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Wealth Isn’t the ‘Pie’ You Think It Is. Or Is It?

Fin - Daily Ticker - US

If you haven't already done so, it's time to stop viewing wealth as a pie that has pieces we should be looking to share.

That's the message from Yaron Brook, president of the right-leaning Ayn Rand Center for Individual Rights, in a Forbes column written with his colleague Don Watkins.

"One metaphor responsible for a great deal of confusion is that of wealth as a pie -- a metaphor that shows up again and again in debates over income inequality," the column contends.

Brook brought that message to The Daily Ticker recently, and he shared the set with someone who doesn't necessarily see eye to eye. That would be David Callahan, co-founder of Demos, a liberal think tank.

On the topic of wealth inequality, how much of a problem is it for the U.S., the world's largest economy? Brook and Callahan laid out their views in the accompanying interview with Aaron. For Brook, wealth is created, rather than existing as a static "pie" from which parts must be taken by individuals or groups.

"My pie is my pie, your pie is your pie, and there is no collective pie then that should be divvied up," Brook says. "I think it's wrong conceptually in terms of how an economy works, and it's wrong morally to collectivize the wealth that each one of us creates as an individual into this societal entity."

Callahan's worries are that in recent years, the middle class, what he calls the backbone of America, has come under severe and unfair pressure to get by, while at the same time the richest citizens of the nation have gotten even richer. That's not the path the nation should be going down, he believes.

"This country has worked best when we have an economy that creates shared prosperity," he says. "During other periods, particularly the last decade, we've had growth, but it's almost gone completely to the top."

Brook isn't happy with the past decade either, but for different reasons. His view is that the amount of wealth going to the upper echelon has "a lot to do" with government regulations and limitations that have been placed on real competition, preventing lower- and middle-income individuals from improving their finances.

"I think the biggest victims of statism … are the ambitious poor, are the people who want a job, who want to work hard, the potential entrepreneurs, the people who want to start small businesses," he says.

Callahan's view is that public policy in the U.S. created a strong middle class following WWII, for example through the creation of the GI bill and investments in science and infrastructure, and that it can do so again.
"We are now backing away from that," he says. "We've been backing away from it for the past 35 years."

Let us hear from you. Is the government too involved these days to let capitalism flourish? Or not enough? Share your thoughts in the comment section below