KONG (AP) – Inspired by Vladimir Lenin's vision … a jeweler
has built two solid gold toilets in a bathroom gilded with 24-carat
gold and encrusted with gems.
Sai-wing says he has dreamed since his youth in China about having
enough wealth to build toilets of gold – which Lenin in 1921 said
would serve as a useful reminder of the waste of capitalist warfare."
begins a left-handed tribute to the free market, carried on the
AP wire in February. Walter Williams wrote recently that when an
American is wealthy, assuming he earned it, the wealth is a measure
of how others value him. Anyone who earns his wealth is paid by
people who believe they will be better off for doing so. Williams'
focus was the inheritance tax (he's against it), but his point can
be expanded to show the value of free markets.
an example, examine a touted peculiarity of the free market: Is
it fair that Michael Jordan made $30 million per year for playing
a game? Well, there are two problems with the question. First, it
is not the business of an economic system to judge what is just
and what isn't. Economic systems evolved, and did so often without
supervision, to solve human problems and answer needs. Reality,
not justice, is the milieu of economic systems. The second problem
with the question is that those who ask it are completely ignorant
of some fundamental economic principles.
Jordan made money because people paid to attend his basketball games,
and paid more for products, or bought more of them, when they carried
his endorsement. Those who attended his games paid $60 and more
per ticket, and thus directly paid his base salary. Ask them why,
and they'll tell you it's because it was worth it. The fans who
bought season tickets will say they got their money's worth, as
did the fans who cared to fork over enough for only one game. The
salaries of sports stars will decrease precipitously if fans decide
they're not getting their money's worth and stop attending. Supply
and demand, working freely, have brought about the high salaries.
Michael Jordan create wealth? Watching a basketball game is the
consumption of value, or the enjoyment of wealth. Anyone who pays
for a ticket is telling the league he would rather watch the game
than keep the money; the game is worth at least the price of the
ticket. Nor is the game the end of the wealth creation: Michael
Jordan created jobs for people who write advertising, people who
manufacture products he endorsed, and people who sold concessions
at the games. His store of wealth cannot help but create more wealth – in
a free market, at least – unless he buries it. If he buys a house,
he employs manufacturers and builders. If he keeps it in a bank,
he employs bankers, who loan the money to businessmen to create
goods and services, and jobs. On balance, the salary of a sports
star is the world's compensation, given freely, commensurate with
the value the market believes the athlete creates.
what about golden toilets? First, they tell us that Mr. Lam already
has done something that people in Hong Kong have found valuable,
or he wouldn't have the resources to build the bathroom. Lam has
several millions invested in this bathroom, and plans to charge
$14 for a mere peek at the toilets. If the venture makes money,
it means people value that peek. People value running and jumping
enough to pay $30 million each year to watch it; the $5 million
or so invested only once in the jeweled privy is far less significant.
The bathroom can be there decades hence. An entire year of basketball,
the whole thirty million dollars worth, is but a highlight reel
a bigger lesson here. Lam built the bathroom because Lenin said
that communism would be so efficient compared to capitalism that
many Russian toilets would be solid gold. The reality, nearly a
century later, is that only two manufacturers are capable of building
a large passenger jet: Boeing, an independent American firm, and
Airbus, requiring the cooperation of several European nations. America
and Europe have in common relatively free economic markets. What
does Russia produce, besides vodka and caviar, that anyone else
wants? Oh, right, weapons. (Russia's ballets and orchestra music
peaked in the 1940's.)
the freest big-nation market, produces its own large jet planes,
the world's largest automobile makers (Honda, Mercedes, BMW, and
others are now building here; Honda brings its Japanese managers
to Marysville, Ohio to see how the most efficient auto plant in
the world works), and the world's largest entertainment industry.
These capitalist "excesses" are not alone – America has
the world's most prolific medical, pharmaceutical, and agricultural
Michael Jordan, Tiger Woods, and other stars have incomprehensible
incomes, and that Lam Sai-wing has built a golden bathroom, are
not signs of decadence, waste, or even greed. They signify other
things of great import: The economies that give rise to such things
obviously have solved basic problems of food, clothing, and shelter
(so much so, for example, that 74% of households in the United States
that are designated "impoverished" by the national government
own video cassette recorders). Basic problems have been solved so
comprehensively that we have money and, equally significantly, time
to spend on basketball and impractical commodes. From this perspective,
perhaps it should be our goal that all nations have golden toilets.
First we must make all nations economically free.
Edmonds, Doctor of Musical Arts, is a banker in Alabama.