When the talk turns to the income gap, Republicans from Ronald Reagan to conservative law professor Richard Epstein like to quote an axiom, or a pair of axioms, mistakenly attributed to Abraham Lincoln: “You cannot help the poor man by destroying the rich.” The close corollary: “You cannot lift the wage earner by pulling down the wage payer.”
Each time these statements are put out for public consumption, someone points out that it was not really Lincoln who made them but a Presbyterian minister, William J.H. Boetcker. Never mind; the right likes these maxims and no doubt we’ll hear them again, still attributed to Lincoln. Mitt Romney also likes to say things that express this idea, and it’s become a motif in the presidential campaign.
Regardless of who made these statements, they’re not without truth, especially if you consider the conditions of an earlier America. It depends on which poor man and which rich man you’re talking about.
Let’s say you have 40 acres and a mule and your neighbor does too, and you get up earlier than he does and plow and fertilize longer and better. Your farm yields a better crop than his, so after 10 years you have 10 cows and a house with 10 rooms while he has two cows and a cabin with two rooms. It’s true that he wouldn’t have more if you could somehow be forced to have less. In fact, the more you have, the better able you might be to help him in a pinch, provided you’re on good terms. Fair enough.
But let’s look at something Abraham Lincoln is known beyond doubt to have said, in a speech about slavery during his debates with William O. Douglas. In one speech, Lincoln spoke of what he called “the eternal struggle between these two principles—right and wrong— throughout the world. They are the two principles that have stood face to face from the beginning of time, and will ever continue to struggle. The one is the common right of humanity and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, ‘You work and toil and earn bread, and I’ll eat it.'”
How likely are we to hear that quote from the right in discussions of the income gap?
Consider the differences between the economy we know and the pre-industrial economy, before it developed to the highly interdependent, primarily capital-driven rather than land-based economy of today. How much chance do urbanized millions in the 21st century have to get their economic start with anything that has the same potential for independent, self-sufficient productivity as 40 acres and a mule?
We’re finished, pretty much, with the divine right of kings, but the sentiment behind the statement “You work and toil and earn bread, and I’ll eat it” didn’t die with Louis XIV.
It’s a long way from Lincoln and Douglas facing off in Alton, Ill. in 1858 to Wall Street in July, 2011. Or maybe it’s not as far as we think. Last July, Eye on the Market, an investor newsletter from J.P. Morgan, reported that profit margins for Standard and Poor 500 companies rose about 1.3 percent between 2000 and 2007. Those margins, said the publication, had reached levels “not seen in decades.”
How did it happen? “There are a lot of moving parts in the margin equation,” the report noted, “but… reductions in wages and benefits explain the majority of the net improvement in margins.”
“U.S. labor compensation,” the report added, “is now at a 50-year low relative to both company sales and U.S. GDP.”
Reductions in wages and benefits for labor; soaring bonuses for CEOs. Workers laid off by fiats from board rooms while profits from what the workers produced go to CEOs, managers, shareholders who “take the risk”—yes, but not all the risk. “You work and toil and earn bread, and I’ll eat it”: in these cases, as opposed to those of our hypothetical farmers, someone is getting more because someone else gets less, and even J. P Morgan says so. By all means, let’s quote Lincoln—early and often.