But that’s not how a market economy works. We all know this when it comes to, say, smartphones and groceries. Steve Jobs didn’t become rich by stealing i-Pads from homeless people. He got rich by creating value for others, including millions of people less wealthy than he was. Ditto for your local grocer. The farmers grew the food, but the grocer also generates value by orchestrating a service that allows you to acquire a wide variety of food items safely and conveniently.
Wealth, in other words, can be created rather than merely transferred from one account to the other. Do we really want a society in which those who can create the most wealth are punished for doing so?
Though each of us is equal in the eyes of God, and should be equal before the law, we have diverse skills, passions and physical attributes. Where this is obvious, and where the contribution of those talents is easily grasped, people are unlikely to complain. Few publicly begrudge the incomes of professional athletes, actors and high tech entrepreneurs. The greedy one percenters we hear about are invariably Wall Street bankers and corporate CEOs, those doing jobs whose value is difficult to grasp because the contribution is abstract.
There are nations that acted on this animus against finance, labeling the business class as leeches and sending them out into the fields either to be killed or do subsistence farming. Those economies imploded, so apparently high-level business managers actually do perform something useful and hard to replicate.
It would be easy to end there, but there’s another wrinkle that when ironed out reveals a legitimate complaint against Wall Street bankers and corporate CEOs. Some seem to have acquired their wealth through political connections rather than value creation. That’s cronyism, not capitalism. And many Americans rightly view cronyism as a moral outrage, since it substitutes the voluntary exchanges of a market for the coercive power of the state.
Rather than fixating on income inequality, then, we should focus on the real problems: poverty, cronyism and the human capacity wasted due to high unemployment. The significant “gap” is not between the homeless and the Tom Bradys of the World, or between the McDonald’s employees and all the Fortune 500 CEOs. The real divide is between the cronies in Washington and everyone else, including the poor and unemployed. Vilifying and punishing genuine wealth creation will remedy none of these problems.
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