A minor but precious scene in “Fiddler on the Roof” raises some neat economic issues. It involves Motel, the poor tailor.
Around 1910, the whole village gathers at his shop because something new and wondrous has arrived — a sewing machine. Motel beams triumphantly: Now we will never again have to wear clothes sewn by hand; all our clothes will be made by machine!
While everyone is excited by the novelty, it really is something that will change their lives. It means that Motel will be able to deliver in spades on his promise to his father-in-law: “Your daughter will not starve!” And the standard of living for everyone in the village will increase significantly.
Decades before, an American with very little education, Isaac M. Singer, had invented, patented and become rich by marketing the first reliable sewing machine. In so doing, he increased the well-being of succeeding generations around the world.
Here’s why: Sewing by hand, a good seamstress could make a decent shirt in 14 hours. But with a sewing machine, it took only one-and-a-quarter hours — one-eleventh of the time. Even allowing for the cost of the machine and material, the cost of clothes – one of life’s basic needs – dropped by a factor of about eight.
So, people could have eight times as many garments for a given cost, with similarly more variety in design and function. Or they could have four times as much wardrobe and spend half their previous clothing budget on better food, shelter, transportation, health care, education, etc.
And when Motel’s productivity rises eight-fold, so does his income and his family’s well-being. Thus also their spending on things at other shops in the village.
Everyone in the economy benefits noticeably, and society as a whole is enriched. The Singers and Motels of the world capture a small fraction of the increased social value to reward their enterprise and investment and encourage others. This example illustrates the key point that, in a market economy, people get income and accumulate wealth mainly from delivering value to others — that is, making folks better off.
In markets, people do not become well-off by exploiting workers, customers or the public, all of whom can work, buy and sell elsewhere. They do so by benefiting others. So, proposals to tax the rich punitively as if they were predators and to “redistribute” wealth and income are, ironically, often both unjust and destructive of aggregate human well-being. They burden people who do the most social good while subsidizing many doing the least.
A few people prosper by exploiting others when cronyism and similar politics let them use the power of government to protect monopolists, oligopolists and other favored special interests (including non-economic ones). But liberals and progressives are untroubled by many inequities fostered by government. Instead, they hound the good folks who do well in free markets.
They do so to promote their own interests or an image of themselves as virtuous for favoring certain groups and causes and opposing others. As their means, they use politics and abuse legislation, regulation and government spending and taxes.
They include greenies opposing oil and gas “fracking”; cab companies and bureaucrats trying to stop Uber and Lyft; and teacher unions preventing school choice. These statists’ proposals are what are predatory upon voters, taxpayers and the public interest, impoverishing society and oppressing people.
A century ago, Motel took his family and sewing machine to Chicago and no doubt prospered. Today, we need to restore the freedom and resulting prosperity that support his view that even a poor tailor is entitled to some happiness.
Ron Knecht is an economist, law school graduate, higher education regent and Nevada controller-elect.