Are the rich hurting the poor?
It depends on which rich people you're asking about, says guest blogger Stefan Karlsson.
At the Free Exchange blog, it is asked whether the rich are being so at the expense of others or not.Skip to next paragraph
Stefan is an economist currently working in Sweden.
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Well, that depends on which rich guys you're talking about. Steve Jobs, who created Apple, and helped create the Macintosh computers and Iphones and Ipads and many other things are certainly not someone who has become rich at the expense of others. On the contrary, he has helped people who are poor or middle class with his entrepreneurship.
On the other hand, if you look at certain people in for example the financial sector, it is clear that they have become rich at the expense of others. Merrill Lynch CEO Stanley O'Neal for example, earned $45 to 50 million per year for participating in the creation of the U.S. housing bubble, and then after it became clear that he had helped wreck his company and country, he not only got to keep these enormous undeserved sums, he got an additional $161 million in a "parachute" package.
The main difference between the two is that Jobs became rich by providing value for consumers, while O'Neal became rich by taking advantage of government intervention (Fed monetary policy). While even a truly free market would sometimes make people who don't deserve it rich, central bank policy will in this case both create the opportunity to make profits that hurt the overall economy, it also rescues firms that hires people that damage their companies.
Trying to remove undeserved wealth from those who don't deserve it by for example higher taxes for the rich in general would to some extent work, but it would be associated with the collateral damage of also hurting deserving wealth creators like Steve Jobs. A much smarter way to solve this problem would be to end the Fed policies and other government interventions that enable people to get rich at the expense of others.
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on stefanmikarlsson.blogspot.com.