We are regularly bombarded with narratives touting the devastating effects of income inequality in capitalist societies. For many, inequality is the emblematic economic story of the 20th century and must be avoided at all costs. But inequality is only problematic when it is the culmination of corrupt policies that grant favors to privileged groups. In reality, market-driven inequality is the source of unbridled progress.
Without inequality, there can be no progress, since its absence suggests that we all have the same talent. (File, Archive)
By examining the quality of ideas, markets reward talented and insightful individuals for responding to consumer demands. Unlike government-imposed privileges, markets are impartial observers of value. Political connections are unnecessary for actors to succeed in the free market; only the willingness to employ one's talents to serve consumers will reap success.
However, given that some people are more talented than others, markets will invariably produce inequalities. However, it is likely that inequalities produce positive results because of the ability of talented individuals to improve the standard of living of average people. Most people lack the ability to revolutionize society, but luckily for ordinary people, the activities of talented individuals trigger economic and technological changes that drive long-term economic growth and create opportunities for ordinary people to join elite circles.
Amazon made Jeff Bezos a rich man, but the entity has also turned thousands of small businesses into lucrative enterprises by providing them with a place to market their products in the world. In fact, through its store, the company has launched forty thousand millionaires. Amazon's ripple effect is so significant that it has even made the clients of its affiliates very successful, as Celinne Dacosta points out in her article on Rasmus and Christian Mikkelsen:
Rasmus and Christian Mikkelsen are twin brothers who quickly became pioneers in the Amazon book and audiobook publishing space, having collectively published over 150 books. The growing industry prompted the twins to co-found PublishingLife.com, an online education business that helps ordinary people escape their 9-to-5 jobs. Using the twins' book publishing business model on Amazon, hundreds of people have been able to achieve life-changing results. To date, his students have earned a total of $20 million in verified earnings.
Without talent inequality, there would be no super-companies like Amazon and Google, and fewer outlets for average people to create wealth. Inequality is beneficial to society because if we were all equal, the world would be remarkably mediocre. Culturally, this world would be devoid of artistic and literary wonders, as people would be unable to reach the level of William Shakespeare or Pablo Picasso.
Our understanding of science would be similarly warped in the absence of minds like Galileo Galiei, Isaac Newton, and Albert Einstein. Unfortunately, life in this realm of mediocrity would be ugly, brutal, and short. Dying of simple ailments would be the order of the day, considering that society would lack people with the curiosity and talent of men like Louis Pasteur and Alexander Fleming, who revolutionized the way we treat disease.
More ominous still, the absence of extraordinary people would not provoke the benign envy that often motivates people to improve their circumstances. Without inequality, there can be no progress, since its absence suggests that we all have the same talent. And if this is so, the creativity necessary for society to advance cannot arise.
Never forget that when all men are equally competent, no man can be excellent. Therefore, a truly egalitarian society is one in which we are all equally mediocre and live a life below the potential of humanity.
This piece was originally published by Mises Institute