Article by Ismael Hernandez
“Us” against “them” is the narrative of our times because it feels so good. It offers a simple answer for why things are they way they are, absolving us and condemning them. This type of pseudo-sacramental understanding of social processes offers what so many desire, an alibi.
A good example of a pseudo-sacramental view of life is the insistence on “income inequality.” The rationalization goes like this: “We” are poor because “they” are “rich.” All we need to do is punish them by confiscating what belongs to us. This understanding blames U.S. policy for having facilitated over time an upward redistribution of wealth. The underlying narrative assumes that wealth is a function of systemic injustice instead of a function of a system that rewards risk, inventiveness, response to opportunity, and economic initiative.
No, economic policy that protects the rich is the culprit. Over time, economic policy has supported the rick who tamper with the system and that is why we need state intervention to “level the playing field.” It is irrelevant that in effect policies that penalize investment has risen from 15% to 23.8% in this century when we factor in the Affordable Care Act surcharge.[i]
What do we get when economic policy punishes investment? We get slow growth. What is a tax on investments if not a penalty for putting wealth in motion to create more wealth and jobs? More important here is how the economy as a whole is understood as a battle for the distribution of resources instead of a working field for the creation of these resources. Anyone with a mindset of warring parties will be less inclined to become a producer, to become active. Instead, the incentive is for passivity and activism—aiming to mobilize others to change rules to benefit me.
What has created great wealth in the past decades has not been economic policy aimed at benefiting the “haves” and injure the “have-nots.” Such wealth is an effect of amazing technological advances—the internet, online companies, communications advances, changes in the service industry—which started in the mind of entrepreneurs who took great risks.Wealth was created by brilliant minds whose capacity to observe and decipher the great field of human needs and wants and find answers never envisioned before and has created better conditions for all. So amazing is this system that we have today a mass of people having access for cheap to things that were only accessible to a very few yesterday. We even thumb our noses to things today that only the “rich” could brag about a decade ago.
Penalizing great minds can only produce sorrows for all but it seems “fair.” Let us all get a “fair share” of a shrinking universe, is the idea. As long as the space between “them” and “us” shrinks, I’ll be happy to know that, although I’m not better off, they are not as well as I imagined. In reality, they will remain well-off, just not mobilizing their resources to create more wealth. This is a slippery-slope that only ends by the total collapse of a system that works in favor of a centralist system of unitary power that completely eliminates the enemy” the entrepreneur.
There will be no wealth gap to shrink when there is no more wealth. In the insatiable desire to harm a whole class of people, the benighted “rich”, no one will be lifted up.
[i]Tamny, John. Surging Wealth Inequality Is Poverty’s Greatest Enemy. Mises Institute, February 6, 2019, https://mises.org/wire/surging-wealth-inequality-povertys-greatest-enemy. Access on May 30, 2019.
