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Shared Prosperity

In my latest column in the Pittsburgh Tribune-Review, I express my strong support for policies that ensure that the economy generates shared prosperity.  A slice:

Consider the simple market exchange of Ms. Jones buying tomatoes at Wal-Mart. Ms. Jones gains (otherwise she wouldn’t have chosen to buy the tomatoes at Wal-Mart); Wal-Mart’s shareholders gain (otherwise Wal-Mart wouldn’t have chosen to build a store and employ workers to sell the tomatoes); Wal-Mart’s workers gain (otherwise they wouldn’t have chosen to work for Wal-Mart); farmers gain (otherwise they wouldn’t have chosen to sell their tomatoes to Wal-Mart).

Wal-Mart’s entrepreneurial moves to build stores, to sell groceries and to innovatively manage its inventories undoubtedly enrich investors who stake some of their money on Wal-Mart. These investors, however, earn money only because Wal-Mart enables workers and consumers to gain.

If too few workers choose to work for Wal-Mart or if too few consumers choose to shop at Wal-Mart, Wal-Mart’s investors would lose, not gain, prosperity.

In short, Wal-Mart’s success at increasing its profits causes prosperity to be shared by many others. Some individuals might enjoy larger increases in their well-being than are enjoyed by others, but nearly everyone gains. In the market, an investor, producer or corporation that attempts to gain wealth without at the same time improving the well-being of others will fail.