We needn’t go all Marxist to think about how wealth is distributed.
Article by: JOE SELVAGGIO
I realize I’m a bit odd. Children like Halloween. Lovers favor Valentine’s Day. Military folks revere Memorial Day. But I get excited about Labor Day. Maybe it’s because my father taught me the value of industriousness and of always staying busy. Or maybe it’s because good hard work is the basis of all wealth. The labor movement has recognized this for a long time, which was why machinist Matthew Maguire proposed the holiday in 1882 while serving as secretary of the Central Labor Union in New York.
Thank you, labor unions, for giving us this wonderful holiday!
Of course, my business friends point out that while laborers may eke out a living and be paid wages, substantial wealth that pushes an economy upward is created by wealth itself, wisely invested. I agree, but beneath it all you have a working person, without whom wealth itself is impossible.
I celebrate all workers, not just those in unions. You need all kinds of labor. A country needs working judges, lawyers and politicians to make sure there is a level playing field for businesses within a free democracy. It needs entrepreneurs with working investors to transform resources into products. It needs workers to build roads, drivers to transport goods to market and retailers to sell them. A country even needs workers like police officers to enforce laws, academics to teach us, and entertainers and artists to keep us refreshed enough to work.
What we don’t need are couch potatoes, a good reason we don’t have a holiday celebrating laziness. Communities that work the hardest and smartest seem to produce the most wealth.
But once wealth is produced, how fairly is it shared by the citizens? Some countries have all the wealth at the top, and that doesn’t lend itself to a happy thriving community. In fact, the United States seems to be going that way, with its shrinking middle class. President Obama pointed out that the founding fathers never considered the notion of the “distribution of wealth” when they framed the Constitution.
I don’t think the dilemma is solved by the simple redistribution scheme of Karl Marx — “from each according to his ability, to each according to his need.” I’ve always believed that without the incentive to keep what you gain from work, people would stop working. I may not have even started working if I’d thought those with wealth would give me some if I just appeared needy.
But there are different ways of redistributing wealth without destroying incentives. Governments and nonprofits can invest in education, job-training, Internet access, medical care, and roads and parks, to name a few.
When visiting Haiti recently I was struck by all the visiting aid workers. In contrast, the Haitian economy has a very weak for-profit sector generating lasting wealth. I wondered what would happen if we sent an entrepreneurial task force to that country — something like the group on the ABC series “Shark Tank.” The entrepreneurs on “Shark Tank” try to get billionaire investors to buy a piece of their businesses, whereupon they can grow to hire more workers to produce more salable products for the marketplace. This builds wealth for the entrepreneurs and the workers. It may be counterintuitive, but it seems that somewhat-greedy, acquisitive folks may do more to alleviate poverty in the long run than antipoverty workers.
We could even promote “Shark Tank”-type investors to foster wealth-producing small and midsize businesses in impoverished urban neighborhoods, as well as in outstate cities suffering from an economic slump.
We at my organization, MicroGrants, are trying to enact this idea on a small scale, with $1,000 grants to emerging entrepreneurs. I would like to see wealthy local corporations invest likewise. The goal is the same: To enable the unemployed poor and underemployed middle class to become a resource rather than a drag on the economy.
It’s a lot more efficient to create and distribute wealth through the marketplace than through entitlements. Our best economic minds just need to take up the challenge.
The Bible notes that the race does not always go to the swift. Nor, I would say, does the wealth always go to the worker.
But that’s still the way to bet them.
Joe Selvaggio is founder of MicroGrants and the Project for Pride in Living.