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People everywhere are sacking capitalism.
But what they think they know about capitalism is generally wrong.
My new video debunks some myths about capitalism.
“No one ever makes a billion dollars,” complains Rep. Alexandria Ocasio-Cortez (DN.Y.). “You take a billion dollars.” In other words, the capitalists get rich by taking money from others.
It’s nonsense, and myth number one.
People believe this myth if they think that when one person wins, someone else has to lose. It is natural to believe that if you think that there is a limited amount of money in the world. But there is none.
Free markets increase total wealth. Competition encourages entrepreneurs to find new ways to unlock more value from both people and resources.
Because capitalism is voluntary and consumers have choices, the only way for capitalists to get richer is to give us something that we think is better than before.
It creates new wealth.
Steve Jobs has become a billionaire. But by creating Apple, he gave us more: millions of jobs and billions of dollars added to our economy.
Research shows that entrepreneurs only keep 2.2% of the extra wealth they generate. “In other words, the rest of us have captured almost 98% of the benefits,” says economist Dan Mitchell of the Center for Freedom and Prosperity.
“I hope we have 100 new super billionaires,” he adds, “Because that means 100 new people have found ways to improve the rest of our lives.”
But former Labor Secretary Robert Reich said we should “abolish billionaires”. He wants some form of wealth tax to withhold their wealth. “Entrepreneurs like Jeff Bezos would be just as motivated by $ 100 million, even $ 50 million,” says Reich.
But Mitchell points out that if their income is limited, “maybe they’ll just relax… retire… sail a yacht around the world… consume instead of saving and producing.”
I want them to save and produce! Billionaires have shown that they are good at reducing prices or improving products or both.
As Michell says, “I don’t give Jeff Bezos money unless he sells me something that I appreciate more than that money.”
Even if they don’t, even if they run out of ideas, their wealth is useful.
One reader called me “a complete jerk” for saying that. He argues that “more money in the richer hands means that the money stays in the bank and does nothing.”
But it is an ignorant view of the banks. Because the banks lend that money, they allow other people to buy houses, start new businesses, and get an education.
Yet I hear that “the rich get richer, while the poor get poorer!”
This is myth number two. Yes, the rich got a lot richer, but the poor and the middle class got richer as well.
“The economic pie is growing,” says Mitchell. “We are a lot richer than our grandparents, and our grandparents were a lot richer than their grandparents.”
For thousands of years, the world has had virtually no wealth creation. It was only when some countries tried capitalism that the gross domestic product increased.
The capitalists helped everyone, including the poor.
The media suggest that today’s wealth gap proves this is no longer true. But they are wrong. The gradual progression of capitalism continues. Census Bureau data shows that the average family today is almost a third richer than it was 40 years ago (yes, adjusted for inflation).
The media also say, “The middle class is in decline.
That’s right, Mitchell points out. “It is decreasing because more and more people are entering the top income quintiles!” The rich get richer in a capitalist society. But guess what? The rest of us are getting richer as well. “
Next week no more myths about capitalism.
COPYRIGHT 2021 BY JFS PRODUCTIONS INC.
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