February 21, 2014
Everyone seems to have an opinion about the recent World Economic Forum in Davos, Switzerland and whether the conference demonizes those who are successful, or as Pope Francis said, promotes business practices that lead to “widespread social exclusion.” But bringing together powerful global interests to address social injustices is among the most effective ways to encourage the kind of innovation and investment that pulls people out of poverty. A rising tide lifts all boats, and if we want to see greater prosperity on a global scale, we must encourage success, not vilify it. A recent Slate column by Matthew Yglesias perpetuates the dangerous, mushy thinking that says one person’s wealth automatically means greater poverty for everyone else. Yglesias suggests that innovation will suffer unless we equalize income. This mindset may seem reasonable on its surface, but if you break down the arguments they make little sense.
Innovation no longer requires wealthy venture capitalists to fund groundbreaking ideas. The rise of crowdfunding through websites like Kickstarter and Indiegogo is quickly democratizing investment, giving thousands of innovators the boost they need to create new products and services. Title III of the JOBS Act is due to go into effect this year, which will further open up the possibilities for funding disruptive innovation, regardless of income level.
Wealth is not a zero-sum game. Just because some people are rich, it doesn’t mean others must be suffering. Forty-eight billionaires on Forbes’ 400 Richest People in America list built their empires on technological innovations that have changed the way the world works, while creating jobs and launching entirely new industries. Allowing innovators to build and grow new businesses creates new jobs and in some cases entirely new industries. As David Brooks wrote in January in the New York Times, growing wealth and growing poverty are completely separate spheres. Wealth comes from various combinations of luck, success, public policy, tax laws, hard work, investing and inheritance. Poverty comes from various combinations of the breakdown of the family unit, illness, unexpecte