Rewarding businesses that provide society with the products and services they want is fundamental to economic vibrancy.
Apple Inc., the world’s largest company by market capitalization, recently released the newest version of its iconic Smartphone: iPhone 5. Preorders topped 2 million in the first 24 hours. It will give a massive boost to suppliers and derivative companies; indeed, JPMorgan estimates it could add about 0.5 percent to the nation’s GDP on an annualized basis.
Should public servants determine that Apple’s executives, or any brilliant innovators who create wealth for society, have “made enough money”? Is the government more efficient than free markets in spreading wealth around?
President Obama seems to think so. Here are a few things he’s said: “I do think at a certain point you’ve made enough money,” “When you spread the wealth around, it’s good for everybody,” and “You didn’t build that.”
These sentiments thrive in community organizations and academia’s ivory towers, but the troubled history of failed socialist states shows that redistribution slows overall economic growth. Actually, slower growth adversely affects minorities disproportionately, creating even wider inequality. Just look at the current unemployment rates by race.
While government can properly foster equality of opportunity, sanctioning equality of outcomes is folly; it contradicts human nature. That’s why Marx’s infamous slogan, “From each according to his ability, to each according to his needs,” has been consigned to the scrapheap of history.