Concerns about inequality animate much of today’s political debate. But Michael Tanner uses his latest National Review Online column to highlight benefits of inequality.
Hooray! Economic inequality has decreased. Fewer billionaires exist today than yesterday. Bernie Sanders should be dancing in the street.
As of its close on Monday, the Dow Jones was down more than 2,000 points and the S&P had dropped almost 8 percent, down from its peak on February 20. The plunge obliterated more than $5 trillion in wealth, a good chunk of it belonging to those evil millionaires and billionaires. In fact, the net worth of the world’s five richest people — Bill Gates, Jeff Bezos, Bernard Arnault, Warren Buffett, and Mark Zuckerberg — went down $24.6 billion collectively on Monday, according to the Bloomberg Billionaire Index.
But while schadenfreude may be emotionally satisfying, it is poor economics.
Much of the Left (and the populist Right as well) buys into a fixed-pie view of the economy: If one person gets rich, someone else gets poorer. Therefore, the only way to lift up those at the bottom is to tear down those at the top. In reality, however, those average, working-class Americans that Bernie claims to champion are no better off today because Jeff Bezos is now poorer.
The economy is not fixed in size, with the only question one of distribution. In a free-market economy, one person’s wealth does not necessarily come at the expense of another’s. We should, in fact, be striving for a growing economy with more resources for everyone, but the stock-market decline and its associated loss of wealth may actually make that harder. And those who will end up suffering the most will be those who can least afford it.
