A Dangerous Obsession

Thomas Sowell on income disparities:

The media and academia are continuously obsessed with "gaps" and "disparities" in income. As one talk show host put it, "It makes no sense" that a corporate executive makes over $50 million a year.

Ninety-nine percent of all the things that happen in this world "make no sense" to any given individual. Do you understand how your automobile's transmission works? Could you repair it if something went wrong?

Do you understand how aspirin stops headaches? How to make yogurt?

Years ago, a famous essay pointed out that nobody knows how to make a simple lead pencil. That is, there is no single individual anywhere who knows how to grow the wood, mine the graphite, produce the rubber, and manufacture the paint.

Complex economic processes cause all these things to be done and coordinated by a wide variety of people, just in order to produce something as simple as a lead pencil. Multiply that by a hundred or a thousand when it comes to the complexity of producing a car or a computer.

If you cannot understand something as simple as making a lead pencil, why should you be surprised that you don't understand why someone is making a lot more money than somebody else?

Moreover, if this obsession with income disparities is to be something more than mere hand-wringing or gnashing of teeth, obviously the point is that somebody ought to "do something" to change what you don't understand.

Usually that means that the government — politicians — should impose policies based on your ignorance of what is going on. Can you imagine anything more dangerous than allowing politicians to decide how much money each of us can earn?

Read the whole thing!

(HT Greg Mankiw)