I just saw the title and the first paragraph of a New York Times article about the recent health bill and its attack on wealth inequality. That got me to thinking, what’s so wrong with wealth inequality? Demonizing wealth inequality assumes that the economy is a zero-sum game. In other words, it assumes that if I make more money, that necessarily means someone else has to make less money. I don’t believe that is true.
Think of the economy as a pie. There are 2 ways to get rich: 1) to take a bigger slice of the pie, or 2) make the pie bigger so that everyone’s slice is bigger. I’m a firm believer that capitalism and free markets lead to the second option, making the pie bigger so that everyone’s slice is bigger. I also believe that opposition to capitalism and free markets is rooted in the belief that the end game of capitalists is not to make a bigger pie, but to take a bigger piece of a finite pie.
Wealth production is not a zero-sum game. It is a result of the freedom we have to pursue life, liberty and happiness. That freedom means there are incentives to work hard, take calculated risks, and try and make the most of the time and talents God has given us. That freedom also ensures that there are incentives to be as efficient and productive as possible. When we are efficient and productive, we produce more. When we produce more, we make the pie bigger. When the pie gets bigger, everyone’s piece gets bigger. Yes, one person’s piece might still be much smaller than someone else’s piece, but ultimately we all have the opportunity to expand our piece of the pie while simultaneously expanding the size of the pie.
I hope that made sense. It’s lunch time, and all this talk of pie is making me hungry.