Friday, March 5, 2010

The Myth of Unequal Distribution of Wealth

One of the myths perpetuated by the great socialist educators of our time is the idea that an unqual distribution of wealth is a bad thing. Educators pound it into student heads as if it is a geometry postulate. Like almost everything else they say, the socialists have it wrong here as well.

G. M. Trevelyan in his History of England is not trying to make an economic or ideological point when he describes how an unequal division of wealth helped to build a prosperous England. Medieval aristocrats had wealth, much of the rest of the country did not. When those aristocrats started developing tastes for items made outside their regions, a merchant class had to emerge to bring those items to the wealthy. later a manufacturing class emerged to produce those items closer to home. In other words an unequal distribution of wealth created a market condition that spread the wealth to those who were most productive and innovative, therefore encouraging more efficiency and innovation. The wealthy did distribute wealth, but got a fair market value of goods or services in exchange. Also they are unlikely to spend all their money at once, so they will continue rewarding good businessmen for a long time to come.

Meanwhile the formerly less wealthy individuals who work hard and make sound decisions rise to the classes of the wealthy.

An unequal distribution of wealth in a society where government interferes little will produce more real upward social mobility. We used to call that "the American Dream."

Obama wants to redistribute wealth as well. He does not propose to offer goods and services to the wealthy; he wants to seize from them the wealth that they earned legitimately. Obama does not propose to reward the industrious, efficient, or innovative, he proposes to prop up failed businesses that support him politically, give away favors to political allies, and toss out crumbs to the poor to purchase their votes. Meanwhile the productive and industrious get burdened with more taxes so that they can finance "change." Where is the incentive to be a producer? You can stick to principles and get your wealth stripped from you or get in line with the looters and beg from the benevolent fist of socialized government. Or head for the hills and go on strike like John Galt.

Which example is more likely to produce a powerful and prosperous economy?

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