Already a Bloomberg.com user?
Sign in with the same account.
WHO DID MORE FOR MANKIND, MOTHER TERESA OR MIKE MILKEN?
In any country with a market economy, even one forced to bear the burden of a large welfare state, consumers have a wide range of choices for all their wants. People from communist countries who visited America went home in awe of the ability of the market economy to deliver the goods.
Intellectuals, including many academic economists, have a difficult time giving the market its due--despite its unrivaled success. The professor sitting at his desk with his choice of every tobacco for his pipe, every tweed for his back, and every wine and food for his table will nevertheless pen a screed denouncing conspicuous consumption, greed, and income inequality, all of which he will blame on the market.
Economists especially cannot get income inequality out of their system. It galls and perplexes them immensely that the process of wealth creation results in income differences. One recent book, The Inequality Paradox, published by the National Policy Assn. with essays by Janet L. Yellen, President Clinton's chief economic adviser, and Robert B. Reich, Clinton's former Labor Secretary, finds inequality to be a disturbing paradox. It blames economic growth for not solving the "problem of income inequality."
Income inequality is not a problem, but a natural consequence of a free society. Nevertheless, judging capitalism by the standards of communism is a favorite pastime for economists. The process allows them to denigrate capitalism for not doing what a different system--a failed and defunct one--was supposed to do but didn't. The market rewards merit, ability, luck, and success with wages, salaries, profits, capital gains, and dividends. The rewards differ because the performances differ. Unequal incomes are proof that the market is doing its job.
STOLEN WEALTH. One day, perhaps, egalitarian ideologues will manipulate genetics to eliminate all distinctions between people, including drive and determination. Then, only luck would account for income differences, and these differences could be eliminated with a "luck tax" that would not harm the incentives of the system.
Intellectuals are unhappy with the market because they don't see wealth as the result of a creative process such as art and literature. Intellectuals view wealth as stolen if made, and mundane if inherited. They think of wealth as a finite quantity like "exhaustible" resources. The people who get rich are the ones who go back for seconds before others get their first helping. Intellectuals simply cannot connect the wealth of a Bill Gates with the creative process.
Not many people have been brave enough to come to the defense of "immoral greed," but ABC-TV's John Stossel recently found one for his program--philosopher David Kelley of the Institute for Objectivist Studies. Kelley calmly noted that Michael R. Milken was a greater benefactor to mankind than Mother Teresa. Milken created wealth, jobs, incomes, and new products for large numbers of people, while Mother Teresa redistributed wealth donated by philanthropists. Yet Mother Teresa was praised for her self-sacrifice, and Milken damned for self-interest.
PAYING A PRICE. The attack on "greed" is really an attack on freedom. Among economists, it was Milton Friedman more than anyone else who took time from his research to defend economic freedom. The memoirs of Friedman and his wife, Rose, are about to be published by the University of Chicago Press. They show, among many other fascinating things, that economists who had a good word for capitalism in the 1940s, 1950s, 1960s, and 1970s paid a price.
For example, in 1941, not even the determined president and dean of the University of Wisconsin could get Friedman appointed to a teaching job over faculty objections. Years later, a person who had studied economics at Duke University in the 1950s later wrote to Friedman that the library in those days had contained nothing by Friedman: "On consulting with my professor, he explained that Duke had a system of screening new material by the appropriate department and the Economics Dept. did not consider your work worthy of carrying." Out of step with the socialist thinking of his time, Friedman was passed over for the Nobel prize for many years. When the award could be avoided no longer and was finally made in 1976, Louis Rukeyser said that if Friedman had been "less committed to human freedom, he would have had his Nobel prize in economics years ago."
Now that communism has failed and its former adherents acknowledge that there is more morality in freedom than in income equality, perhaps American intellectuals also will one day give up communism.BY PAUL CRAIG ROBERTS