There was a viral video called "Wealth Inequality in America" making the rounds this week and a post by Derek Thompson at The Atlantic that cited it with the headline "Wealth Inequality Is a Problem, but How Do You Even Begin to Solve It?"
It was enough for me to write a response at Forbes:
There are at least two problems with Thompson’s article. First, the very term “wealth inequality” and second, his less than enthusiastic reference to the “returns of globalized capitalism,” a sentiment more obnoxiously expressed in the way the video he embedded put facetious quotation marks around “’dreaded’ socialism” to hint that such a system has actual merit as an alternative to capitalism.
To address the first issue, we need to agree right now to do ourselves a favor and stop calling it “wealth inequality.” Wealth is not the culprit. There should be no negative associations with the word wealth in the context of people having it. Poverty and social dysfunction are what plague us; they cannot be fixed by taking from the haves to give to the have-nots. To improve the situation, the have-nots must become the do-somethings.
While the solution may be complex in its execution, it can be simply stated: Establish stable institutions to empower people to be free and productive and they will prosper. Redistribution of a static supply of resources accomplishes nothing and makes no one richer. Wealth creation is the answer.
I go on to explain what I mean by wealth:
Though the video uses little animated dollar bills, money is only the measurement of wealth, it is not the substance. Wealth is instead a richness of life. As John Stuart Mill put it, wealth may be defined as “all useful or agreeable things, which possess exchangeable value.” It is potentially anything our boundless minds can produce from the materials at hand.
And then I go into the persistent, oblivious fascination with socialism, though it pains me that such things even still need to be said:
Let’s get something straight once and for all. Socialism is not to be satirically “dreaded,” it is to be summarily avoided at all opportunities. Socialism is economic insanity. There is no more adequate way to describe it. Even if we were to tolerate the folly of redistribution, for instance through taxation and welfare transfer payments, this is merely the least offensive socialist idea.
Socialism entails nationalization, the state management of the means of production and resources. The state is the main employer and therefore the main benefactor. People are reliant on the whims of leaders and technocrats to determine a fair compensation for their labor. Because the state sets prices arbitrarily, rationing inevitably follows. Black markets become a necessity. Socialism is an economic system that requires a shadow economy to operate. It is at every level inefficient and global history more than proves this by now.
I close with an argument that many have been trying to make lately, a case for capitalism and its moral and material superiority:
Capitalism is not the enemy. Not for a free people who have prospered because of it, at least. Capitalism has done more to save and enrich lives in Western civilization than we can possibly enumerate. Perhaps that’s the problem. Most Americans don’t know any other way of life. They don’t understand how miserable, sick, and poor we’d be without the creative power of a free market.
They don’t grasp how disturbing socialism has been in practice. In the 1930s, in the larger cities of the Soviet Union, abortions outnumbered births. People had no incentive even to carry life on into the next generation. People need incentives. They need to believe that their children will thrive and prosper. The only system to successfully and consistently instill that kind of confidence is capitalism. So, yes, socialism is rightly to be dreaded and no, the returns of capitalism are not to be viewed with scorn.
The full post can be found here. What do you make of the "wealth inequality" meme? Why does it seem to capture people's attention?