"World’s wealth belongs to few," The Toronto Globe headline proclaimed. "First wide-ranging analysis of international distribution of riches finds ‘a lot of inequality.’" According to the accompanying story, the study found that "1 percent of the richest adults own 40 percent of total global wealth." Another story, this one from The New York Times, says the top 1 percent of wage earners in the U.S. saw their "share" of income go up 14 percent in 2005, to an average of about $1.1 million each.
My mind races; will there be any global wealth left over for me to own? My sanity catches up. Wait a minute, wealth is not a commodity to be bought or sold. It is simply a measure, in this case of what a person actually owns. More importantly, the fact that the guy next door has more wealth than I do does not mean that I cannot acquire wealth myself.
The global study, conducted under the auspices of the United Nations, considered as its measure of wealth what many of us would call our net assets, the things we own after we subtract what we owe. In so doing, the researchers found that the United States is the richest country, having 37 percent of the world’s wealthiest 1 percent. Interesting, but what does it mean?
To read the newspaper accounts, one would think it means Americans have a disproportionate amount of the world’s wealth. That once again, greedy Americans have more than their share, and that the richest Americans have a disproportionate amount of that share. But such a view portrays the wrong notion of wealth.
Wealth is not a product or commodity. There is not some factory out there manufacturing wealth that will someday run out. Wealth is not a service that ends when the shop closes for the night. Wealth is simply a measure. Having more of it does not mean your neighbor has less. Having more of it does not mean you took it from someone else. It is instead a reflection of who we are; our talents, our choices, our opportunities, how hard we have applied ourselves, and, often overlooked, the economic system that underlies the nation in which we live. In other words, unless fraud or some other nefarious scheme is in place, obtaining wealth is not a zero-sum game.
The fact that there is inequality in wealth should not surprise those in a free society. Lawrence W. Reed, president of the Mackinac Center for Public Policy, points out that it is a basic economic principle that equal people are not free and free people are not equal. This point is easy to illustrate. Give $1,000 to every man woman and child at 8 a.m. and by 5 p.m. the amount individuals have remaining will differ radically. Some will have spent their money on a desired good or service, others will have invested it and made even more money, and still others will have given it away. This is simply the result of free people making independent choices. Indeed, if everyone at the end of the day still had exactly $1,000, it is hard to imagine that these people live in a free society. People are different, with unique wants and needs that lead to various levels of wealth.
Government, too, plays an important role. It is not surprising that the United States leads the world in wealthy citizens. The founders of the United States predicated their view of a nation not on a geographical place, but on the idea of freedom of the individual. The system of government set forth in our Declaration of Independence and Constitution is one that promotes individual choice and freedom. Such a system, designed to allow individuals to decide for themselves what to do with their time, effort and money, is what we call a free-market economy.
History has shown, and economists observed, that when nations pursue economic systems that rely on the power of free individuals to make decisions about what to produce and consume, prosperity results. This is in contrast to the centrally planned systems of dictatorships, socialism or communism, where economies struggle for decades and end in failure.
The question that ought to be raised by the reports is not whether the people of the United States are guilty of too much wealth, but rather what is it about the U.S. that has fostered such economic prosperity and how can it be replicated. To Americans, it should also bring to mind that we should be very cautious about moving further toward government mandated choices and solutions.
There are legitimate concerns that can be raised about the moral responsibilities of people of wealth. But this is not a question of whether there is enough wealth in the world or an issue of government concern. It is entirely possible for the rich to stay rich and at the same time for the poor to also become rich. Wealth is not a pie to be divided. In sum, your getting rich costs me nothing.
Thomas W. Washburne is director of labor policy for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.