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To: No One Special
Orwell's "1984" probably influenced my thinking more than any other book. Orwell's profound commitment to "see what was really in front of his face" and not allow any preconceived narrative - be it socialist or otherwise - come between his conscience and the evidence of his own eyes, is and was a true inspiration to me. I strive to remember at all times that I'm as prone to "doublethink" as any other human being; i.e. that I'm just as tempted to arrange my own internal world to "groupthink" - whatever the larger society perceives as being expedient to believe at any given time. This is a human trait, and one that must be recognized and controlled.

But Orwell remained very much a man of the left. In "1984" his desire for a truly classless society where everybody lives at about the same level of reasonable comfort is very evident. But here he makes a very simple mistake that he should not have made. He isn't taking his own advice and accepting the facts as they really are.

And the fact that he's not accepting is a well-known law of economics called "Pareto's Law." Basically, and I'm no economist, Pareto's Law states that a so-called "power law" that applies to all biological systems applies to economics: that a 80/20 relationship will always prevail over time.

You've probably heard people say things like "my business derives 80% of its income from 20% of its clients" or "20% of my sales staff close 80% of my sales." I even hear these things on advertisements of various kinds. And it's true. It's the same for the economy at large. Liberals breathlessly state that "20% of the people enjoy 80% of the wealth produced." What they forget to say is the converse: 20% of the people produce 80% of the wealth. But you see, that's just the way it is, so there's nothing to complain about (unless you want to lodge your gripe with God). It's Pareto's Law.

Pareto's Law relates somehow to the conservation of energy in biological systems striving for stasis. Somebody much smarter than me can maybe explain it better. But I do know this much - it's simply a fact of life like Newton's laws of thermodynamics. You can't escape it, because it's rooted in biology and ultimately in physics.

So, once we've accepted the inevitability of Pareto's Law and the ensuring 80/20 inequality as a relative matter, we immediately recognize that if we want to improve the lot of the 80% then we need to grow the economy as rapidly and as sustainedly as possible. How do we do that? I think rather obviously, the best way to do that is to incentivize the 20% who are producers to produce as much as they can by letting them keep what they make. Get rid of things like progressive taxation and the death tax, strive to reward risk-taking and innovation, etc. Basically, what Ronald Reagan wanted as a program. That way the pie grows and grows to the point where in a couple of decades the 80% are living like the 20% are now in absolute terms. The unpalatable thing for those of a socialist bent is that such a thing - desirable in itself - must under the inescapable hand of Pareto come at the "cost" of continued 80/20 relative inequality. The 20% will be enormously richer, in short. That bothers a lot of people, even as their lives have improved immensely in relative terms.

I think that one thing that Pareto's Law doesn't dictate is who the 20% are. Socialism is not - indeed, cannot - really be about sharing out the wealth equally, since this is impossible as a matter of immutable law. Rather, when you dig down to the essentials, Socialism is all about ensuring that the 20% are people who wouldn't otherwise be in the 20%. It's all about non-producers playing the leading role in society. It's all about a coalition of non-producers thrusting the productive 20% into the 80%, taking their relative place in society - and of course at the cost of making everybody absolutely poorer.

A careful reading of 1984 indicates that Orwell understood the difference between absolute wealth and relative wealth, and that for the socialist nomenklatura relative wealth was all that mattered. He called it "the distinction that wealth conferred" - the feeling of relative wealth of possessing the last lump of horseflesh in a besieged city, if memory serves. At the same time he recognized that in a world where everybody had plenty to eat, access to basic services, and even leisure time and some luxuries, that the social importance of relative wealth would decline. Odd.

His problem is that he never confronted the inevitability of relative inequality under Pareto's Law. And even though I'm a great admirer I have to say that Orwell's inability or unwillingness to confront Pareto's Law is troubling. Was he trying to force reality into his preconceived socialist narrative? Was he thereby practicing the very doublethink he condemned so powerfully in 1984?

Here's a link to a nice little article on this point:

http://constitutionclub.org/2012/09/30/reality-equality-and-pareto-make-trouble/

18 posted on 11/22/2012 8:43:00 AM PST by Gluteus Maximus
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To: Gluteus Maximus

Never heard of Pareto or his law. That is very iteresting. Thanks so much for the post and the link.


26 posted on 11/23/2012 4:35:24 PM PST by No One Special
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