Wednesday, August 19, 2009

Economic Fundamentals: The Role of the Rich

There's been a lot of bashing of the well-to-do in the last decade. I don't get it. Society shouldn't try to denigrate the successful. It should aim to expand their ranks.

Personally, I don't want to trash the rich. I want to join them (and not by reducing their wealth to my level).

Even if you don't like the wealthy, you need them. They play an important role in our economy. The poor won't give you a job. And without a job, you're unlikey to give to the poor.

W. Michael Cox was chief economist of the Dallas Fed and is now the director of the Center for Global Markets and Freedom at SMU's Cox School of Business. Yesterday, he nailed the value of the rich in three paragraphs of an Investor's Business Daily op/ed piece...

Let's look at what the rich do for the economy. They're overwhelmingly the investors and entrepreneurs that start new businesses. These activities make the rich the economy's leading employers, providing millions of jobs and the payroll that goes with them.

The rich are big spenders, contributing a large share to the consumer demand that keeps the economy percolating. Every dollar they spend becomes income to somebody else.

From telephones and cars generations ago to cell phones and plasma TVs more recently, the rich are also the early adopters of new technologies. They encourage innovation by paying the high prices that cover producers' startup costs. Their money lets companies expand output, driving prices down for middle-class consumers.

Next time you hear someone attack the wealthy ask, "Why attack the rich? Why not join them? The great thing about this country is, you can!"

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