Posted by: bkivey | 5 August 2013

Carnot and Economic Mobility

President Obama has made several speeches the past few weeks focusing on the economy.  This president far prefers campaigning to governing, because he’s much better at the former than the latter. His speeches as president are virtually indistinguishable from his speeches as candidate. And one reason his speeches tend to run together is that he uses the time-worn Progressive tropes that have been extant for at least the last 120 years.

The most recent spate of cam, um, presidential speeches have emphasized the ‘economic inequality’ bugbear. For people who think everything they need to know they learned in kindergarten, there are few evils greater than ‘inequality’. Everything and everyone must be ‘equal’. Except, of course, for those whom Thomas Sowell calls ‘the anointed’, because those folks are naturally more capable than the masses of plebeians.  Ignoring the fact that a steady state is inconsistent with life, Progressives have for decades espoused one of the great examples of cognitive dissonance.

As one of the anointed, President Obama often equates economic inequality as the reason for lack of upward mobility. The trope is that somehow ‘the rich’ or ‘the 1%’ are somehow hoarding all the money, leaving nothing for ‘the poor’ and ‘the 99%’. This is demonstrably not true: in the private sector, no one gets anyone  else’s money unless the party of the second part voluntarily transfers that money. Compare that to how government acquires funding. And the fact that very few poor people remain poor their entire lives disproves that assertion. But there is a more fundamental logical flaw in this line of thought.

Years ago I termed the operation of a free economy as a function of economic inequality as the Carnot economic model. I had noted the similarity between the function of a heat engine on a pressure-volume graph to economic elasticity curves. By the Second Law of Thermodynamics, no work can be done unless there is a heat differential. By the same token, an economy cannot function unless there is a difference in wealth between any two societal endpoints. What Progressives seem to be blind to is this:

If there isn’t any economic inequality, there cannot be any upward mobility.

If a society achieved a Statist ideal, and life was ‘fair’, and everyone was ‘equal’, a society would achieve economic equilibrium, and there wouldn’t be any economic opportunity. While economics has many similarities to thermodynamics, the logical endpoint cannot be achieved because life in general, and sentient life in particular, isn’t bound by mathematics. Societies that have tried to impose a steady economic state have failed every single time they’ve been tried. Humans are biological, not mathematical, constructs.

Every person is born different from any other.  Any given person will have a unique set of talents and abilities, and a unique level of motivation to use those attributes. The most successful societies have sought to exploit those differences rather than repress them. Yes, some will be more successful than others, sometimes wildly so, But in a society with few or no hereditary class distinctions, and free of repressive government, this individual dynamism creates the ‘heat’ that makes an economy work.

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