Capitalism or socialism are terms people throw around… but let’s keep it simple.

Suppose someone wants three residences: a condo in New York, a house on the water in Florida, and another house on the ocean on Martha’s Vineyard. Some would call that guy “greedy”. But suppose, you tell that guy, he won’t be able to have those things… he will get a small apartment in New York (where he works as a renown surgeon…no more and no less (socialism). Any excess income will be taxed and used for good purposes to help those less fortunate.

Our renown surgeon realizing he is limited to a small apartment for which he can earn enough income to pay for that apartment by working a half day a week turns his attention to pursuing his interest in art, visiting the local museums, strolling in the park and taking yoga classes at the nearby gym. With all his extra time, he cooks his own meals and lives a comfortable modest life in New York denying people jobs who would have done things for him as he cannot afford such luxuries.

So are we better off, because this renown surgeon only works half a day? Are those who die waiting for their turn to get surgery better off? Is anyone better off because this surgeon does not make $500K a year? Now you may think he should want to work hard enough to earn $500K a year and then give away 70%, but what you think does not matter… what matters is what the surgeon thinks… what motivates him. If what motivates him is money, then aren’t we all better off if he earns $500K by working like a dog seven days a week saving lives?

This is a rather simple example, but the point is clear. Society is better off when people work to their full capacity. Socialism has been shown over and over again not to achieve that goal. So we need capitalism, where people get to retain the “fruits of their labor” to motivate them. Can we “take” a bit of that “fruit” away and give it to those that need it… yes. As long as we don’t take so much “fruit” away, the person stops “giving it their all”.

We need people to take risks and start new businesses. The SBA says 30% of businesses fail in the first two years, 50% within five years, and 66% within 10. The odds are stacked against entrepreneurs. Now suppose we decide that even if you succeed you will never earn more than a “salary”. Why risk all you have for a chance not to go broke and no chance of success?

Why do people buy lottery tickets? For the chance to donate money to the state or the chance to get rich? People start businesses for lots of reasons but one reason is for the chance to make money. My wife and I started a business four plus years ago. She worked hard the first year and lost money. She worked hard the second year and earned less than minimum wage. She worked hard the third year and made around $50K. She worked hard the fourth year and earned over $100K and this year looks slightly better.

But if you told her she could not earn over $50K, she would have said forget it. And all the contractors we employ would have earned less. And the people from whom they buy things would have earned less. People would have “suffered” by my wife not willing to build her business. Why risk it… for no reward. People talk about taxing the successful business owners, but what was the last time, you heard people say let’s reimburse failed business owners for the money they lost?

The real failure in Umair Haque’s writing is a profound failure to understand what causes people to take risks or work hard. Most people do have a desire to help others (the socialistic side of our natures), but an equally important part is the desire to help ourselves (the capitalism side of our natures). My experience is that capitalistic side of our natures more often than the socialist side is what drives people to work hard… the socialist side is what drives them to share “some” with others… but take to much… and the capitalistic side shuts down… and there is nothing to share…

I don’t define helping oneself as “greedy”. For me greedy comes when you “cheat” or “somehow make money dishonestly”, not by satisfying a desire or “want” of someone for a fair profit. Am I greedy for asking $20 to shovel your driveway? What about if I shovel two driveways for $20 each, does that make me greedy… what about if I start a company and shovel one million driveways and keep $1 of profit per driveway… did I suddenly become greedy? At exactly what point did that happen?

What if I come up with a way to make a billion people “happy” with a product I create, what is wrong with me making a $1 profit from each of them for making their lives better. Am I being “greedy” or simply enjoying the benefit of making other people happy. I have no problem regardless of how wealthy someone is buying something for a fair price even if it makes someone wealthier.

If Bill Gates earns $100 billion in his lifetime and by the time of his death, he gives $99 billion to charity, is he greedy for leaving a billion to his family? Why is that “greedy”, who decides? As I said, I think people are getting to complicated…

The desire to help others and the desire to help oneself are both natural and to some extent self preserving aspects of human nature. Recognizing that people deserve the right to be “rich” if they attain their wealth honestly is important if we want our society to thrive… if we begin to label wealthy people as “evil” rather than evaluate how they earned their wealth in making that determination… then as a world we are destined for poverty… and that will be quite sad… for everyone… especially those who depend on entitlements… for there will be little to share…