Leftists are notorious for wanting to use the force of government to confiscate money from the rich in order to equalize wealth in society. They lament large “disparities of wealth” — e.g., the fact that there are billionaires and paupers living in the same society.
Sometimes leftists call for giving the IRS-confiscated money to people who have less. Sometimes they simply favor government keeping the money. Of foremost importance to leftists is simply bringing the rich down, closer to the level of others, either by taking their money or taking it and giving it to those who have less.
The justification given for this process is that leftists say that a free-market way of life results in tremendous disparities of wealth, with some people having lots more money than others. Of course, a question naturally arises: So what? What difference does it make that some people have more money than others, especially if they have acquired their money legitimately, i.e., by producing goods or services that consumers are willing and eager to buy?
There is also an important point that leftists fail to understand or appreciate: a free market is itself a powerful redistributor and equalizer of wealth.
Central to leftist economic philosophy is the notion that once a person become rich, he only gets richer. Therefore, leftists say, it’s necessary for the government to take his money from him in order to prevent him from becoming too rich. Otherwise, he’ll just keep getting richer and richer, making the disparities of wealth that leftists lament become progressively larger.
But that’s just not reality.
Consider, for example, Sears, the American chain department store. According to Wikipedia, “Sears had the largest domestic revenue of any retailer in the United States until October 1989, when Walmart surpassed it.” Last fall, Sears filed for Chapter 11 bankruptcy.
But how is that possible under leftist economic philosophy? If the rich only get richer, then Sears should be wallowing in riches, not declaring bankruptcy.
The reason for this phenomenon is not difficult to understand. In a free-market environment, consumers are sovereign. And there is something important to note about consumers: They are ruthless. They want the best quality goods and services at the lowest price. And no matter how long they have patronized a particular business, most of them have little or no loyalty if someone comes along offering something better at a lower price. In most cases, loyalty goes out the window. The consumer quickly shifts to the seller who has the better product at a lower price.
That means that every producer or seller is at the mercy and whim of consumers. It is the consumers who are deciding, through their purchasing habits, who is going to get rich and who isn’t. That’s why, for example, a rock star is, generally speaking, richer than a college professor.
For more than 100 years, Sears succeeded in satisfying and pleasing consumers. But as other companies came along offering better products and services at lower cost, consumers took their business elsewhere.
The Sears phenomenon demonstrates the power of a free market to redistribute and equalize wealth. And that’s not the only example. The history of American business confirms this phenomenon. In 1955, the following companies were the Top 10 of Fortune 500 companies:
- General Motors
- Exxon Mobil
- U.S. Steel
- General Electric
- Esmark
- Chrysler
- Armour
- Gulf Oil
- Mobil
- DuPont
Twenty years later–1975, the following were the Top 10:
- Exxon Mobil
- General Motors
- Ford Motor
- Texaco
- Mobil
- ChevonTexaco
- Gulf Oil
- General Electric
- International Business Machines
- ITT Industries
Do you notice a difference? The list has changed. Some of the top 10 companies in 1955 are no longer on the list? Some are on the list and have dropped in the ranking. What gives with that? If leftists are right — that the rich only get richer and, therefore, that government force is needed to equalize wealth — then wouldn’t we expect to see the top 10 in 1955 be the same top 10 in 1975 and richer than ever?
Here is the list twenty years later, in 1995:
- General Motors
- Ford Motor
- Exxon Mobil
- Wal-Mart Stores
- AT&T
- General Electric
- International Business Machines
- Mobil
- Sears Roebuck
- Altria Group
See the difference? Notice that Sears suddenly appears in the top 10.
Now let’s examine the list in 2015:
- Walmart
- Exxon Mobil
- Chevron
- Berkshire Hathaway
- Apple
- General Motors
- Phillips 66
- General Electric
- Ford MotoR
- CVS Health
Only three companies in the top 10 in 1955 were still on the list in 2015. What gives with that? Under leftist economic doctrine, the top 10 in 1955 should have still been the top 10 in 2015. After all, don’t forget: under leftist economic doctrine, the rich only get richer.
Given that a market process, with consumers in charge, is such a powerful redistributor and equalizer of wealth, why is it that leftists want the government to confiscate money from the wealthy? Why not simply leave the redistributive and equalizing process to a free market, one in which consumers, not politicians or IRS bureaucrats, are making the decision as to who gets rich?
The reason is obvious: Leftists are driven by the great sins of envy and covetousness. It’s not enough for them to know that wealth is being redistributed in monumental ways every day through the buying habits of consumers. They don’t want anyone to be wealthier than anyone else, consumer sovereignty or no consumer sovereignty. They want everyone to be equalized, even if that means everyone is equally poor, like in Cuba, North Korea, and Venezuela, all of which are ruled by leftist regimes.