I was recently going back over some of Paul Graham’s essays, and I noticed something that bothered me while reading “Mind the Gap.” It’s an essay about how income disparities might actually be a sign of health, rather than a sign that something is wrong. That’s not the part that bothers me–it’s an issue I’ve written about myself and with which I mostly agree. No, what bothers me is this:
“A hundred years ago, the rich led a different kind of life from ordinary people. They lived in houses full of servants, wore elaborately uncomfortable clothes, and travelled about in carriages drawn by teams of horses which themselves required their own houses and servants. Now, thanks to technology, the rich live more like the average person. … Materially and socially, technology seems to be decreasing the gap between the rich and the poor, not increasing it.”
What he’s arguing here is that the gap between rich and poor may be quantitatively the same as in previous centuries (i.e., in terms of raw income), but qualitatively wealth makes less and less difference to the way people live. The rich today may still have much more money than the rest of us, he argues, but they are not leading fundamentally different lives anymore.
The problem with this argument is that it’s only half true. It seems clear that, as Graham argues, the gap between rich people and average people has been decreasing, especially in qualitative measures other than raw income. However, he never actually shows that the gap between rich and poor has substantially decreased. In fact, poverty has changed very little since the beginning of the industrial revolution, and in the most severe cases it has not changed at all in millennia.
In fact, in Graham’s own qualitative terms the gap between the poorest of the population and everyone else has only been increasing since the industrial revolution: the standard of life has been going up for most of us, but a beggar living on the streets today is facing conditions nearly identical in every practical respect to those faced by a beggar living in the streets in the 1800s–or, for that matter, the 800s.
Not only have the conditions of poverty not improved (in some ways, they’ve arguably gotten worse), but the demographics of poverty have not changed much either. Now, as ever, the poorest of the poor are overwhelmingly marginalized minorities: blacks, hispanics, homosexuals, the undereducated, people with mental or physical disabilities, religious and ideological outcasts, etc. Anyone who doesn’t fit the normalized ideal of (in our case) “straight white abled male” pays the price in lower wages, higher interest rates, less access to opportunities, poorer educations, and greater exposure to violence and substance abuse. Unless you’re willing to admit to the abhorrent belief that white males are genetically more competent than everyone else, you can’t argue that all these varied demographics bring poverty on themselves–their poverty has to be caused by something external. The obvious answer is that the cause of their poverty and the cause of their marginalization are one and the same: systemic social discrimination.
This is capitalism’s most glaring flaw. I consider myself an Objectivist in many ways, but the problem with Objectivism as portrayed by Ayn Rand is that it assumes the market is blind: let it do whatever it will, and the most competent people will win out. Unfortunately, the market is not blind. The market is made up of human beings, and human beings are biased. If I may quote PG once more…
“It’s absolute poverty you want to avoid, not relative poverty.”
…and there, as they say, is the rub. Poverty now is as absolutely bad as it has always been, and it is bad for almost exactly the same reasons. Until that stops, we have no hope of living in a true meritocracy.
In Search of Secrets 
These are interesting reflections. I have a tendency to dismiss concepts like “inequality is a sign of health” out of hand, and won’t take the time to read such books since life’s too short.
Though it never has the same weight as actual research, like most I rely heavily on my own experiences, which is only anecdotal evidence. The rich people I know lead vastly different lives qualitatively in the sense you described. It’s just that the term “servant” has been relabeled “personal assistant”, “driver”, “trainer”, “security”, “life coach”, “tutor”, “cook”, “cleaning lady”, “dog walker”, “personal shopper” etc. The only differences since the Industrial Revolution I could find is that the rich now dress themselves (though they might not select their own wardrobe), ladle out their own food at table and bathe all by themselves.
My experiences differ from yours: the wealthy people I’ve known (only a handful firsthand, I admit) drive their own cars, continue working steady jobs, and eat at restaurants rather than employ servants to cook their food. What’s more, there are lots of people smack dab in the middle of the income spectrum who employ personal trainers, dog walkers, tutors, and life coaches. Of course the rich tend to enjoy more of these luxuries than the average person, but those luxuries are no longer *qualitatively* different.
Of course there are exceptions–just because things have come a long way since 1600 doesn’t mean all meaningful differences between rich and average have vanished. (In my essay “We Are the 1%,” I discuss one of the worst offenders: wealth’s continued ability to unfairly influence the political process.) However, I think it is fair to say that in America, at least, the top 1% are living much more like the middle 50% than they were only a few hundred years ago.
The bottom 1%, however, is not–and for now, I think, that’s the bigger problem.
Thanks for the comment!
Many seem to miss the role of government redistributing the earnings of tomorrow’s workers to today’s consumers through debt. Today’s apparent economic ‘health’ of the poor is supplied at the expense of the people who will have to deal with government debt.
Meanwhile, the money borrowed by government props up today’s consumption which is moving that borrowed money into the accounts of the corporations (bankers & merchants, if you accept the personhood of corporations).
When American voters have done enough damage to the credit of the US, you will see the poverty that they have created in all it’s chaotic, mindless rage.
He also lives in California. I can assure you “elaborately uncomfortable clothes” (expensive suits) are still popular among many of the rich in my neck of the woods.
Good catch–he’s even written about that himself (in his essay on cities). But then, he would probably also argue that Silicon Valley is more successful than NY these days, so maybe it fits.