Building Blocks - Part 3
As noted previously, Joseph Stiglitz (left-wing economist and Nobel Prize winner) and other progressives delight in pointing out the shortcomings of the American economic and political system. And, in all honesty, they actually have quite a lot of things to point out. The American system is not perfect. No system designed and implemented by humans can be. And there is nothing wrong (and arguably laudable) about pointing out a system’s defects and suggesting remedies and reforms to improve the system’s operation. Unfortunately, because the progressive left, mired in wrong-headed Marxian economic thinking, does not understand what drives the free market economy their recommendations for reform do not address the real problems that affect our political/economic system.
Their list of complaints is long, very long. Inequality is one of their principal bugaboos. In his book, The Price of Inequality (2012), Stiglitz states, “our growing inequality –especially the amounts seized by the upper one percent – is a distinctly American ‘achievement’.” The use of the word “seize” is notable. Seize means to take possession of forcibly (although it has other less apt meanings as well). Stiglitz expounds the Marxist concept that surplus is “seized” through exploitation or other non-legitimate methods. I wonder if Mr. Stiglitz believes that Steve Jobs “seized” his fortune? Or Bill Gates? Or Jeff Bezos? Or the many other inventors and entrepreneurs that make the gadgets and supply the services that make up our modern day life.
It is indeed true that some surplus can be generated by nefarious means. But this unjustifiable and often illegal surplus does not represent all surplus and I believe that it represents a relatively small percentage of the total surplus generated by the free market economic system. The social contract defines the rules by which surplus can be legitimately created and the citizens constitute a government to enforce those rules. Illegal surplus is the surplus generated by violating those rules.
There are three main ways that people and organizations create non-legitimate surplus; monopoly, fraud/theft and capture.