Now for a few words about inequality.
As I write this, the news media are in an uproar over the reporting that fewer than 100 very wealthy families have more total wealth than the poorest 3.5 billion people on the planet. This, it is suggested, is scandalous, disgraceful, criminal.
With respect, I would like to suggest that the question is not being properly put. There is no doubt that there are far too many very poor people on this earth. There are people who live and toil in miserable conditions. There are perfectly decent people who have too little to eat, wear rags, and lack access to medical care and decent housing. That is indisputable.
One good question to ask is why these people are poorer than most people in, say, Denmark or Sweden and why those in Carmel, Calif., or Beverly Hills, Calif., or Malibu are not poor. As an economist, I would say that the simple answer is that these people lack capital.
They do not have either financial or human capital. They do not own apartment buildings and office buildings the way my neighbors in Beverly Hills do. They do not own great popularity with the viewing public nor cachet at the networks and movie studios the way my neighbors in Malibu do.
It is capital, utilized properly, that allows people to be rich.
But how do these people get that capital in the first place? How do human beings go from having nothing to having capital that allows them to live like maharajahs? How do so many of my neighbors in Beverly Hills, who came to the United States from, say, Iran with nothing or almost nothing, have thousands of units of living space and hundreds of thousands of square feet of office and warehouse space?
They worked extremely hard. They saved. They made connections with people in the real estate business. They were brave enough to borrow. And slowly at first, and then rapidly, they acquired assets that paid a stream of income beyond what it cost and allowed them to acquire still more real estate and get even more income.
This, in a nutshell, is how people get to be rich. They use their own human capital in a society that allows for the ownership and growth and legal protection of capital of all kinds to get to be rich.
Now, it might be said that some of my neighbors may have gotten rich by stealing. In fact, I know they did. But they are rare. Usually it's just hard work, discipline, and daring in a society of laws.
Why are people all over the world poor? Mostly, it's because they live in lawless societies that do not allow for the acquisition and maintenance of capital: Third World countries where there is little access to education, very, very little access to financial capital and a legal system that is either nonexistent or explicitly repressive about work and thrift.
Ben Stein is a writer, actor, and lawyer, who served as a speechwriter in the Nixon administration as the Watergate scandal unfolded. He began his unlikely road to stardom when director John Hughes cast him as the numbingly dull economics teacher in the urban comedy, "Ferris Bueller's Day Off." Read more reports from Ben Stein — Click Here Now.
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