Thoughts on capitalism (part 2)

2: Capitalism is a growing pie for everyone, not just the already rich.

The growing pie idea doesn’t only mean that rich people keep getting richer. They do, but instead of growing rich at the expense of everyone else (as in the agrarian economy we touched on in part 1), everyone else also gets richer. Capitalism is a rising tide that raises all the boats, even the little ones. A cool analogy for this rising tide idea (as noted in John Addison Teevan’s Integrated Justice and Equalitycan be seen in the late great Chicago Bulls teams of the ’80s and ’90s. In 1986 the lowest salary on the Bulls was $135,000, the median salary was $300,000, the highest salary was $806,000. Jump to 1996, the Bulls highest paid player (you can guess) was Jordan, who made a screaming $33 million. At the same time, the lowest paid player’s income had also increased significantly to $500,000, and the median salary was all the way up to $2.3 million. Everyone wins! Over that 10 year period, the incomes of Bulls players grew by an average of 21% per year compared to an inflation rate of 3.65%, which is some serious wealth creation. Furthermore, while the income of the rich (Jordan) increased by a larger percentage than the lowest paid players (44% growth per year compared to 13%), it wasn’t at the expense of anyone. No one lost anything in this scenario. In fact, the opposite is true, everyone gained income. Sports salaries obviously aren’t perfectly correlated with the entire economy, but the point remains: capitalism creates wealth for everyone.

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