Robin Hood pols wrong: Billionaires good for society
By Michael R. Worthington
Sunday, November 10, 2019
Entrepreneurs begin and build businesses, some of which propel a few of them to great wealth. The motive behind their successes doesn’t really matter because businesses are inherently good for society. Businesses provide employment, pay taxes, offer goods and services, and most contribute to charities.
Many wealthy business owners created charitable foundations to serve as eternal monuments to their memory. Who has not heard of the Ford Foundation, the Rockefeller Foundation, or the Carnegie Foundation? In more recent years, there is the Bill & Melinda Gates Foundation, The Oprah Winfrey Foundation, and the Craig Newmark Foundation (by the founder of Craig’s List). On the other hand, some wealthy business owners, such as Julius Rosenwald, donated to charity with little fanfare. Do their motives for establishing foundations matter to those who benefit from the charitable giving?
The only motive necessary for business success is that of economic self-interest. If a business doesn’t fulfill a societal need, it will go under due to a lack of customers. The economic invisible hand — described in Adam Smith’s classic book “The Wealth of Nations” — ensures that successful businesses efficiently allocate resources to owners and employees, which benefits everyone.
There are always a few bad apples in every group, but the overwhelming number of businesses are positive for society. One can cherry-pick a few truly horrible businesses or a few extraordinarily beneficial ones, but the success of the national economy depends on the success of the vast majority of businesses.
Philanthropy is wonderful, but it is not the only way, or even the most significant way, that businesses make positive contributions to society. Business enterprises (like this newspaper) pay employees and suppliers, who then spend money in the economy, which benefits other businesses and workers who also spend money, and so on.
Entrepreneurs are by definition innovative. Think of the electronic and pharmaceutical inventions over the last few decades that have benefited all of society. Some of the richest people in the world built their wealth in the technology sector by transforming how people communicate and transact business, and in the process, enriching the lives of everyone.
What is good for business, is good for employees. Lower tax rates and less red tape lead to economic growth and increases in individual income. Average hourly wages are now growing at the highest rate in a decade, and the unemployment rate is at the lowest level since 1969. In addition, there are a record number of people working in United States.
Unfortunately, some politicians are inciting envy of the wealthy. These Robin Hood candidates propose the confiscation of wealth from the rich and transfer of it to the less financially well-off. The problem is that this would remove the incentive to build successful businesses, and the economy as a whole would suffer. The very people these politicians claim they want to help, would be the first to lose their jobs during a recession.
The success of America is built on freedoms: free enterprise, free speech and freedom of association. All three of these freedoms are under attack by politicians who would restrict businesses, which are associations of people, and limit free speech by business enterprises. Some politicians are even promoting socialism, which is government control of businesses such as health care that comprises about 18 percent of the economy. The choice is clear. You can vote for freedom or you can vote for socialism.