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Reich Is Wrong Again

Here’s a letter to the Baltimore Sun:

Misleading language, faulty economics, and failures to connect the dots saturate Robert Reich’s essay “The growing wealth and clout of the richest .01 percent” (Nov. 21).

He misleads by writing that “the richest one-hundredth of one percent of Americans now hold more than 11 percent of the nation’s total wealth.”  In reality, though, there’s no such thing as the nation’s wealth.  Wealth is created by, and belongs to, individuals.  And overwhelmingly, the more wealth an individual creates – by producing, in cooperation with others, goods and services valued by consumers – the wealthier that individual becomes.  Yet Mr. Reich’s wording suggests that wealth exists independently of individual creativity and initiative, and that it rightly and originally belongs to “the nation” rather than to each of the individual men and women who create it.

His economics is faulty when he describes this wealth as being ‘held,’ as if it sits idly.  Yet the great bulk of this wealth is invested in productive enterprises that make consumers and workers better off even as it makes its risk-taking owners better off.  This wealth is not in safes or mattresses.

And Mr. Reich fails to connect the dots by complaining that the rich spend more and more of their wealth in the political arena.  What else to expect when that arena becomes ever more central to Americans’ daily lives and, simultaneously, becomes ever more crowded with redistribution-mongers (such as Mr. Reich) whose squeals to soak the rich grow louder and harsher?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030