FOR US THE LIVING BY ROBERT A. HEINLEIN

THE END

APPENDIX TO CHAPTER IX

NOTE: This need not be read in sequence. It is included to amplify Davis’ remarks in order that the reader may understand the causes of economic confusion in the early 20th century.

There is an old tale of five blind men who were taken to “see” an elephant. Each examined it as best he could, and described it in terms of his experience.

One felt a leg and said, “It is like the trunk of a tree.”

One had grasped the tail and answered, “How ridiculous! It is a rope.”

A third countered, “You are slightly mistaken, brother. It is somewhat like a rope, but is actually a mighty snake.” He had touched the trunk.

Another ran his hand across the broad solid side of the beast and exclaimed, “How can you be so deceived? Verily, it is a wall.”

The last touched the elephant not at all, but heard him trumpet. He fled, for he thought the Spirit of Death was upon him.

They were all correct insofar as their data went. Each in grasping a part of the truth had reached a different wrong conclusion.

Twentieth century economists, of whatever school, almost unanimously fell into the same sort of error. Illustrations of how they made such errors, through examining some special case of the production-consumption cycle, are set forth below:

RENT TROUBLE (The Single Tax Argument)

Use the same data as used by Perry and Davis, except:

(1) the banker spends all of his interest.

(2) the land owner does not spend his rent.

OVER-PRODUCTION: two playing cards.

Nevertheless, title to land frequently results in individuals receiving returns in rent disproportionate to investment. This is Henry George’s “un-earned increment.” But un-earned increment does not in itself cause over-production, and taxing it away will not balance the cycle. On the contrary, it throws it further out of balance. Taxing un-earned increment out of existence is only a means of social readjustment.

PROFIT TROUBLE (The Socialist Argument)

Same data except:

(1) Banker spends his interest.

(2) Entrepreneur spends only two shekels.

OVER-PRODUCTION: 3 playing cards.

Same situation as above. If a concern’s profits seem disproportionately high, they may be lowered by punitive taxation, but to do so will not tend to balance the cycle, unless shekel for shekel (or dollar for dollar) an equal amount of money is given away to someone who will spend it.

LABOR TROUBLE (The Conservative Argument)

Using the same data, but with banker spending all the interest, run two cycles side by side. Let the additional cycle suffer from labor trouble, the workers striking for high wages, and winning the strike. Let the additional labor cost be 31.5 shekels. Necessary price of cards will be 2.5 shekels per card in this cycle. But the other cycle can sell to the same market at 2 shekels per card. No matter what the final market price, both cycles will have overproduction, or the second cycle will fail to obtain a return equal to cost, or both.

Results:

(a) Market price 2 shekels, 1st cycle balances, 2nd cycle sells all its goods, but is insolvent by 31.5 shekels.

(b) Market price 2 1/2 shekels, combined over-production is 15.75 playing cards.

DUMPING FROM ABROAD (The High Tariff Argument)

Using the same data, place on the market from another cycle with lower costs of any sort, especially labor, playing cards to sell at one shekel. Our entrepreneur is forced to cut prices and goes broke. Orthodox solution, XXth century: protective tariff. Rational solution: Cease to manufacture the type of articles being dumped on us, and pay for them with our currency. We gain the increment in real wealth.

INTEREST (The Anti-Semitic Argument)

There is an element of truth to this argument—that interest not spent as purchasing power unbalances the cycle. The illustration given in the narrative is proof of this. And there were undoubtedly many Jews in the banking business, though by no means a majority. Yet somehow on this slender pedestal, an incredible structure of half-truths and outright falsehoods was constructed many times in history to ‘prove’ that Jewry was engaged in a conspiracy to enslave the rest of mankind. It is difficult for us, in the enlightened 21st century, to realize that this preposterous myth was the cause of torture, mass murder, and an endless number of vicious acts of racial discrimination.