Incomes are Created, Not “Distributed”

by Don Boudreaux on October 7, 2011

in Inequality, Myths and Fallacies, Other People's Money

Regarding the recent rash of the anti-social sentiment called “envy,” one point to keep in mind is that the common use of the term “income distribution” (or “wealth distribution”) stacks the deck in favor of those people who are prone to envy – and in favor also of those politicians and pundits and community organizers agitators who are prone to feather their own nests by exploiting the propensity of many people to succumb to envy and to suppose that envy is a sound basis for government policy.

In market economies (which America’s still largely is), incomes and wealth are not “distributed”; they are created – and, hence, earned by their creators.

If the semantic convention were to refer, not to “income distribution,” but to “income creation,” then we’d have headlines (Or would we?) such as the following “Last year, the Top 10 Percent of Income Creators Created Even More Income than the Year Before.”

Such a headline is far less likely to conjure in readers’ minds images of prime-time-soap-opera demons who craftily steal money from the pockets of unsuspecting innocents.  But such a headline would be far more accurate than one that uses the term “distribution” in place of the more-correct term “creation.”

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The above point is hardly original to me.  It’s been made many times in the past by many sensible people.  But it bears repeating.

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{ 335 comments }

Randy October 9, 2011 at 5:44 am

MJ,
Re; Rampant Consumerism.

As I understand the term, it means that I have the right to decide for myself what to do with the product of my labors – as opposed to some politician deciding what to do with the product of my labors. You say it like its a bad thing, so I assume that you are one of the politicians.

Jim S October 12, 2011 at 10:11 am

Democrats and fellow travelers want everybody to have a piece of the pie, but they can only cut the pie into smaller pieces… it never occurs to them to bake more pies…. or better yet to get out of the way and let the people who know what they’re going to bake more pies.

Jim S October 12, 2011 at 10:13 am

oops… replace “going” with “doing”

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