Every American is much better off with more – not less – wealth inequality.
Wealth Inequality Benefits All Americans
By: George Noga – June 27, 2021
Inequality of wealth, especially compared to the top 1%, is condemned by progressive class warriors. They are wrong. Most wealth inequality, including that of the top 1%, is beneficial, both economically and socially, to all Americans including those at the bottom of the economic pyramid. This post addresses wealth inequality; our post of May 9, 2021 addressed income inequality; read it on our website: www.mllg.us.
Although most forms of wealth inequality are a boon to society, some aren’t. The Latin American model where a few caudillos are immensely rich while most people live in poverty is condemnable. The Russian and third world model, where oligarchs get rich from abusing political power, also is evil. Some equality is harmful such as that in Haiti, Chad and Somalia; how much of that equality do you want? Then there is the matter of inherited wealth, which is addressed later in this post.
Why Wealth Inequality – Especially by the Top 1 % – Benefits Everyone
Even Soviet economists understood that newly minted wealth was the best indication of how well a society was innovating, becoming more efficient and serving the needs of all its people. In a free market capitalist economy such as the USA, wealth is created by providing products or services consumers voluntarily buy; it is always a win-win situation. Even the most powerful company cannot compel anyone to buy its products. The most potent force on earth is a consumer armed with a free choice.
Progressives like to consternate over the top 1% of wealth. AOC condemned “a system that allows billionaires to exist; every billionaire is a policy mistake”. Pocahontas called billionaires “freeloaders”. Bernie Sanders went bonkers saying, “The insatiable greed of billionaires is having an unbelievably negative impact on the fabric of our country.” So, is great wealth something to be condemned or lauded?
As noted supra, wealth is created by providing sovereign consumers with products they value. Great wealth is achieved by creating products desired by millions and even billions of consumers. The creation of great wealth is the same in principle as creation of small wealth; the only difference is the number of consumers being helped. Liberals believe it is okay to help a few people but it is evil to help a great many people.
Inequality between the top fraction of one percent and everyone else stems from the outsize success of entrepreneurs like Zuckerberg, Gates, Bezos, Jobs and Walton, who created millions of good jobs and enriched the lives of billions of people with innovative new products. Wal-Mart saves the average American family $100 per month via lower prices. The Waltons’ wealth pales compared to the benefits Wal-Mart provides ordinary Americans. We should celebrate such successes. Even though the great wealth that accrues to mega-entrepreneurs increases wealth inequality, Americans are much better off because of it. We need more of that kind of wealth inequality.
Dynastic wealth is viewed differently; many who accept new wealth are less sanguine about wealth not earned. Arguably, a modest amount of dynastic wealth is a small price to pay for the societal benefits of the original wealth creation. While acknowledging inherited wealth is different, it is a tempest in a teapot for the following reasons.
- The motivation of the person creating the original wealth includes providing for his/her family and future generations – a universal human sentiment.
- The vast majority of billionaires did not inherit. Of the Forbes list of American billionaires and their family members, over 80% are self-made.
- Most goes to charity. Gates, Buffet and others are giving it all away.
- Estate taxes take a large bite out of dynastic wealth in each generation.
- Most wealth is dissipated within three generations due to an ever-expanding pool of future beneficiaries, prodigal behavior and poor investments.
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Inequality of wealth in America is an unalloyed blessing; the more inequality we have, the better – especially if it results from the creation of incredible new products that make us more productive, enrich our lives every day and save us lots of money.
July 4th is MLLG’s inimitable post: Independence Day 2021.