Back in the apprentice / master days, Carnegie states that the relationship between the two was more equal. They shared the same work space, the same hardships, and the same successes. But, as specialization and factories expanded, the cottage industries with their hand crafted goods could not compete with the factories’ cheaply priced goods and eventually had to adapt or go out of business (which sounds a lot like what happened in Carnegie’s experience). A third option that occurred was to violently resist the change like some weavers and other workers had done when they destroyed the machines in the early 19th Century (the Luddites). In the Carnegie’s case, they adapted and headed for America where some of their family had already had some success.
The problem with working in factories, according to Carnegie, is that the owner no longer works side-by-side with the workers in the factories. There’s a huge gulf between “the palace of the millionaire and the cottage of the laborer” and this is beneficial to all, he believes. He uses a visit to a Sioux Indian tribe as an example where the chief’s dwelling wasn’t very different from the rest of his peoples’ “wigwams.” By this, Carnegie inferred that Americans are advancing in civilization because not only are there cheaper goods for all, but that:
“This change, however, is not to be deplored, but welcomed as highly beneficial. It is well, nay, essential, for the progress of the race that the houses of some should be homes for all that is highest and best in literature and the arts, and for all the refinements of civilization, rather than that none should be so.”What we basically have here is the survival of the fittest, Carnegie states, in the business world. Those who are best at managing money, creating products, organizing and conducting business affairs will be rewarded because they are the best at what they do.
But, Carnegie feels that the gap between rich and poor has to be addressed in some way, and that’s where the disposal of excess wealth comes in. First, “it can be left to the families of the decedents; or it can be bequeathed for public purposes; or, finally, it can be administered by its possessors during their lives.”
The problem with the first way (inherited wealth), Carnegie believes, is that it is rare to find children of wealthy individuals who have NOT been spoiled by a life of leisure or indulgence, and by giving the inheritance to them would be a waste of that hard-earned money. See the 60 Minutes video below on Howard Buffett, son of billionaire Warren Buffett and see what he has done w/ his life so far. The father has made all of his children work for their lives and given them few extra things in their lives (in fact, none of them have graduated from college).
The issues with the second way (money is left to the public or gov’t) is that the real wishes of the deceased about how the money should be used might be thwarted (though I wonder what happened to wills and stuff like that in Carnegie’s day). This particular quote is probably the most damning: “In many cases the bequests are so used as to become only monuments of his folly. It is well to remember that it requires the exercise of not less ability than that which acquires it, to use wealth so as to be really beneficial to the community.” In essence, it’s easier to spend the money than to make it.
So, Carnegie feels that the best way to address the gap between the rich and the poor is for the wealthy of his and future time periods to follow the third way and use that wealth however they choose, but to do it wisely. People have joked that if Bill Gates just divided up his fortune amongst everybody, things would be nice in the short term. But it literally might amount to $500 a person (my own estimate) and then trigger some staggering inflation across the country as many people use some of that money to go and buy stuff unless they put it away for college or retirement. Carnegie felt that this kind of gift would be a silly idea: “if distributed in small quantities among the people, would have been wasted in the indulgence of appetite, some of it in excess, and it may be doubted whether even the part put to the best use…”
So, the wealthy shouldn’t be extravagant. They should be modest, and use that money wisely, in effect, putting it aside like a trust fund for when they retire to be spent on things that they feel are important. And, as Carnegie writes, the wealthy know how to spend the money better than the poor: ” the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.”
1. Do you agree or disagree with Carnegie’s assessment of how the wealthy should distribute their extra wealth? Why or why not?
2. In order to address the gaps between the rich and the poor, back then and even today, what should the money have been (and should be) spent on? Explain why.