Andrew Colclough

It has an often repeated axiom that a person can learn a whole lot about a society by how it treats its poor. But just as much can be learned by looking at how that society treats its rich. Indeed, the economic future of the poor – and our nation – will be determined in the coming decades by how we treat the people in this country who create great wealth. It will be determined by our understanding of the so-called rich. And our ability to protect this minority.

It is an unpopular thing to say, I know. Rich people need help? Rich people need to be protected? Rich people a minority? Give me a break. They just seem to keep getting richer!  Regrettably, too many Americans, and far too many intellectuals and politicians, don’t understand these people we call “the rich.” And how it is they got rich in the first place.

Because most of us don’t actually know any of these rich people, we instead experience them in the abstract, through policy debates and statistics, and always through the prism of our own ideological lens. We look at the raw data to state our case either against or for the richest among us. In the end, our view of the rich has much to do about how all of us view "capitalism" itself. Indeed, in that respect, our opinions about the rich are a sort of Rorsach test, revealing more about ourselves than anything else.

To those on The Left who think capitalism creates unfair outcomes, they have statistics to confirm their outlook. It seems absurd on its face that the top 1% of American families own 90% of the nation's wealth.

Wouldn't it be possible to contrive an economy that is just as prosperous but with a fairer distribution of wealth? Couldn’t we cap the earnings of the rich at $50 million? Or even $100 million? 

Most defenders of capitalism and free markets say no. They contend that the bizarre inequalities we see are an indispensable part of the processes that create wealth. They imply capitalism doesn't make sense, morally or rationally, but it makes wealth. So don't knock it.

What nonsense it all is!  And how little to do with the reality of the rich. And how sad that defenders of the rich – or the rich themselves - can’t come up with a better economic or moral case! Quoting Adam Smith and supply side economists just doesn’t cut it.

So who are the so called rich? As someone who is rich (and would love to be even richer), and has spent a lifetime working with people who create wealth, I thought I’d explain who they are, where they come from, and why we should care about their wealth – and their desire to hold on to it.

To begin, it is not exactly a list of the Who’s Who and Most Likely to Succeed in high school or college, this group of Americans called the rich. They are certainly not the best looking. They didn’t get the highest SAT or ACT scores in high school, they probably weren’t voted most likely to succeed in any yearbook, and they certainly didn’t get where they got through the force of their personalities, charisma or celebrity.

A great number of the richest among us never finished high school, and many who went to college never managed to graduate. That’s because the rich in this country are chosen not by blood, credentials, education, or services to the establishment. The rich are chosen for performance, and for their relentless desire to serve consumers.

The entrepreneurial knowledge that is the crux of wealth creation has little to do with glamorous work, or with the certified expertise of advanced degrees. Great wealth usually comes from doing what other people consider insufferably boring.

The treacherous intricacies of building codes or garbage routes or software languages or groceries, the mechanics of butchering sheep and pigs or frying and freezing potatoes, the murky lore of petroleum leases or housing deeds, the ways and means of pushing pizzas or insurance policies or hawking hosiery or pet supplies or scrounging for pennies in fast-food unit sales, all of those tasks are deemed tedious and trivial.

In short, our rich – America’s best entrepreneurs - perform work that most others spurn.

Very important article.

This is a thoughtful critique of the private vs. public control of our air traffic control system. However, it raises some important issues which deserve more attention.

Whenever someone trots out the 'Profits vs. People' line (or its various forms - as above: "Profits over People"), it is important to recognize this as nothing more than an economically illiterate straw-man. We live in a society of free people, not of slaves.  Therefore, there is no such thing as People versus Profit, rather - they go hand in hand.

In a free society, Profit in not something which necessarily requires the sacrifice of People. In fact, Profit is not possible without People - whether workers or consumers. Nor is Profit simply "making money," though it is almost exclusively discussed this way. (Note that money is nothing more than a representation of value, and a means of easily trading it. Without money - trading would be nearly impossible. I would have to barter hours of web development directly for flight control service, or mexican food, or Wii games, or my mortgage payment, etc.) People trade things they value and produce, (usually represented by money), for things they value more or are incapable of producing. This creates a 'profit' for both traders. The one offering the service - turns a profit on the service provide, the other gains a profit from the service rendered. There is no 'versus'.

Likewise, the animosity toward the 'profit motive' is also illogical. This phrase is often used as a pejorative describing an enterprise making money. But what of the consumer's 'profit motive' to obtain the service for the cheapest cost? Both parties are negotiating a trade of value. Why is only one seen as profiting, and is thus demonized? As a service provider or producer in a free market - it runs counter to the 'profit motive' to 'put profits over people' and do something that is destructive to your customers or the public image of your company. Because a private entity does not have the ability to use force (in contrast with the government, which IS force), it is inherently imperative to, not only, earn your trust and support - but provide something of greater value, than whatever thing of value (money) you would trade for it. If a certain product or service is not of greater value - or if the provider is known to harm its customers, you are free to trade for something else that isn't harmful and is a better deal. Essentially - you are free to choose to pursue a better trade - one in which you gain a bigger (here comes that 'evil' word again...) profit with regard to what you offer to trade. The profit motive is hardly more than the desire to not get screwed over when making a trade.

Consider these thoughts the next time someone attempts to decry Profits, the profit motive, or pushes the false idea that Profits and People are enemies fighting for opposing teams.

One Crucial Distinction About Capitalism

Above I am arguing for capitalism. It is essential to point out that private entities who do use governmental force to compel consumers to trade for their service are not practicing capitalism. Capitalism is free trade, hence -laissez faire.  The power to determine and negotiate value and fairness is on the individual traders. Forced trade is a feature of socialism, communism, and/or fascism. With forced trade, the government (force) is used to increase a private entities influence or bargaining power. For example: Let's say General Electric is lobbying congress (which they are) for all sorts of things (as is their constitutional right). Among those things is likely a push to pass legislation against incandescent light bulbs in the interest of climate change. Congress then may outlaw these bulbs, and you will be obligated to purchase the new curly florescent bulbs. Obviously, G.E. will profit greatly from this new legislation, even if you buy your new bulbs elsewhere, because the new law will necessarily create an increase in demand. The point is that G.E. will have bargained with the politicians to borrow the government's monopolistic force to influence the market and raise the value of florescent light bulbs. This is anti-capitalism. 

Perhaps you may argue that you get to vote about the new legislation (usually you don't, but for the sake of the argument...) - but your decision is either upheld or overruled by the majority of other voters. This is a far cry from actually freely choosing - "I will trade some value, in exchange for something you value more".

This difference is crucial and must be distinguished, as it is commonplace to blame laissez faire capitalism (free trade) for the faults which are actually aspects of socialism (government sponsored forced trade). Ayn Rand further lays out this distinction in the video below:

In reality, scarcity is the cause of many of the difficult choices individuals face. However, governments prefer to find "greedy-bastard" bogeymen to blame. This allows governments to play as saviors rather than as the parasites causing the problems in order to benefit favored constituencies at others' expense. But government has no power to eliminate scarcity.

Government, beyond its role of defending voluntary arrangements against force and fraud, only makes the effects of scarcity worse. It substitutes decisions by people with worse information and incentives, backed by the power of coercion, for decisions by people with better information and incentives. That is why it is actually government "solutions" that increase the influence of greedy bastards in society. After all, "greedy bastard" is an excellent description of someone who demands power over others without cost or their willing consent; and falsely blames others to gain it.

Socialism's greatest success is effectively blaming Capitalism for all of its faults.

Now if only I could find a really good scapegoat for all the moronic things I've done... Unfortunately, nothing can repel buffoonery of that magnitude. :)

"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics." 
-Thomas Sowell