15. The Astonishing Greatness of Inequality

WHEN FREE MARKETS CREATE wealth, regardless of how wealthy one individual becomes, someone else, as noted above, is also better off.²⁷ In a market in which new technologies are emerging at unprecedented rates, we would expect that those on the frontier of those technologies would experience extraordinary incomes. For some that income has been astronomic. The billionaires of those industries have had an unbelievable impact—directly and indirectly—on virtually everyone in the world. The benefits they’ve created for the present generations and for future generations are immeasurable, but, undoubtedly, they would add up to many times more than all the billions earned by the richest of the rich. If we experience as many breakthroughs in the next fifty years as we’ve seen in the past fifty, we can expect to see a continued increase in the number of billionaires, pushing the highest quintile of wealth to even higher levels, while granting all of us the benefits of those breakthroughs.

Those in the lower quintiles will continue to increase their wealth as well, since the upper quintiles can’t gain without pulling the other quintiles up with them—wealth begets wealth, as discussed earlier. Still, as the number of billionaires increases, many egalitarians will moan about “how sad that is,” while in reality, the greater the number of billionaires, the better off we all will be, collectively. The wealth of billionaires represents revolutionary ideas that come from exceptional individuals who push technology, create and facilitate markets, invent ways to increase productivity, or entertain us in new ways.

Some of these superstars will create benefits for us that future generations will enjoy many centuries after their creation. Imagine what we have already gained and what our descendants will continue to gain from the talent of one exceptional man: Ludwig van Beethoven. How much would he be owed today if we were to compensate him for all the joy he has given us over time and will continue to give us in the future?²⁸ Imagine our lives today without the incredible creations of Alexander Graham Bell, Guglielmo Marconi, the Wright brothers, Henry Ford, Jonas Salk, or Bill Gates. These people represent those who have deeply enriched our lives and deserve our deepest gratitude.

We often hear that those who have earned great wealth should “give something back,” as though they had taken something from society. Such resentful notions stem from the misconception of how wealth is earned. Contrary to such notions, those of wealth have not taken anything from society, but, in fact, have given to society an amount of wealth that far exceeds the amount they have earned.

²⁷When wealth is gained from involuntary transactions such as in takings by a king, Mafia, or the State, someone else is worse-off.

²⁸Additionally, the ability to enjoy Ludwig van Beethoven’s work by virtually everyone is due to the sound replication technology that began with Thomas Edison’s invention of the gramophone.