Baking the Socialist Pie

Recently, an older gentlemen asked me to give him insight into the mystery of the millennial generation supporting a Socialist like Bernie Sanders. “Why would anyone do that?” he asked, “Don’t they know their history?” I believe the groundswell of support for Bernie Sanders (accepting his own party’s leadership) is due in part to ignorance of history and economics.

But also it is driven by a sense of fair-play. Perceived economic injustice doesn’t sit well with this generation. Nor should it. However, they make a false leap of economic logic and make capitalism the enemy. In their mind, when someone wins economically, somebody must have lost.

Let’s give everyone a trophy. If you have more than me, that means you must have taken from me or used me in some form or fashion. Socialism (Or “Democratic Socialism,” which is a system where we get to vote on who takes our money and controls our lives.) is viewed as the hero. It makes things “fair.” Excepting small anomalies like Russia, China, Cambodia, Venezuela, Ethiopia and Cuba.

These ideas are all rooted in some way in a myth. I call it the “pie myth.” The pie myth states that if you get a larger piece of the pie, I must have a smaller piece because we only have so much pie. It’s called “zero sum” economics. If I win, you lose.

We can throw out statistics like, “The top four richest people in the world control more wealth than the bottom 600 million in the world.” This statement makes us feel like something is unfair. It makes us react, but it doesn’t help us think. Are we supposed to believe that because Bill Gates has billions of dollars the rest of the world is poor? Complaints about gaps almost always reflect ignorance to the basic nature of wealth and how it is created.[1] These complaints may have merit if the total amount of wealth is static or finite. But it isn’t.

The pie myth is wrong because wealth is not fixed. We can always make bigger pies! God has gifted image-bearers (humans) with the ability to produce wealth. Wealth is created when humans use their ingenuity and efforts applied to the earth’s resources to create more usable and desirable resources. Wealth is a product of the human spirit and human creativity. Wealth consists of a recombination of ideas and material resources that far exceed what we currently enjoy.

Each generation has had their tycoons. Oil was once a pollutant and a nuisance to farmers in Pennsylvania. Edwin Drake saw it differently. He realized it could be refined and used in kerosene lamps and for lubrication of machinery. Drake and Rockefeller took a resource that was a waste product of water drilling and found ways to use it. They created wealth by applying their ingenuity to the earth’s resources.

In our generation, the computer revolution changed everything. It created many of the richest people in the world. But how did they do it? They discovered a way to encode information onto silicon (sand) in the form of zero’s and ones. Have we run out of zero’s and ones? Are third world countries lacking for zero’s and ones because Bill Gates took them all? No. They didn’t take from others so they could have more, they used their efforts to create a bigger pie.

To say that the wealthiest people in the world control their wealth belies our bias. Why don’t we say that the wealthiest people in the world created more wealth than the other 600 million? This would be more fair. Is it fair that those who created the wealth should have some sense of stewardship over it? Furthermore, should we give more control to a centralized government who didn’t create it? This is giving power to those who sacrificed nothing and took no risk of capital to create this wealth. If we complain that the rich control too much, why give the government (who controls more of the U.S. economy than any one person) more control? If we want to tax the rich to prevent them from getting too much power, why centralize the wealth more by giving it to the government which has unique coercive power to tax and imprison.

The wealthy decentralize their power naturally because they all don’t agree on policies and passions and their wealth can only be generated by creating useable and desirable goods and services NOT taxing and coercion. Generally, those who don’t sweat for their money, don’t steward it well. Hence the waste in government programs. Jay Richards asks in his book, Money, Greed and God, “If we’re concerned about concentrated power, why on earth would we want to hand more power over to the most powerful entity in human history, the U.S. government?”[2]

As they have created vast amounts of wealth, millions of people enjoy a higher standard of living because the total amount of wealth has grown. Currently, we can create more and more wealth with less materials and more information in less time.  Richards writes, “It took perhaps six thousand years to go from the first farms to the invention of the wheel. In contrast, everything from indoor plumbing to telephones, lightbulbs, cars, planes, rockets, computers, MRIs, and antibiotics was invented in the last four generations.”[3]

Yet wealth is only created with the right personal and cultural conditions. Instead of trying to use governmental power to coerce wealth transfer, we should look to create the right conditions and image bearers will do what they do. Produce! These conditions consist of a stable society based on the rule of law, freedom to trade, just justice systems, the right to private property and freedom from burdensome government regulation. In countries where you find these conditions, humans create wealth.  (See http://www.heritage.org/index/   and   https://www.gapminder.org/ )

“If trends continue, the gap between rich and poor will grow exponentially wider, even as the lot of the poor slowly improves. Except in the case of theft, this won’t be because the rich have extracted wealth from the poor. It will be because wealth creation is on a trajectory of accelerated returns in some places and is scarcely being created in other places. Again, the gap is not the problem. The problem is that some places aren’t creating much wealth.”[4]

[1] Jay Richards, Money, Greed and God. 89

[2] Ibid, 108

[3] Ibid

[4] Ibid, 104

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