I am not sure to what extent Hanauer has changed my mind - if at all - but I do know that he has helped me to be a lot clearer about my point of view, which remains largely unchanged.
Anyway, please take a moment to watch this video of an interview with Hanauer. I will add my comments below.
At the most basic level, Hanauer is right. Suppose you open a shop, and lots of people buy from you without ever quibbling over the price. The outcome is that you become very rich, and you might find people referring to you as a wealth creator.
Now suppose instead that no one buys from your shop, and you end up bankrupt. If success makes you a wealth creator, then does failure make you a wealth destroyer?
If there are such things as wealth creators, then surely they are inventors. The mere act of buying and selling does not create wealth, but it allows some people to become wealthy. True wealth exists in the invention and distribution of new products. Some readers might be thinking that rich people help with the process of distribution, but it might be closer to the truth to say that they hinder it.
A digression is called for. Suppose you are a rich person, and you pay some workmen to dig great big holes in the ground and then fill them in again. On the one hand you have benefited a group of workmen by giving them employment, but on the other hand there is no lasting benefit to what you have done. At some point you will run out of money, and there will be nothing to show for it.
This may seem absurd, but take a moment to look around your home. You may possess such things as books you never read, DVDs you never watch, and board games you never play. The money you spent on those things might as well have been spent on digging a hole in the ground and filling it in again.
Now suppose you are rich. You might well be tempted to spend your money on cars you rarely or never drive, and houses you rarely or never live in. In other words, you might be tempted to spend your money in a way which has little or no lasting value.
It is not inevitable that rich people will spend their money frivolously. For example, Michael Owen bought an entire street of houses in the Welsh town of Ewloe for his relatives to live in. Nevertheless there does appear to be a lot of reason to be critical of the way in rich people spend their money.
Suppose a rich person gives ten million pounds to charity. The same benefit could be achieved by one million working class people giving ten pounds each. Suppose a rich person hires Gary Barlow to perform a private concert. Gary Barlow could earn the same money or maybe more by playing an arena concert to thousands of ordinary people. Suppose a rich person buys two large houses for five million pounds each. The same money could buy houses for maybe as many as one hundred middle Englanders.
Even if our rich person buys two houses that cost less than five million pounds each, then the fact remains that he owns one more house than he needs. Next time your local council allows a housing developer to concrete over another piece of green land in your home town, reflect that there would be less need for new housing if everyone owned just one house.
In short, the idea of rich people being wealth creators is massively flawed. Not only are they not really wealth creators at all, but depending on how they spend their money they could actually be stifling the prosperity of society as a whole.
Related previous posts include:
The banksters are not Jonathan and Charlotte
Fat cats and commies
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