Oct 26, 2007

Sheldon Richman on wealth creation

Let’s dispose of an economic point; the government cannot “redistribute” wealth. The word in quotations marks implies that wealth is initially distributed. It is not. In the market there is no common pot from which someone ladles wealth. The incomes we observe result from a long series of voluntary exchanges. In each transaction, two parties decide that what they will get is more valuable than what they will give up. If each did not believe that, no transaction would occur. (The exception, of course, is income derived from government sources.)

Since there is no distribution, it cannot be judged fair or unfair. No one decided how much each person would get. Rather, everyone had opportunities to enter or not enter into transactions, depending on their values and what contribution they could make to the productive process. It makes no sense to call the “distribution” of income unfair if each step in the series of exchanges that brought that outcome was fair, that is, voluntary.

~ Sheldon L. Richman, "Egalitarianism," The Free Market, July 1990

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