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PERSPECTIVE

Income Distribution

JANUARY 01, 1996 by THOMAS SOWELL

Despite a voluminous and often fervent literature on “income distribution,” the cold fact is that most income is not distributed: It is earned. People paying each other for goods and services generate income. While many people’s entire income comes from a salary paid to them by a given employer, many others collect individual fees for everything from shoe shines to surgery, and it is the sum total of these innumerable fees which constitutes their income. . . .

To question the “fairness” or other index of validity of the existing statistics growing out of voluntary economic transactions is to question whether those who spent their own money to buy what they wanted from other people have a right to do so. To say that a shoe shine boy earns “too little” or a surgeon “too much” is to say that third parties should have the right to preempt the decisions of those who elected to spend their money on shoe shines or surgery. To say that “society” should decide how much it values various goods and services is to say that individual decisions on these matters should be superseded by collective decisions made by political surrogates. But to say this openly would require some persuasive reasons why collective decisions are better than individual decisions and why third parties are better judges than those who are making their own trade-offs at their own expense.

—Thomas Sowell

The Vision of the Anointed

Harassing Business

The only viable definition of monopoly is a grant of privilege from the government. It therefore becomes quite clear that it is impossible for the government to decrease monopoly by passing punitive laws. The only way for the government to decrease monopoly . . . is to remove its own monopoly grants. The antitrust laws, therefore, do not in the least “diminish monopoly.” What they do accomplish is to impose a continual, capricious harassment of efficient business enterprise. The law in the United States is couched in vague, indefinable terms, permitting the Administration and the courts to omit defining in advance what is a “monopolistic” crime and what is not. Whereas Anglo-Saxon law has rested on a structure of clear definitions of crime, known in advance and discoverable by a jury after due legal process, the antitrust laws thrive on deliberate vagueness and ex post facto rulings. No businessman knows when he has committed a crime and when he has not, and he will never know until the government, perhaps after another shift in its own criteria of crime, swoops down upon him and prosecutes. The effects of these arbitrary rules and ex post facto findings of “crime” are manifold: business initiative is hampered, businessmen are fearful and subservient to the arbitrary rulings of government officials, and business is not permitted to be efficient in serving the consumer.

—Murray Rothbard, Power and Market

What Was Lost

I saw in State Rights the only availing check upon the absolution of the sovereign will, and secession filled me with hope, not as the destruction but as the redemption of Democracy. . . . Therefore I deemed that you were fighting the battles of our liberty, our progress, and our civilization; and I mourn for the stake that was lost at Richmond more deeply than I rejoice over that which was saved at Waterloo.

—Letter from Lord Acton to Robert E. Lee, November 4, 1866

1995-96 Olive W. Garvey Fellowships

Since 1972, the Garvey Fellowship program has awarded financial fellowships to advance the higher education of outstanding young academics around the world through a competitive essay contest on the meaning and significance of economic and personal liberty. Olive W. Garvey Fellows have since become some of the finest of scholars, business leaders, and journalists, applying and advancing public knowledge and appreciation internationally for the ideas of individual liberty and personal responsibility.

The Independent Institute, the sponsor of the program, has announced the following recipients of the 1995-96 Olive W. Garvey Fellowships: First Prize, $2,500—Bryan Caplan (Department of Economics, Princeton University); Second Prize, $1,500—Jeffry W. Duffy (London School of Economics); and Third Prize, $1,000—Michael Huemer (Department of Philosophy, Rutgers University).

This year’s Olive W. Garvey Fellowships have been awarded to the authors of the top three essays on the topic, “The road to prosperity and human welfare: free markets or government controls?” Mr. Caplan’s first-prize essay, “Freedom and Happiness,” appears on pages 37-41 of this issue. Excerpts from the second- and third-prize winning essays start on page 42.

All entries were reviewed by a panel of three distinguished scholars: Gerald Gunderson (Professor of Economics, Trinity College), Daniel Klein (Professor of Economics, University of California, Irvine), and John Morehouse (Professor of Economics, Wake Forest University).

For further information on the Olive W. Garvey Fellowships program, please contact Ms. Theresa Navarro, Director of Program Services, The Independent Institute, 134 Ninety-Eighth Avenue, Oakland, CA 94603; Phone: (510) 632-1366; fax: (510) 568-6040; E-mail: independ@dnai.com.

ASSOCIATED ISSUE

January 1996

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