In a post that’s nominally in reaction to an op-ed by Stephen Moore in yesterday’s Wall Street Journal, Pete Abel, writing at The Moderate Voice declaims:
I passionately agree that the most reliable, proven path to economically benefitting the most people is by constructing a society that consistently encourages “the entrepreneur, the risk taker and the cultivator of wealth through human intellect.”
followed by a mild defense of the progressive income tax.
The op-ed, the post, and the ensuing comments betray so many misconceptions about wealth and income that I was moved to write this post.
While inherited wealth and position are factors in being wealthy and having a powerful position, they’re not the only factors. If you don’t believe me, look at the list of America’s wealthiest people. Bill Gates, Warren Buffet, Sheldon Adelson, Sergey Brin, Larry Page, and Kirk Kerkorian aren’t the beneficiaries of inherited wealth and position. You need to get down to #9 on the list before you find somebody who inherited his wealth and, if you look at the entire list, only a minority inherited wealth.
The list of CEO’s of Fortune 500 companies tells the same story: inherited power is a factor but it’s not the most important factor.
Wealth or income are not the consequence of entrepeneurship, risk-taking (they’re the same thing), or cultivating wealth through human intellect or at the very best they are by-products of those things. However our American Calvinistic prejudices may tell us otherwise, wealth is not the consequence of moral excellence or intelligence or God’s favor or hard work.
There are only three ways that one becomes wealthy: luck, force or guile, or one does something that somebody is willing to pay for (the workings of the market). The notion that we reward risk-taking or hard work or anything of the sort is poppycock since it is the result that is being rewarded not the effort or the risk.
I’ve known a number of very wealthy individuals and a number of very powerful individuals over the years. It has not been my experience that they are particularly creative or even particularly bright. They are hard-working but not IMO they do not work a great deal harder than tens of millions of other people in the country who aren’t similarly wealthy or powerful.
My experience has been that most of the wealthy and powerful are canny manipulators of the system who’ve had a bit of luck. It’s not clear to me that either of those qualities are ones that deserve any particular subsidy.