Why do some people deserve a billion dollars?

This Cafe Hayek post discusses an inconsistency in the French culture when it comes to addressing income inequality.

They are fine with using government to address it, through taxation and redistribution, but are oddly opposed when the market addresses it through innovation.

In the comments of that post, there are some typical progressive responses.

Here’s one:

…there is no logical , moral, rational reason why any individual needs a billion dollars. Those people benifitted (sic) form (sic) a time when we had a far more progressive tax base that paid for the infrasturcture (sic), the education and the basic science research funding that allowed them to be so prosperous.

Here’s one logical and rational reason we should be okay with individuals earnings billions: it’s the potential of earning such handsome sums that encourages them and many others who don’t earn billions to take the risks that results in the innovations that make our lives better.

Nobody knows which risks will pay off and actually make life better, so the more trials we can encourage the better off we will all be.

Here’s a moral reason we should be okay with individuals earning billions: they created it and earned it. They didn’t take billions from others that already existed. They created billions in wealth by making making everyone else’s lives better. Those billions would not exist without the risks they took and effort they made.

This is a tough one for people to visualize because wealth creation is abstract. It’s too easy to view wealth as a ‘fixed pie’ to be divided up. But, it’s not.

Wealth is more like a fruit tree. Each new branch bears fruit that didn’t exist before. The more the tree grows, the more fruit it bears.

The commentator’s final points gives us a window into his thinking. He says the innovator doesn’t deserve billions because they really benefited from all the infrastructure and research that was laid before them.

I wonder if he would apply his argument to other fields? A music artist creates a popular hit and becomes wealthy. But, didn’t they just benefit from all the hard work of others who invented instruments, recording equipment and the networks that distribute that music?

Not magic or miracles

On the Carpe Diem blog, Mark Perry contrasts opposing views on Uber to illustrate different views on the market and government.

Then Perry writes:

Progressives seem to trust the heavy hand of government force more than they trust the invisible hand of market, they have more faith in regulated monopolies/cartels (e.g. Big Taxi, public schools) than market competition (Uber, charter schools), and in general favor government solutions and government force over market solutions and voluntary exchange. Or put differently, progressives don’t believe in the magic or miracle of the marketplace…

Markets don’t work because of magic or miracles.

Markets work because of communication, prices, competition and trial-and-error.

What amazes me is how few people see that.

As a consumer, choosing between competing products beats trying to change the rules so that the one provider does it the way you like.

Sometimes you can’t even anticipate how a business can change its product to suit you and you simply have to stumble upon the value through trial-and-error.

Game changer?

I agree with this article in American Thinker by Lloyd Marcus. He thinks Trump is providing a refreshing challenge to the “iron-fist, out-of-control bullying tactics” used by the left and the media to control their politically-correct message.

The left and media have grown too cozy in framing news items to fit their desired message to get the results they want or to make the news themselves.

In this case, from the incessant drumbeat about what Trump said of McCain’s war hero status, they seemed to hope to at least get an apology (better yet if it’s on their show) that is all too common from spineless politicians who play not to lose. Or, maybe it could derail Trump’s presidential hopes.

I couldn’t help but think that Matt Lauer had hopes that he could broker an apology to put a feather in his cap when he got on the phone with Trump yesterday morning on the Today show.

I must say, I enjoyed watching Trump give a holier-than-thou Matt Lauer a hard time for how his show had represented his comments about John McCain and refused to roll over to the bully.

Do I support Trump?

No. I think he needs help formulating and articulating his ideas — especially from some good free market economists. His DIY view on immigration, for example, is sophomoric.

He and Warren Buffett have demonstrated to me that good business results don’t necessarily make for good economic though. Though, to give them both credit, they’ve likely been so busy building fortunes to have given it a lot of thought. But, I figured they’d be smart enough to know that. Yet, both seem at ease in their own ignorance when it comes to such matters.

But, Trump seems to be resonating. There are many like me and Lloyd who appreciate what appears to be his authenticity and backbone.

Perhaps Trump will demonstrate to others that this can stand up against the phony, focus-group-tested, offend-no-one facades other politicians use to get your vote.

Made me laugh

In the Wall Street Journal, William McGurn wrote about how the Democratic Party is oddly at odds with revolutionary innovations like Uber.

This made me laugh:

Perhaps even more important, innovation by its nature challenges the inner-Elizabeth Warren in so much of today’s Democratic Party. However open Democrats may be to revolutionary new definitions of marriage, the thought that there might be some nonsexual for-profit contracts between consenting adults keeps progressives up at night.

Trump and McCain

If I were Trump I would say, What I meant to say is that someone’s war hero status should not be an excuse for allowing them to be a milquetoast career politician. 

McCain, as a skilled career politician, is milking it and using it to deflect from the issues. Give me a break. If I were him I would say, I could give a rat’s ass what hair ball thinks of my war service.

Tax Zing

A local afternoon radio talk show host this afternoon pointed out that the local paper has applied for and received an extension of property tax abatement for its state-of-the-art, architectural masterpiece of a production facility.

The editorial board of the same paper often writes about how the wealthy and corporations should pay their fair share of taxes.

He said, that’s fine if you want the property tax abatement. Who wouldn’t? But, I don’t want to see you writing about how others should pay their fair share when you don’t.

Yep.

Blame Disorder

Flipping thru radio stations yesterday and I heard a caller on a radio show say something like (paraphrasing from memory):

Did you know capitalism would have failed long ago if it wasn’t for marketing and credit? Marketing gets people to want things they can’t afford and credit allows them to buy those things.

Set aside the fact that capitalism has resulted in the highest standard of living ever on this planet and assume the caller is correct.

I wondered, why doesn’t this guy blame people for making irresponsible choices? Nobody forces people to buy things they can’t afford.