A Noxious Mix of Economic Ignorance and Envy…

by Don Boudreaux on February 1, 2019

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

… fuels the passion to soak the rich. In my most-recent column for the Pittsburgh Tribune-Review, I take on what I believe to be the chief chunk of economic ignorance that fuels this destructive passion. A slice:

I’m not close to being a billionaire, and I have no prospect of ever becoming one. Yet when I hear calls to confiscate large amounts of wealth from billionaires, I shudder. While exceptions no doubt exist, the people who get rich in our economy are overwhelmingly people who have made the rest of us richer.

Jeff Bezos is worth billions only because hundreds of millions of ordinary people found his new retailing method to be a boon. Bill Gates is worth billions only because hundreds of millions of ordinary people found his software to be superior, all things considered, to rival software. Billionaire hedge-fund managers are wealthy overwhelmingly because they took the risks necessary to direct large amounts of financial capital to where they do the most good for the economy.

The prosperity that we all enjoy as a result of the creativity, risk-taking, saving and work effort of these and other super-rich people would not exist if they had lounged around all day watching television, playing pool or reading poetry.

And note this important fact: no super-rich entrepreneur got rich by forcing anyone to buy his or her goods or services. You, me, and every other middle-class and poor person who spends money on what these entrepreneurs offer spends that money voluntarily.

People such as Ocasio-Cortez no doubt feel swells of moral superiority when they thunder in support of confiscatory taxation of the rich. But sensible people understand that such taxation, by dampening the incentives for entrepreneurship, will make us all poorer.

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