Those who argue that only the rich have gotten richer, and blame “capitalism”, do not consider the facts. The stock market has made nearly everyone richer, not only in terms of income but also in terms of the overall quality of life and the products that they own. If Jeff Bezos is the richest person in the world–because of the value of his Amazon stock (he owned 17% of all shares in 2017)–what about the tens of thousands of people who also own that and other growth stocks, in their mutual funds, 401(k)’s, pension plans or as individual investors? Have they not also gotten richer?
The Mises Institute points out that the “capitalism blamers” (my term, they call them “leftists”) also ignore income mobility in market economies, when studies show that in fact most people born to the richest fifth of Americans fall out of that bracket within twenty years while most of those born to the poorest fifth climb to a higher quintile and even to the top. Why? As Ludwig von Mises pointed out in The Anti-Capitalistic Mentality, the businessman owes his wealth to his customers, and this wealth is inevitably lost or diminished when others enter the market who can better satisfy the consumer through lower prices and/or a better quality of goods and services.
The problem with income inequality today is that it isn’t entirely a byproduct of the free market but instead is the result of a market crippled by interventionist policies, such as (often) inappropriate or overly restrictive regulations, expensive licenses, and the most complicated tax system in the history of this country. Such restrictions have limited competition and made wealth creation more difficult, leading to the stagnation of the middle and lower classes. Though “regulation lovers” (leftists again) contend that these restrictions protect people from the “dangers” of the free market, they actually protect the corporate interests that progressives claim to stand against.
Colossal businesses like Amazon and Walmart favor higher minimum wages and increased regulations, because they have the funds to implement them with ease, and such regulations end up acting as a protective barrier, keeping startups and potential competitors from entering the market. With competition blocked, such businesses can grow artificially large and don’t have to work as hard to earn people’s business. Instead they can spend money on lawyers and DC lobbyists to fence small businesses out of the market. Ironically, efforts to regulate businesses in the name of protecting laborers and consumers harms small businesses and makes everyone less equal than they could be in a free market.…as I remind everyone of my recent post, The Beauty of Unintended Consequences.
Voluntary exchanges in capitalism are mutually advantageous. If they weren’t, the exchange would never take place. People who live in countries with more economic and social freedom enjoy greater incomes and a higher standard of living. Free trade has contributed more to the alleviation of poverty than have all the government-run programs. Socialist intervention in the market can only distance man from eradicating poverty and from happiness, as history has demonstrated over and over. Only free enterprise competition driven by profit can bring about the expansion of choice, the fall in prices, and the increased satisfaction that make us wealthier.