9. Real income.—Economists sometimes speak of a man's real income and it is not difficult to explain what they mean. By real income is meant the things which a man buys with his money income. Suppose, for example, that a skilled artisan in a small city is earning $1,200 a year and that he must spend all of his money income in the support of himself and fam ily. If be moves to a large city where the prices of the necessaries of life are much higher than in his former home and his money income remains the same, his real income will decline, for he will be able to buy less. Yet we should note that possibly his psychical income -will be greater, perhaps because hig children have better opportunities for education, or perhaps because one of his daughters has a fme voice and can have it more properly trained and developed in the city than in the country. But the economist carmot make these fine distinctions. He is obliged to assume that, as a rule, working men think first and last of their money incomes and that they will not voluntarily and knowingly submit to a reduction of their real incomes.
In ordinary times men give no thought whatever to real income. The phrase would puzzle tbem. All they think of is money income, and if salaries or wages are raised they are pleased; but in extraordinary times circumstances may force the distinction upon them. When in 1914 the war between the Central Powers and the Allies caused a rapid and spectacular rise in the prices of foodstuffs and of many of the neces saries of life, no man had to be an economist in order to see clearly that real incomes were declining. To meet this situation the money wages of most of the laboring classes were greatly increased.
10. Private property.—Two most important insti tutions of human society are the family and property.
The test of private property is (1) the exclusive right of use and control, (2) the recognition of this right by others and (3) the willingness and power of some constituted authority to maintain this right against all comers.
The pursuit of agriculture introduced the idea of permaneneproperty in the soil. It became necessary to protect the tiller in his property rights in order to secure a continuance of tillage. The incentive to save, as well as the encouragement to produce, led in time to the creation of the capitalist system, under which, in most productive processes, the tools are owned by others than those who use them.
Private property- has been established as an institu tion because it is potent to increase the power of society over the external conditions of existence. Nevertheless society has seen fit to modify the right of private property in many instances. An owner
may not withhold his property from public use when it is needed for the public good ; nor may he use it in ways opposed to the public good.
The view that the right to private property is in herent and inalienable has been superseded by- another, that this right is a matter of social expediency based on the needs of society. Consequently, the right may be restricted or abolished when in the judgment of society its disadvantages outweigh the advantages.
11. Social discontent is manifested today, especially in newspapers and periodicals in tended to circulate among the poor, with regard to the great fortunes which a large number of men have accumulated during the last generation. It is claimed that the disparity between the condition of the rich and the poor is evidence of social injustice which de mands instant remedy. During the last twenty years legislative bodies in most civilized countries have as a result given much of their time to the enactment of laws intended to benefit the so-called working classes. Most economists are in sympathy with the purpose of all this legislation, such as the minimum wage law, child labor laws and the eight-hour day law, but they know very well that no permanent improvement in the condition of the so-called masses can be made until there is a clear understanding of the reasons why the incomes of certain classes are inadequate.
To people who are ill-fed and badly housed, whose wages are pitifully low, the attitude of economists toward them may seem one of callous indifference, but it is not. The economist forever dreams of an eco nomic millennium in which every man shall do the work he loves best, be happy in doing it, and receive compensation that will enable him to support himself and family in comfort and secure for his children the training and education that will fit them for well-paid services. But the economist knows that dreaming, hoping and sympathizing will accomplish nothing. He must make clear what are the causes of the in equality of incomes. Only when lie does this can laws be enacted which will be more palliative.
For several thousand years the human race guessed at remedies for malaria. Scientific investigation dis covered the cause in the mosquito, and there is reason to hope that the disease will finally disappear. Un fortunately it is not likely that any such siMple cause of economic evils will ever be discovered. The causes are complex. For that reason in this field of the dis tribution of/income the economist, faces many difficult problems.