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In Praise of Capitalist Inequality

As both Ayn Rand and Steve Jobs would remind them, the economic inequality that the OWS protestors oppose is not something to be condemned, but to be celebrated.

by
Paul Hsieh

Bio

November 6, 2011 - 12:00 am
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This is precisely the lesson that the OWS kitchen staff (or the woman with the laptop) have learned the hard way. Most people who advocate robbing Peter to pay Paul always imagine themselves as Paul — never as Peter. But when their desired forced redistribution is applied at a national level, the result is the near-universal misery and squalor of socialist countries like Cuba and North Korea. Except for a few political elites, everyone is equal — but poor.

In a free society, the economic inequality that the OWS protestors oppose is not something to be condemned, but something to be celebrated. A fully capitalist society allows people to rise as far as their ability and efforts allow. Because people differ in their talents, work ethic, and personal priorities, the natural result would be unequal levels of wealth.

Unequal “power law” distributions are the norm in a free society. A small number of authors sell a disproportionate number of books — just ask Harry Potter author JK Rowling. A relatively small fraction of blogs attracts a majority of web traffic. Or as anyone who works in a customer service field knows all too well, a small minority of customers always account for the majority of complaints.

Hence, it’s natural that a relatively small fraction of individuals might possess a disproportionate share of the wealth. In a free society, such inequality per se is not a problem, especially given that there is still income mobility for people to rise (or fall) as they deserve based on their talent and willingness to work hard — which is still the case in America.

Fortunately, many Americans still have a healthy respect for earned inequality. When Apple CEO Steve Jobs recently passed away, William Stoddard poignantly wrote:

I’ve given many thousands of dollars to Apple over the decades, a substantial part of which went to Jobs. And every dollar I’ve spent has brought me something that was worth more than the money was. Jobs spent his life giving me things of greater value than the money he accepted in exchange. And the same is true for his other customers. He gave the world far more value than the value of his personal wealth. If his fortune looked huge, it was a measure of the immense number of other people he made better off.

The fact that Steve Jobs earned a greater fortune than most others reflects the fact that he created much more value than most others — and in the process enhanced others’ lives to a proportionately greater degree. Steve Jobs’ earned wealth was a direct reflection of the value he added for himself and others — and his wealth should be praised and respected as a noble achievement.

It is also important to recognize that America is not currently a capitalist country, but rather a mixed economy with both capitalist and socialist elements. Hence, some Americans have become undeservedly rich through political “pull” and favors. But the OWS protestors aren’t opposed to government favoritism in principle — they merely want to shift those special favors onto themselves.

The OWS protestors claim to want “economic justice.” But real economic justice doesn’t consist of looting others’ wealth, but respecting others’ right to keep what they’ve earned. Unlike the OWS protestors, I don’t want to destroy the 1% to achieve a dubious “equality” where everyone is equally miserable. I don’t want to live in a dog-eat-dog world of constant “redistribution” and mutual predation where I survive only by looting from those wealthier than me, while those poorer than me survive by looting from me. Instead, I want a capitalist society which allows the top 1% the freedom to make their lives better — and in the process makes my life better as well.

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Paul Hsieh, MD, is a member of the Colorado chapter of Docs4PatientCare (www.Docs4PatientCare.org) and co-founder of Freedom and Individual Rights in Medicine (www.WeStandFIRM.org).
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