. But that sort of shift can be huge in terms of how it changes behavior. Class warfare strikes me as a dangerous worldview. It encourages a win-lose approach to government policy in order to pursue the elusive unicorn of "fairness." A more productive way to view the world is in terms of net creators and net consumers of wealth, at least so long as society makes it possible for any net consumer to become a net creator by going to school, training for a job, or investing in start-ups. For the middle class, it might simply mean spending less than they earn.  I think this approach gets you to a healthy economy faster than a class war.

I know some of you will reject this idea because there's no clean way to know who is a net consumer of wealth and who is a net creator. But I think common sense gets you close enough.

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Nov 27, 2012
I love this idea. But then, I believe myself to be a net creator of wealth, and I like most ideas that identify me as part of a desirable group, which is kind of the point. :)

Also, it is my assumption/bias that most people who enjoy your blog are creators, since like-minded people tend to like hanging out together.
-3 Rank Up Rank Down
Nov 27, 2012
BTW, I wouldn't care about the wealth disparity so much if the wealthy weren't getting a free ride - not working and getting income from investments, and then paying a lower tax. Bring back the tax rates pre-Reagan, and I'll be happy.
Nov 27, 2012
One more thing: If we're going to drag human nature and value judgements into this, let's agree that some people are jerks no matter how rich or poor they are. And even if proportionately fewer jerks are rich, they have the power to cause a lot more damage than poor jerks. They're more likely to "create wealth" by means damaging to the country and world at large.

Also, a goodly share of people are willing (and trying) to work not for wealth, but for what used to be the middle-class life of food, shelter, and some left over for investment and savings towards retirement and kids' education. But the arguments seem to assume that ALL persons not actively trying to crack the one percent are bums; and parasites if they expect, say, a social structure that helps handle crises too big for the individual.

This line of thinking is popular with a certain crowd, because it translates material possession into moral superiority, with the handy consequence that those who possess little deserve whatever happens to them, no matter what the cause. It's of a piece with certain types of religious faith, where the emphasis is on oneself being pre-approved and exempt from judgement while other people are damned and need not be treated in an ethical or even humane manner.
Nov 27, 2012
Interesting thoughts; however, I want to point out the reality of the situation that in the world, and especially in the US, the income producing is a pyramid - with the wealthy at the top and the poor at the bottom. Even if every person was a college graduate with an IQ over 100 and voted in a liberal manner, the pyramid would still exist, since no every person can have a CEO job and skim off millions, even if they are qualified for the position; plus, the crap jobs at the bottom, that no one wants, always need to be filled. Until we figure out a way to look at the machine wholistically, and realize the little cog is just as valuable and worthy as the big cog for keeping the maching running, we will have a class disparity. The wealth distribution, conversely, is also a pyramic, but with the point at the bottom, just waiting for the right stimulus to cause it to tip over and create wealth distribution.
Nov 27, 2012
Big problem in this debate: Replacing the idea of producing goods and services of value with the empty word "wealth", which simply denotes stacking up money.

The world is full of "wealth creators" who essentially just cause money to move around without actually generating anything new. Yes, they may be decent people working really hard to make their balances grow, but too many are ultimately about as productive as the middle manager who churns out memos nobody reads. Wall Street is supposed to be a mechanism for driving capital to the most profitable and productive enterprises; hedge fund managers and the like have no purpose but to make money off market fluctuations and/or short-term rises in stock prices. A CEO who tries to position his company for long-term growth is all but lynched for betraying "shareholder value", which is based on the assumption all shareholders want to sell at a profit in the next few hours. That's why the current success stories are propping up stale business models or buying up innovators who reportedly have a clue. Who's going risk the time and money needed to do something genuinely revolutionary? Thomas Edison today would be kicked out of his own company for messing with recorded sound and moving pictures instead of concentrating on different colored light bulbs.

With top executives bouncing from industry to industry instead of coming up through company ranks with solid specific knowledge, their answer to everything is finding a new and legal way to spend less and charge more. The holy grail for Internet businesses is to get content for free and monetize it; other industries have to be content with subcontracting or outsourcing their products/services as cheaply as possible (often to !$%*!$%* doing the same for their competitors) and somehow persuading customers to buy it at a huge markup. The risk is that the subcontractors catch on and remove the middleman -- which is why so many American brands were elbowed aside by Japanese brands; and those brands are now facing competition from their own subcontractors.

It says something about the competence of corporate America that the producers of the most famous snack foods in the most obese society is in trouble and has no game plan for survival other than asking for (and up until recently, getting) repeated reductions in wages and benefits from lower-tier employees. And that the leaders at Circuit City thought it was a sound business decision to get rid employees who knew anything about products, thus driving even more customers to the Internet. And that HP keeps finding new and expensive ways to shoot itself in the foot.

I for one am a little tired of hearing these vaunted "wealth creators" (or, when they need political cover, "job creators") justifying their often self-determined market value. If they're paid a penny more than what anyone else is currently bidding for their services, they're robbing the stockholders no matter how successful they may be. A business shouldn't overpay its executives any more than it should overpay its employees and vendors.
Nov 27, 2012
I read somewhere that the American economist, Walter Williams once observed that the top ten percent of income earners pay 71 percent of the federal income tax and 47 percent of Americans pay absolutely nothing.
Then consider the fact that the total expenditure of the government is not limited to what it earns as tax but is far in excess of that amount.

Given this equation it is evident that the middle 43 percent of the population is paying only 29 per cent of the tax. Which means that 90 per cent of the population of the country is not bearing its fair share of government expenses.

So what are the so-called poor (90% of the population) complaining about? Every one of them is being subsidised by the top 10 per cent every single day.

Disclaimer: I am not an American, but the numbers are probably similar in many countries.
-3 Rank Up Rank Down
Nov 27, 2012
Did you ever think that entertainment creators (like cartoonists) are worse than wealth consumers? Yes they are, they encourage the rest of the population to be iddle (and watch their creation), instead of working hard. Therefore they contribute negatively to the wealth creation far more than any wealth consumer on government benefits or rich fat cat that sits by his hotel pool in the bahamas.
Nov 27, 2012
i recently became associated with selling drugs (alcohol/tabacco/energy drinks) and small gambling (lottery). ive often wondered how to square myself to tacit endorsement of these kinds of things.

my latest justification is that if the govt doesnt run the market, a black market will appear and efficiently exploit the poor. therefore the govts lazy involvement pollutes the market with its ineptitude, thereby limiting how much suffering the poor endure.

sound reasoning or ignorant rationalization?
Nov 27, 2012
i would put casinos, propagandists, vice corporations (tobacco/pimps) on side of consumer. they eat resources but contribute nothing of value.

also tax accountants and lawyers.

its deeply fascinating how a marketing firm will pay a person $100k per year to brainwash ppl to arbitrarily pick 1 brand over others of similar value. it does nothing good for society, but power brokers can afford to pay her off to manage the masses.

its a case of power in exchange for $. very similar to the bribe paradigm of politicians.
Nov 27, 2012
There is an old saying in Kannada, which roughly translates to "One who says enough is the rich, one who says 'i need' is the poor"
(ah.. it does loose the charm after translating, but that is the meaning of it though)
Nov 27, 2012
Where are these rich people who are improving the world? Those great guys who make millions, then use a small fraction of their wealth to give their employees healthcare? Are they hiding REALLY well? If the world you think you live in had anything to do with the real world, what a wonderful world it would be!
+2 Rank Up Rank Down
Nov 27, 2012
Interesting concept but I'm stuck on how you define a "Wealth Creator".

I work in Public Health, in a management role. I can't see how anything I do contributes toward creating wealth.

That would also apply for everyone else in the public sector, Nurses, Doctors, Police, all paid for by the government with tax money taken from other peoples earnings.

You couldn't argue that they don't make a contribution to society, but not in the area of "wealth creation"

If i quit my job and wen't into business for myself mowing lawns, I'm neither a wealth creator nor a net consumer if I make enough money to fund my own lifestyle and pay my bills.

I think the concept is too narrow. Those who can actually create wealth are a small subset of the total, as are the net consumers of wealth who would need to be in receipt of some form of welfare benefits to fit the category. The vast majority of people fit neither category.
Nov 27, 2012
@whtllnew - sorry, but I've had this argument with day-traders and others. The people who trade in stock to not create wealth, which was the criterion used. If they do, please explain how. That is not to say that their existence isn't beneficial to the economy. However, the money that they keep is drfevied from discounted future values of dividends, or is part of a bubble.
Nov 27, 2012
I'm not sure if it will be that easy because that isn't how people are organized.

Say I am a rich wealth-creator. I've worked hard to get where I am, and see a clear correlation between my hard work and where I am. Because of the nature of social groups I tend to associate with other rich people. Some of them are wealth-creators like myself, and some are leeches and theives. I don't have any real measuring stick to tell them apart, so I tend to assume that all of them are wealth-creators.

Also due to social structure, and maybe my own upward mobility the only poor people I know are leeches who take without giving anything in return. The especially leechy members of my own family are especially prone to hanging around me looking for a hand-out. Because I found success through hard work, I tend to associate poverty with laziness.

Conversely, say I am a poor wealth-creator. Due to what amounts to bad luck I am still poor in spite of my hard work. Because of my social structure, I tend to associate with other poor people, some of whom are hard working like me, while others are not. Because I don't have a good measuring stick I can't tell them apart so I tend to assume that all of them are hardworking.

The only rich people I deal with are the especially leechy kind that tend to exploit my bad luck. So I come to view all rich people as leeches.

Class conflict is a natural result of class segregation. In order for things to get better, there needs to be actual economic mobility. Where a poor person who works hard will be put in a place where he can interact with rich people who work hard, and vice versa.
-2 Rank Up Rank Down
Nov 26, 2012
Forgive me for this attempt at amateur philosophizing, but I think this creator slash consumer debate is in the end an attempt to rationalize individual successes or failures. These are issues that have been debated for generations. I notice, in re-reading Bryan’s Cross of Gold speech, that they were already being expressed in a similar way.

Go back several hundred years, and a column comparable to today’s might have been titled, Nobility vs. Commoners. We can see the past for what it was but few can ever truly see the present for what it is. Maybe only Saints and cantankerous Philosophers can.

There was once a lot of nonsense about divine intentions and rights that clever people concocted and applied for a while. Or maybe it was necessary, subtle nonsense that sometimes proved useful. At one time it was acceptable to be of the noble class and a wealth consumer – but they did not consider themselves so, of course. And the peasantry as a whole was the wealth creator class – but they were not considered as such.

From a modern viewpoint, those nobility were wealthy through prevailing social convention, undeservedly. The peasants were poor, unfairly. I think that is how our own society will be proportionally viewed in a future history books. I think it is the pattern as far as human eye can see.

Capitalism is in theory a gamble for privileges and comforts of nobility by anyone in society. But do not the conditions in which successful capitalists, so-called wealth creators, thrive in areas owned by all and granted to a few? These are the old industries stemming from our public natural resources; but these days, industries in that category, grossly profitable, include entertainment and broadcasting -- they are like the mammoth beasts that evolved beyond all good purpose and sense. There are business opportunities that produce definite necessities for existence -- but also luxury items that people could easily do without. Much of the wealth generated today is frivolous, has not provided essential health or value to the human condition.

Consumers perform ritual potlatch , and our governments encourage it. It is all the effluvium of a game system that is turned in on itself, that exists for itself, oftentimes a complicated lottery that rewards participants through luck and human complacency. The Borges story, THE LOTTERY IN BABYLON, is a subtle portrayal of an artificial construct that gradually took the form of closed and trapped reality.

How long will this concept of the deserved special privileges for wealth producers last? If there weren’t so many people on one small world a different philosophy would soon evolve. That is the real basis of the supposed class welfare push: Awareness there are limited supplies and limited opportunities, limited niches within tribal hierarchies that human beings fall naturally into, whether we admit it or not. Something unconscious within us knows trouble is brewing.

With eventual depletion of easy to obtain natural resources within a few generations, and climate change destructive to our present way of life -- indeed caused by it -- things will necessarily become different. And with increasing populations of American-prosperity wannabes in China and India, the situation is worse than it has ever been.

Humans within their separate physical shells crave dignity, and the current consumer paths to dignity are coming to dead ends. Dignity as a selling point for many successful businesses is drawing on limited metaphysical resources. Our present era of human history will naturally end, and something different will come about. This will be beyond the relative shallowness of Marxism because a constructed philosophy seldom turns out according to plan. All plans soon fall apart in their implementation. It is the exercise toward effective planning to changing conditions that is most valuable. We are not doing much of that these days.

When wealth is freed from the material constrictions of our closed planetary system, when it is limitless and available to all through either supply or production techniques we cannot imagine, all these wealth producer slash wealth consumer ideas will seem as quaint as feudal concepts do to us now.
-3 Rank Up Rank Down
Nov 26, 2012
[Obviously everyone wants a world with more creators of wealth and fewer net consumers of wealth.]

Oh, and what do you do with the surplus wealth?

I think this method of dividing people is equally prone to class war as the one you want to replace it with. From every sentence you write we learn that producing is good and consuming is bad. Thats BS. If everybody stopped consuming, the economy would grind to a halt faster than you can say "Scott Adams is a weird guy, but his comics are funny".
Nov 26, 2012
I think it's funny that the idea assumes people understand what "net" means in this context. That's a whole conversation right wait did you see the last Judge Judy?
Nov 26, 2012
I found myself thinking a lot about this post today and came up with this.

Perhaps the best way to make the world a better place is not to come up with a new label but rather to move away from simplistic labels that invite us to make sweeping generalizations about the characteristics of a group of diverse people. The rich are not uniformly makers, nor are they uniformly creators. I don't think of creators as being uniformly beneficial either. If we moved away from these labels and the name calling that seems to follow, perhaps we could actually address the complexity of the problems we face as a nation rather than getting stuck in how to (, all too often, pejoratively) brand those that disagree with us. This might also allow us to skip debating whether the brand was justified. The end of the debate about whether the brand was justified will almost always be: it was not justified to label a diverse group of people in a way that invited dismissive generalizations.
Nov 26, 2012
very interesting post, and very helpful for me. I've been thinking for several months about the idea of viewing individuals from the perspective of consumers vs. producers, but I'm stuck. My hope is to be able to stretch the paradigm beyond economics to more of a worldview level, then conceptualize it on some sort of relative scale. For example, beyond economics, a parent who spends all his free time watching TV is consuming (something), and a parent who spends all their free time playing with their kids, doing housework, volunteering, etc. is producing (something). Or, a commuter who focuses on driving contentiously (letting people merge and being basically safe) is producing (something), while a commuter who cuts people off and drives dangerously is consuming (something; maybe goodwill in this case). more pertinent to the moment, a blog reader who provides generally constructive and thoughtful comments is producing (something), and a reader who provides nothing is (something), and a reader who provides generally non-constructive and moronic comments is consuming (something).
Any ideas to clarify this particular point of fuzziness in my head would be much appreciated. Specifically, help on what those somethings might be, and how to compare them to each other would be very helpful.
+17 Rank Up Rank Down
Nov 26, 2012
Following your concept, the government could create a score called "How much am I helping society".
Working helps society, Studying, Creating a job helps society, Reducing CO2 emissions helps society, Charity helps society, Volunteer work helps, Teaching helps, Financing startups help, etc
At the same time you have the stuff that might help individuals, but are a burden on the society.
Welfare, Money sitting on the bank, Polluting businesses, Smoking, Not paying health insurance for employees, etc.
And the awesome part would be to have this score to influence your tax rate!
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