Rolling Stone writes that Bernie Sanders “is the rarest of Washington animals, a completely honest person.” This sentiment is echoed throughout the media, and among his supporters. But, we should not mistake passion for truth or persistence for honesty. There is no doubt that Sanders is a true believer; but he promotes his cause with a fundamental lie: that capitalism allows the “billionaire class” to harm middle America, and the solution is a more powerful government. The truth is just the opposite.
Sanders argues that “the issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of out time.” He claims that “the billionaires of America are on a warpath,” waging war “against working families, against the disappearing and shrinking middle class.” That is a good story if he can sell it. Many middle-class families are struggling, many are insecure in their jobs or underemployed, and many have seen their wages stagnate even as the “billionaire class” continues to get wealthier. These “greedy” capitalists are a perfect scapegoat, and the liberal media is only too happy to promote the fiction that capitalism is somehow destroying the middle class.
But, Sanders never explains how capitalism allows wealthy individuals to prosper at the expense of the middle class, or how billionaires are “waging war” against working families. He talks a lot about cronyism and how the wealthy and special interests have a disproportionate influence over government, but this is not an aspect of capitalism, it is the consequence of a corrupt government. It seems particularly odd that Sanders’ solution to a government that has been corrupted by money and influence is to give that corrupt government substantially more money and power. The way to take corporate money out of politics is by eliminating the government’s power to give special favors (e.g., tax breaks, subsidies, regulatory preferences) to favored industries and corporations, not to give the same corrupt politicians and regulators even more power over the economy.
As for the billionaires that Sanders rails against, they have done more for the middle-class than government ever has. Just 7% of the Forbes 400 billionaires inherited all their wealth, and nearly 70% are self-made entrepreneurs. This is up from 40% in 1982. These entrepreneurs — many of whom started out as middle or lower class — did not achieve wealth through force or theft, but instead by developing companies and products that make peoples’ lives better, and creating millions of jobs in the process. Income inequality has increased largely because the Internet and global markets now allow successful entrepreneurs to become very wealthy, very fast. This means that someone like Mark Zuckerberg can rise from a middle-class upbringing to being worth nearly $50 billion by the age of 31. Not by pillaging his former middle-class brethren, but by creating a social network now used by over 1.4 billion people, and which has been estimated at indirectly creating over 1.1 million American jobs. Zuckerberg has now joined with over 140 other billionaires who have pledged to give away at least half their wealth, promising to donate 99% of his wealth to charity. Senator Sanders should really explain how Mark Zuckerberg is “on a warpath against working families.” Or Bill Gates; or Jeff Bezos; or Elan Musk. It is easy for Sanders to vilify the “billionaire class,” but I would challenge him to identify any meaningful number of American billionaires whose own wealth does not pale in comparison to the benefits that they have brought to society — to their customers, suppliers, employees, charity recipients.
The beauty of capitalism is that you become wealthy by making other peoples’ lives better. In a free market, there is no cronyism — you make money only if you provide a product that people voluntarily want to buy. And, entrepreneurship and innovation beget more entrepreneurship and innovation. Mark Zuckerberg didn’t just create Facebook, but a platform for new app development companies and an effective means of marketing millions of small businesses. Apple has created entire new industries. It is this entrepreneurship and innovation that drives economic growth, creates jobs, and provides new and better products for American consumers.
The greatest economic issue facing this country is not that there are too many millionaires and billionaires, but that there are too few. Our country is facing a devastating shortage of entrepreneurs. Virtually all net jobs created over the last 25 years have come from new businesses.
But, the rate of new business creation has seen a precipitous decline.
The middle class is not struggling because the economy is “rigged” (even through the crony capitalism of government must be eliminated). They are not struggling because some manufacturing jobs have been transferred overseas — there has always been creative destruction in the economy and the loss of old industry jobs generally made way for better jobs in new industries. The middle class is struggling because the true source of job creation and economic growth — creation of new firms by entrepreneurs — is disappearing. Senator Sanders’ political strategy to demonize successful entrepreneurs, and his policy proposals to drastically reduce the rewards of entrepreneurship, could not be more misguided.
The way to reverse this trend is not through more government, but less government. We need to make it easier and less expensive for entrepreneurs to start and run a business. And, successful entrepreneurs should enjoy the financial rewards of their risk, investment, and efforts.
By his own admission, Bernie Sanders is a committed socialist. He is a true believer that has dedicated his public life to this cause. But, his attacks on capitalism and the “billionaire class” are simply untrue. Whether disingenuous or merely ill-informed, these fictions should be answered with facts and reason at every opportunity. America was built on entrepreneurial capitalism, and its continued greatness depends on returning to an economy that fosters and rewards entrepreneurship.