What is so terrifying about the idea to let the rich get richer? Is some kind of injustice going to befall the world if the rich keep getting richer? Just because the rich get richer faster does not necessarily mean they are doing so at the expense of the poor, not at least in a free society. In a socialist system on the other hand, for a rich to get richer, requires in no small measure, for others to become poorer. This is because in a controlled economy the rich need the government to decide who gets the right to do something. This in turn leads to rich to influence via the government the rules that allow them monopoly status in whatever fields they are in. With the status secured and competition stifled the end product or service offered to the clients as a result is not top notch.
Have a look at any socialist country such as, the former Soviet Union, North Korea, Cuba, Venezuela, and it is evident how poorly the poor have fared over the years. There are cases to be made for the Nordic countries being socialist in nature, yet not so poor. I’ll discuss that case in another post.
The whole idea of capitalism and free market is that those who own a resource have a right to use it any way they deem fit. If these resource owners provide goods and services, for which the people are willing to pay for voluntarily, then the owner makes a profit. In the absence of this willingness of people to pay, the capitalist ends up with a loss and can even go out of business. The result is that all successful owners in a free market do all they can to cater to the needs and sensibilities of the consumers. The consumers get what they need most, and the producers get a profit. This profit because of a lack of any government intervention to prevent competition is not guaranteed every year.
Lack of barriers to entry entice other competitors to enter the market in search of the very profits, driving the prices down. This benefits the consumers even more as they can have a better quality product of their liking at a cheaper price. The funds that the consumers saved by getting that cheaper product leaves the consumer better off and richer than before. Those funds could then be used for savings, investing, or more consumption giving the consumer a higher standard of living.
There are those who have claimed that there is an inherent inequality in capitalism. The only way you can make two different people who are not exactly the same and hence unequal in terms of ability, talent, or education to become equal is to redistribute wealth. To redistribution wealth means to forcibly take assets from those who have to give to those who don’t have. On the surface it seems such a wonderful and kind thing to help those in need, yet beneath the surface lie the seeds of destruction for a society and its freedom.
If the incentives to benefit are taken away from those who have greater ability, then what reason would they have to continue to take greater risks? Some may continue with the time and effort in potentially unfruitful endeavors but a large majority, in the absence of greater rewards, are more likely to just give up and focus on less risky tasks. Would we have the scientific or technological breakthroughs such as the first Model T car by Henry Ford, and the iPhone by Steve Jobs, the light bulb by Thomas Edison, and a host of other equally valuable inventions without the advantage of larger rewards?
The rich get richer not at the expense of the poor in a free society, as is generally believed. They get richer by providing the best product or service at lower costs. A socialist would believe that the pie is fixed, and as a consequence there is limited wealth in this world. This would lead to an erroneous conclusion that if one person gets more, it has to be at the expense of another who now gets less. This idea is inherently faulty. The productive entrepreneur by creating new products in essence increases the size of the pie. With a bigger pie, and a lot of new products and services, not only do the rich get richer, the poor also end up being better off. This abundance in productivity is what makes the free society as a whole prosper.