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Rich Man Scorn

I am perhaps among the economists who wields a heavy bludgeon of, “as compared to what” any time I see a proposal that “we” ought to do something, or some paper analyzing the desirability of some program. You might criticize me for that, but I am happy to take the criticism as compared to being at the other extreme.

This got me thinking about an argument I regularly find myself making. When students try to persuade me that the “Moon Shot”
was a gloriously good thing, and that it had the unintended consequence of producing technologies that would ultimately become useful for us today, among my many responses (including: “at what cost,” and wouldn’t those techs be better obtained without having to go to the moon, and what of the costs of the taxation, and is this really doing the poor in America any good, etc.) is sometimes to ask students to consider the following counterfactual.

“Wouldn’t it be reasonable to believe that some rich guy or cabal of rich guys spent their own money and managed to get someone to the moon by now?” Of course we’ll never know, and in fact if I were a betting man I would actually bet against my own counterfactual. Why? Because I think there’s lots and lots of ways to demonstrate whatever it is to demonstrate the moonshot would be demonstrating … my sense is that private individuals would only do it once it was “easy” enough.

In any case, imagine that by today no one had ever walked on the moon, and that no one in governments around the world had any ambitions about actually doing it. Now imagine Sergei Brin or some similarly wealthy dude proclaiming, “By the year 2015, I will spend every dollar that I have to in order to ensure that an American walks on the moon.”

What would our response be? Some might be bemused, delighted, strangely intrigued, indifferent, etc. But I would bet that a considerable share of the population (say 20% or more) would be appalled. “How could someone display such an arrogant disregard for their fellow humans!” Especially as unemployment exceeds 9%, economies the world over are stagnating, resource prices are rising (reversing centuries of progress), and inequality is skyrocketing – it is the height of ego and hubris to do such a thing. A few people might try to defend him – after all, it is “his” money. After all, some jobs will be created by these efforts. After all, some beneficial technologies may be developed as a consequence of this effort. It’s still a bad idea they might say, especially since that kind of money can possibly be employed in such better ways down here on Earth.

I get it. Imagine that instead of a moon shot, the really rich dudes decided to spend money on exclusive and outrageous parties. Swimming pools filled with Cristal; dinner plates overflowing with exotic animals and plants; the most famous people in the world; and so on. Never mind that such parties have the potential to “stimulate” the economy – after all, when Richie Rich spends his money that is as much a part of aggregate demand as when Poor Man Mikey spends it.

Now imagine the vitriol, scorn, distaste, and vituperation that will come Richie Rich’s way for having the gall to behave so “recklessly.” And now reflect again on the real moon shot. On the bank bailouts. On the Solyndra fiasco. On the synfuels fiasco. On the Fisker fiasco. I’m not saying some people don’t disapprove of those things. I am saying that the similarities and differences are not well appreciated – and that for a good handful of folks, they do not see any difference between the two.

One Response to “Rich Man Scorn”

  1. Harry says:

    Without getting in the way of the rest of your thoughts, WC, may I point out that there were TWO synfuel fiascoes?

    The first was roughly 1978, could have been 1979, when one of my client companies poured a river of money into coal gasification. This was the days of “old oil” and “new oil”, part of the newly-created Department of Energy’s attempt at applying Marxist-Lennist principles of economics. If it took $500 per barrel to extract oil from coal, that was better than paying some yahoo from Oklahoma to upgrade his stripper well.

    All of this collapsed after Reagan decontrolled energy. Prices nosedived, and the accountant from Woodward, Oklahoma, who used to fly me in his Beechcraft had to sell his jet. Gas lines in Maryland disappeared, and so did the synfuels business, all a lot of money down the drain.

    A whole lot of broken windows.

    So the new synfuels industry is about making denatured alcohol in stills in Iowa, pushing up the price of gas, killing non-corn farmers who feed cattle, fouling our rototillers that cultivate our sustainable gardens.

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