A more meaningful index than “income inequality”—it implies that income equality is the thing to strive for, heaven help us!—would be the correlation between the increasing balance sheets of the central banks of the world and so-called increasing wealth discrepancies.
Conservatives rarely argue the morality of capitalism and individual liberty. If they do debate, it is about the utility of freedom to the common good. The entire impetus of Republican-Party operatives is to keep up with the issues the Democrats introduce to distract from the destructive effects of galloping statism. So if the latter decry “income inequality,” the former affirm that they too worry themselves sick over whatever it is the Democrats are droning on about.
Today, Fox News reported gravely that the “World’s richest 85 people have as much as bottom half the population.” Similarly, this Townhall.com writer assures his readers that “Inequality is a Conservative Issue.”
“The Capitalist Professor” George Reisman is having none of it. He writes “In Defense of Business Fortunes and the Destructive Effects of Imposing Economic Equality,” at www.twitter.com, @GGReisman:
1. A fortune is accumulated by means of earning a high rate of profit on capital and heavily saving and reinvesting it year after year.
2. The high rate of profit is achieved by introducing newer, better products or producing existing products at a lower cost.
3. Sooner or later, competition brings down a high rate of profit to the general level. To go on earning it, further innovation is necessary.
4. For example, to maintain its high rate of profit, Apple has had to repeatedly improve its products and introduce several major new ones.
5. Had Apple stood still, its initially very profitable products, made obsolete by competition, would now be selling at huge losses.
6. The high profits are generally invested in the means of producing the very kind of products in which the innovations take place.
7. For example, Apple’s profits are invested in the expanded and improved production of Apple’s products.
8. Thus, business fortunes under capitalism represent ever better, less expensive products produced with capital constituted by those fortunes.
9. The fortunes originate in profits and are used as capital. Both ways they serve the general buying public. They also pay wages and salaries.
10. The existence of fortunes under capitalism benefits everyone in his capacity both as a buyer of products and seller of labor.
11. Imposing economic equality requires the confiscation of high profits. It would abort the earning of fortunes and stifle economic progress.
12. Advocates of economic equality know nothing about profits, innovation, or capital. They believe that wealth is a pile of consumers’ goods.
13. The capitalists, whom they depict as fat men, allegedly have too much of this pile. Some of it must be given to the starving masses.
14. Thus, imposing economic equality is also a policy of seizing capital in order to consume it—eating the seed corn and being impoverished.
15. Advocates of economic equality are wilfully ignorant of economics. They are fueled by envy and resentment, biting the hands that feed them.
16. Socialism/Communism is their philosophy. Stalin and Mao are their heroes. Famine, slave labor camps, and mass death are their legacy.
