By Jacob G. Hornberger
One of the principal aims of the progressive (i.e., leftist, liberal, socialist) movement is equalization of income and wealth. They think it’s unfair, even immoral, for some people to have more when others have less. They especially decry the existence of billionaires but their lament oftentimes extends to millionaires as well, sometimes even to anyone who has more wealth than someone else. They want to the government to equalize income and wealth by taking away money from those who have it and either give it to others or simply retain it in the government’s coffers for general expenditures.
Leftists have convinced themselves that people are poor precisely because other people are rich. Of course, under a tax-and-redistribute political-economic system, theoretically that could be possible. That is, the state could tax people and then give the largess to, say, a corporation, enabling it to become wealthy through this corporate-welfare largess. Or the state could grant a monopoly to a firm to provide some good or service, enabling the firm to become wealthy owing to the lack of competitors.
In an unhampered market economy, however, which is what we libertarians favor, the only way that someone can become wealthy is by providing goods or services that other people are willing to buy. The more successful the seller is in satisfying consumers, the wealthier he becomes.
Thus, financial success in a genuine free market society cannot conceivably be the cause of someone’s else’s poverty. In fact, it’s the opposite: The more successful the firm, the better off people at the bottom of the economic ladder are.
First, consider the jobs the firm is offering to people. Those jobs provide income and security to employees. As the firm succeeds in satisfying consumers, it expands its operations. That means offering jobs to more people.
Second, consider the products and services the firm is offering to people in their role as consumers. The more products and services the firm is offering, especially if prices begin diminishing owing to increased supply, the better off consumers are.
Third, by increasing revenues and profits, the firm is adding to the overall level of capital in society, which brings about increased productivity, which means increases in prosperity and the overall societal standard of living.
Thus, in a genuine free market there is a harmony of interests between business owners, investors, employees, and consumers. They all have the same interest in maintaining and expanding the success of the firm. The fact that some people are getting wealthier than others is quite irrelevant when we consider that everyone is better off than they were before.
What really is the real driving force behind the socialist movement for equalization? Envy and covetousness. Leftists simply cannot stand the fact that some people have more money than they do. Even if forced equalization through the power of the state to tax the rich makes everyone, including the poor, worse off, that’s okay with socialists. All that matters is that the rich no longer are rich.
We have seen the socialist equalization mindset play out in communist countries. For example, when Fidel Castro took the reins of power in Cuba, he didn’t settle for just taxing the rich. He knew that that would reduce wealth inequality but not eliminate it. He decided to go for full equalization. He took everything — everything! — from the rich. Money, bank accounts, homes, and businesses. The communist government took ownership of everything. Everyone went to work for the government.
After a while, most everyone was equal in terms of income and wealth — that is, equally poor. In fact, most everyone was now on the verge of starvation. (The exception, of course, entailed certain privileged Cuban government officials.). By taking control over all the businesses and having government bureaucrats run them, the government destroyed not only the entrepreneurship that drives a free-market economy but also the private accumulation of capital, one of the keys to rising standards of living and prosperity.
Thus, the socialist equalization obsession ends up destroying the economic foundation for a genuinely prosperous society. More important, it destroys the liberty of the citizenry. That’s because in a genuinely free society, people have the natural and God-given right to accumulate as much wealth as they want and to do whatever they want with it.
This article was originally published at The Future of Freedom Foundation.