June 2000 Fraser Forum: Capitalism and the Common Man
There are some arguments, having a faint measure of plausibility, that have served politicians, charlatans, and assorted do-gooders for well over a century in their quest for control. One of those arguments is that capitalism primarily benefits the rich and not the ordinary person. That vision prompts declarations such as US Representative Richard Gephardt's assertion that high-income earners are "winners" in the "lottery of life." Then there's Robert Reich, former US Secretary of Labor, who calls high-income earners the "fortunate fifth." This nonsensical vision leads to calls for those who've been "blessed" to "give back" either voluntarily or coercively through the tax code.
While demagogic statements like these have high emotive worth, they reflect resolute, nearly incurable stupidity about the sources of income. Listening to some of the talk about income differences, one would think that out there somewhere is a pile of money. People who are wealthy just happened to get there first and greedily took an unfair share. Justice requires that they give back. Or there's talk about unequal income distribution. The way some people talk, you'd think there's a dealer of dollars who shells out $1,000 to one person, $100,000 to another, and a million dollars to yet another. Thus, the reason that some people are wealthy while others are not wealthy is because the dollar dealer is a racist, sexist, or multi-nationalist - or just plain mean. Economic justice requires a redealing of the dollars - income redistribution - where the ill-gotten gains of the few are returned to their rightful owners.
In a free society, for the most part, people with high incomes have demonstrated extraordinary ability to produce valuable services for, and therefore to please, their fellow man. Sam Walton (founder of Wal-Mart), Bill Gates (founder of Microsoft), and singer Michael Jackson provided services deemed highly valuable by ordinary people who voluntarily took money out of their pockets to purchase those services. Walton's, Gates's, and Jackson's high incomes stand as unambiguous proof of that service. Their high incomes also reflect the "democracy" of the marketplace. For example, millions upon millions of independent decisionmakers decided to fork over $200 for Gates's Windows 98 operating system. Those who think that Gates is too rich and that his income should be redistributed are really disagreeing with the "democracy" of the marketplace and want to cancel or offset the market "vote."
Indeed, we might consider the dollars people earn as certificates of performance. Think of it in the following way. You hire me to mow your lawn. After I have completed the task, you give me $20. I go to the grocer and demand a pound of steak and a six-pack of beer that other people have produced. The grocer says, "You're demanding something that other people have produced. What have you done to serve them?" I reply, "I have served others by mowing that person's lawn." The grocer says, "Prove it!" That's when I hand him my $20, my certificate of performance.
Income earners owe nothing else to their fellow man; they have met their social obligations. If "giving something back" means anything, it should be the admonition to thieves and social parasites because these are people who have taken and given nothing in return. Our society has it backwards. Highly productive (rich) people like Walton and Gates are held up to social ridicule, while thieves and ne'er-do-wells are shown compassion and concern and have become society's mascots.
Good for the masses
Capitalism is the best thing that ever happened to ordinary people. The rich have always had access to entertainment, often in the comfort of their palaces and mansions. The rich have never had to experience the drudgery of beating out carpets, ironing their clothing, or slaving over a hot stove all day to have a decent dinner; they could afford to hire people to do the work for them. Capitalism's mass production and marketing have made radios and televisions, vacuum cleaners, wash-and-wear clothing, and microwave ovens available and well within the means of ordinary people, sparing them the boredom and drudgery of the past. Today most Western people have the power to enjoy more than what only the rich had available yesteryear.
What about those who became wealthy making comforts available to everyone else? Henry Ford benefited immensely from mass-producing automobiles, but the benefit for everyone else from being able to buy a car dwarfs anything Ford received. Individuals and companies that produced penicillin and polio and typhoid vaccines may have become very wealthy, but again it was ordinary people who were the major beneficiaries. In more recent times, computers and software products have benefited our health, safety, and quality of life in ways that far outstrip whatever wealth was received by their creators.
Here's a little test. Stand on the corner and watch people walk or drive by. Then, based on their appearances, identify which people are wealthy. Years ago, that wouldn't have been a difficult challenge. Ordinary people wouldn't be dressed as well - they surely were not wearing designer clothing - nor would they have nice-looking jewellery. Neither would they be driving by. Compare the income status of today's airline passengers with those of a few years ago, and you'll find a much greater percentage of ordinary people on flights now.
That's one of the great benefits of capitalism; it has made it possible for common people to enjoy at lest some of what wealthy people enjoy. One might assert that common people don't have access to Rolls Royces and yachts. You're wrong. Gates is super-rich and can afford to ride in a Rolls Royce and go yachting; but so can ordinary people - just not for as long. Ordinary people can rent a Rolls or a yacht for a day, or a half-day, or an hour.
Capitalism is relatively new in human history. Before its rise, people amassed great wealth by looting, plundering, and enslaving others. Capitalism made it possible to become wealthy by serving others. Capitalists seek to discover what people want, and then produce and market it as efficiently as possible.
Here's a question that we should ponder: are the wealthy people who have created unprecedented convenience, longer life expectancy, and more fun for the ordinary person deserving of all the scorn and ridicule heaped on them by intellectuals and politicians? Are the wealthy really obliged to "give something back?" Exactly what more do the wealthy discoverers and producers of, say, life-saving antibiotics owe us? They've already saved lives and made us healthier.
Despite the miracles of capitalism, it doesn't do well in popularity polls. One reason is that capitalism is always evaluated against the nonexistent, unrealizable utopias of socialism or communism. Any earthly system will pale in comparison to a utopia. But for the ordinary person, capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires.
Walter Williams is John M. Olin Distinguished Scholar at George Mason University in Fairfax, Virginia, and is a syndicated columnist. He has a Ph.D. in Economics from the University of California at Los Angeles.
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