Rich People Are Good With Me

I’m not rich. Not even close. But I have no problem with people being rich. None whatsoever. As long a person or company makes money as the result of voluntary transactions, I say more power to them. They are benefactors of society. Their riches are a reward for serving the public.

On the other hand, if individuals become wealthy due to government subsidies or protection schemes, I have no respect for them. They’ve become rich by draining money from the public. We are all worse off because their actions. Their wealth is based on coercion, not volunteerism.

It is important to make a distinction between these two different types of affluent people. To use the terminology put forth by Burton Folsom Jr. in his great book The Myth of Robber Barons, let us call the first class of rich folks market entrepreneurs. We’ll refer to the second class of wealthy individuals as political entrepreneurs.

The defining characteristic of the market entrepreneur is that all of his or her receipts come from willing customers. The market entrepreneur offers goods and services in such a way and at such a price that clients can see a benefit in making purchases. They value the good more than they value the money it costs to buy the good. They’d rather have the product in their possession than they money. Once the transaction is complete, the client feels as if their lot in life has been improved. If that weren’t the case, they’d have never bought the item in the first place.

If the market entrepreneur is able to make a lot of sales, it is an indication that a lot of people feel that their life has been made better in some way. The profit earned from such mutually beneficial endeavors is a reward for being good at making people happy. In a civilized world, this is exactly the type of behavior that should be rewarded.

It really doesn’t matter what the market entrepreneur’s motivation is. They can be evil, money grubbing, greedy misers, with cold, black hearts, who are motivated by nothing else but the desire for hording every last dollar they earn. Or they can be a local shop owner who sponsors the local little league team. Regardless of any other factors, market entrepreneurs can only get rich in one way: giving people what they want at a price they like. In other words, making life better for their customers.

Personally, I’d prefer not to associate with cold-hearted, mean-spirited rich people. I don’t care to be around folks who are snobbish and have bad attitudes. But I do not have a problem with their wealth, so long as they earned it on the market.

The defining characteristic of the political entrepreneur is that they get their money by force. Taxes are always collected using force. If you don’t believe me try not paying up and see what happens. Political entrepreneurs get paid out of tax revenues.

Citizens have no choice over whether they receive the goods and services that the political entrepreneur provides. There is no way to know if these services make our lives better. Only voluntary buying activities can reveal what customers really think.

Instead of using their resources to offer goods and services in a way and at a price that the customers prefer, political entrepreneurs spend their time and energy lobbying politicians.

Again, motivations are meaningless. A political entrepreneur may be the nicest guy in the world. He might be a pillar of the community, coach the local Pop Warner football team, sing Christmas carols during the holidays, and adopt abandoned puppies from the animal shelter. He still got rich in an unrighteous way. When traced back to its origins, his wealth was obtained at the point of a gun.

We’ve seen a lot of protests lately. We’ve been hearing a lot about the 99% and the 1%. This is a very inaccurate way to frame the problem. Many who belong to the 1% deserve every penny they have. All they ever did was make the world a better place. If all of their profits were made on the market, that money is representative of the amount of good they’ve achieved, the number of people they’ve made happy, and the material improvement they’ve left in their wake.

However, we know that a lot of the 1% has received bailouts, lobbied congress for special tax breaks, influenced politicians to write special legislation on their behalf, forced overpriced goods on an unwilling buying public, and in general has looted taxpayers in an unconscionable way. Such people are the worst type of political entrepreneurs and deserve every bit of the scorn that is heaped upon them.

Each and every one of us has a decision to make. We all need to earn a living. Many of us would like to become wealthy. How will we achieve our goals?

There are truly only two paths to take.

We can use our creative energy, natural talents, work ethic and acquired skills to provide products and services that customers will genuinely enjoy and appreciate. They’ll see the benefit in doing business with us and of their own volition will decide to make a purchase. We can be market entrepreneurs or work for market entrepreneurs.

Or, we can be paid at the public’s expense. We’ll never really know if our services are needed or not. No matter how hard we work or how intelligent and creative we are, it will always be unclear if we’re providing a benefit. We can spend our time kissing up to politicians and hoping that the some tax money will be thrown in our direction. We can deny people a choice about using our products and if they refuse they’ll be thrown in jail. We can be be political entrepreneurs or work for political entrepreneurs.

The next time you’re invited to a really nice house for a delicious dinner served on fine China, don’t be envious. Be appreciative. If the person earned their money the honest way, on the market, they deserve everything they have.

But if you learn that they’ve earned their money through political means, don’t be jealous, be mad as hell.

 

 

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2 Responses to Rich People Are Good With Me

  1. Except for one fundamental flaw in your reasoning, the article is interesting. But in the real world, no human being can become part of the richest 01% by creating value and trading the value they create for money. There are natural limits on a human being’s ability to accumulate wealth. And wealth can only be accumulated beyond those limits with very significant help from the government. The wealthiest 10 or 20 percent of people in the world are therefore by definition political entrepreneurs.

    • You are right. As things currently exist, it is difficult to become uber-rich without government help. However, without government help, rich people would not cease to exist. There would still be a top 1%. In a truly free market economy those people would be the ones who best serve customers. For that reason, we should get government out of the market.

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