Capitalism is amazing. Competing in the market to look after customers has enhanced the lives of everyone on earth to an incredible degree. It has generated enormous wealth for the whole of society and pays for all the other -isms.
Capitalism is uneven in its rewards. Some people are strivers; through enterprise, intelligence, hard work and risk taking they generate more wealth than most. And in a global economy this can be enormous wealth, look at Bill Gates, Larry Ellison, Jeff Bezos and Mark Zuckerberg. There is nothing wrong with this, in fact it is excellent, the wealth that these people create makes everyone in the world richer. Because it trickles down.
Imagine a world where you and everyone else is a multi millionaire, and also in every village there are several billionaires. Would this be such a bad thing? Because it is exactly what we now have compared with the 1950s. A banker, doctor or lawyer 65 years ago was less well off than someone on the minimum wage today. There is no absolute poverty in Britain. None. Zero. There is only relative poverty that is self inflicted and that relative poverty is still very rich indeed compared to 1950. All this wealth now in our society was generated by capitalism.
Now let’s take this argument a stage further. Imagine if just one person owns 99% of the entire wealth of the planet. But at the same time everyone else is a multi millionaire. Would it matter? Of course not. But the left are continually deriding the 1% or the 5% who created the wealth. This is really stupid.
So how does trickle down work? Easy. Unless someone stuffs their mattress with cash they do something with it. And that something distributes wealth. Here are some examples of trickle down:
- LVMH is a luxury goods manufacturer. It owns Dior, Donna Karan, Givenchy, Kenzo, Marc Jacobs, Loewe, Loro Piana, Louis Vuitton and many more expensive brands. The money spent with them by rich people means that they employ nearly 90,000 people.
- Gatwick airport is used mainly by people flying away on overseas vacations. Without them it wouldn’t exist. It generates 21,000 on site jobs and a further 10,000 related jobs. All these people owe their wages to trickle down from rich people.
- Starbucks is a global chain of coffee shops which charges many times the cost of the ingredients it sells. So rich people can enjoy the ambiance, the experience, the luxury. It employs around 200,000 people.
- BMW is a manufacturer of upmarket cars. It employs 116,000 people.
- Now lets look at the hospitality industry in the UK. Eating out. This employs about two and a half million people directly. If the wealthy weren’t spending they would all be out of a job. Isn’t trickle down amazing?
I could go on, but even a fool can see that spending by the rich very effectively redistributes wealth throughout society. Then there is the economic multiplier. Gatwick workers go shopping in supermarkets creating more jobs. The supermarkets buy billions of pounds worth of goods, creating even more jobs. And so on. For every pound of initial spend we end up with several pounds going into peoples’ wages. And remember where this money all came from in the first place; rich people who have generated wealth by looking after customers in the market.
Of course a rich person may not spend all their money. They will probably invest some. And what happens to this money? It is lent to people buying houses, so that they can have homes and also create many jobs in the building industry. It is invested in companies who then employ people creating yet more jobs. And rich people obviously know a lot about money, so they invest far more efficiently. If you distributed 100 billion pounds amongst the richest people in Britain it would benefit the economy and everyone in it many time more than if the government tried to spend the same money. This is just one reason why excessive taxes on the rich are stupid.
Money in itself is virtuous, so the more wealth that rich people create the better. If they buy a yacht, a helicopter or a private jet this is excellent. It just trickles more wealth down. And am I bothered if this person with all these toys lives in my street? Of course not. I celebrate. His success has made everyone richer, including me. We need more very rich people, the more the better and the richer the better.
Some people complain about inherited wealth. This is very stupid for 3 main reasons:
- Wealthy people pay tax on the same money three times. Once when they earn it, again when they spend it and a third time when they die.
- Virtually all the world’s millionaires and billionaires are self made. They personally generated their wealth with their enterprise, intelligence, hard work and risk taking.
- Once a wealth generator dies their money is dissipated very quickly, unless another wealth generator uses some as a starting pot. The “robber barons” of the 1800s who created America’s wealth were some of the richest people in history. John Jacob Astor, Andrew Carnegie, Marshall Field, Henry Clay Frick, Andrew W. Mellon, John D. Rockefeller, Cornelius Vanderbilt and many more. Where is their enormous wealth now?
Once you understand the immense economic power of trickle down, its efficiency and the magic of the economic multiplier, it is obvious that punishing the rich with high taxes is spectacularly stupid. Which is why countries which don’t do this are so amazingly successful. Hong Kong, Singapore, Switzerland. But we are incapable of learning this simple lesson because of the evils of bitter envy and of socialism.
Here is some further reading. Click on the highlighted text to see the article.