Donald J. Boudreaux: Earning Billions Impoverishes Nobody—Quite the Opposite

The Quotation of the Day is from page 4 of Alan Reynolds’s excellent 2006 book, Income and Wealth (original emphasis):

The two young founders of Google, Larry Page and Sergey Brin, quickly made something like $12 billion each by greatly facilitating our information, education, and shopping efficiency. Why should anyone care how much money the founders of Google, Apple, or Microsoft made? Some might object that they earned a larger share of income, but in what sense can we regard their income as shared? Google is something new—without Google there could be no income from Google. The Google founders have their income and you have yours. What they earn has nothing to do with how much or how little you can earn, except that their invention may help you earn more (personally, I feel as though I owe them a really big check).

Indeed so.

People who obsess over differences in monetary incomes—people who leap from observing large differences in monetary incomes to the conclusion that something is thereby amiss and requires “correction” (always by giving a relatively small handful of people an enormously unequal share of power over others)—typically operate with the mistaken presumption that the amount of material wealth in the world is fixed. The very same mistaken presumption is at the core of most arguments against free trade. Neither the redistributionist nor the protectionist understands economic processes or economic growth.

Reprinted from Cafe Hayek

Donald J. Boudreaux


Donald J. Boudreaux

Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.

This article was originally published on FEE.org. Read the original article.

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16 Responses to Donald J. Boudreaux: Earning Billions Impoverishes Nobody—Quite the Opposite

  1. stackja

    Fairness? Some more fair than others?

  2. I have no issue with how much wealth anyone accumulates (as long as it’s legally earned), good luck to them. But what I do have an issue with is what they do when they reach positions of such significant influence. Do they maintain a position of complete neutrality, or do they try and inject their personal biases into the organisation? I have a major concern when it comes to the latter.

  3. Rococo Liberal

    The proper term for the idea that the amoun of wealth in the world is fixed is called the ”zero sum fallacy”

  4. Infidel Tiger 2.0 (Premium Content Subscribers Only)

    Google is something new—without Google there could be no income from Google.

    86% of all revenue generated by Alphabet comes from Google Ads.

    That’s a business ripe for disrupting.

  5. Justin

    Don’t disagree with the income side of things. However, Google is now a virtual monopoly but also an essential public good in many ways. The control and access to information is what concerns me. The 2016 presidential election was substantially more influenced by Facebook and Google algorithms, censorship and propaganda reflecting the culture and political opinions of Silicon Valley than the half arsed efforts of Russian trolling. The issue with Google and Facebook is their monopoly / oligopoly status and ability to subvert freedom of information, freedom of opinion, freedom of commerce (type A in Google and the first hit is Amazon) and freedom of the press on an unprecedented scale.

  6. Tel

    Justin #2771294,

    Money and power usually coalesce in the same hands at any given place and time. For example, George Soros made a bunch of money placing bets on various speculative markets. In a free market he has every right to do that, seems that he bet correctly enough times to get well ahead. Good for him.

    Now what does he do with the money? Well, he feeds it around into various political organizations, who in turn fund activist groups, or put forward certain points of view, and quite a few things I happen to disagree with. In other words, he leverages his money into personal power. In a free society we have to accept that a man can spend his money on what he wants, but if Soros gets his way we probably won’t have a free society anymore. Thus, we need to at very least keep and eye on him and call out funding sources, in order to maintain some balance.

    With Google, Facebook, Twitter, etc they are all leaning very much towards a central planned society where free market political views are curtailed and even if the founders don’t want that to happen, it will happen anyhow because once these machines are built they get claimed by whoever has the clout to take control. Zuc was up in front of Congress and they made it clear they don’t want to see Trump winning anymore. No one bitched about the Democrats siphoning off user data to assist Obama’s 2012 victory (which they admitted doing, see the link to Project Narwhal below).

    http://www.slate.com/articles/news_and_politics/victory_lab/2012/02/project_narwhal_how_a_top_secret_obama_campaign_program_could_change_the_2012_race_.html

    That’s at least one reason why people should be concerned about very large concentrations of wealth. Although, simply handing all the power to a bunch of unelected regulators doesn’t solve anything, and probably makes things worse. Power corrupts whoever you are, and government regulators tend to get captured fairly readily.

  7. Procrustes

    Bemused. I understand your concern. But could you suggest some remedies that won’t actually make matters worse?

  8. Nerblnob

    What procrustes said x2.

    Tel reminds us that Obama’s campaign manipulated data from social media.

    So would anyone with an ounce of nous.

    I shouldn’t be surprised that anyone even needs reminding in this age of partisan amnesia, but I am. It was only six years ago that the media was gushing over Obama’s modern, youthful, agile use of social media and how dumb and flatfooted it made his opponents look.

    All well and good until your opponents do it back to you but better, and then – OMG! “Democracy is in trouble” “the Russians” etc etc etc.

  9. JC

    You know, I’ve always had an issue with patents and copyrights, which is something handed down by the state. Google’s foundations are based on this and so are the others. We could argue that a decent part of the money was made through intellectual property protection offered by the state.

    As always, in libertarian world, Ive seen discussions for and against IP rights with some libertarians arguing there is no such thing.

    I said at the beginning that I’ve had an issue, it doesn’t mean I don’t support it, but I can also see a semblance of an argument contrary.

  10. JC

    Here’s the libertarian case against IP

    http://freenation.org/a/f31l1.html

    It’s worth reading.

  11. Bemused. I understand your concern. But could you suggest some remedies that won’t actually make matters worse?

    This has been discussed before. One suggestion (proposed in the US) is that the likes of Google, Facebook, Twitter be classified as common carriers, the same as telecom companies and thus wouldn’t be able to censor any content. Naturally they have all fought vigorously against this, while maintaining that telecoms need such restrictions and ‘net neutrality’ should be enforced, so that telecoms companies can’t do what they do.

    Sinc seems to be dead against this, so it must naturally be a pretty good solution. Everything that Sinc has been against so far has turned out for the good (Trump, the banking Royal Commission), and what he’s supported hasn’t worked out that well (Turnbull).

  12. NuThink

    Without copyright does that mean I could purchase any book, reprint the contents and put my name to it and just change the cover so that it is more attractive on the bookshelf?

    If I spend 10 million developing a physical thingamjig and someone sees it and just makes it at half price so I lose my ten million invested in time and effort and risk, I would certainly want to have some protection for that, else who would bother to develop anything?

    The US government used to try to prevent or break up monopolies like AT&T by using anti trust legislation.

    I have worked at places where they have policies to not lock themselves into one supplier so that they don’t get financially screwed by being held to ransom by a single supplier.

    COBOL was a result of government not wanting to be held to ransom by one computer supplier. They wanted a common language that would run on any computer (a little tweaking was allowed). Machine language programs were not easily converted to other hardware.

    If you only use Google you only get what they decide is good for you.

    When you want to use internet it is a little difficult if you don’t want to use the monopolistic NBN.

    I do not see a simple solution.

  13. Kneel

    “You know, I’ve always had an issue with patents and copyrights,…”

    I don’t have an issue with the concept, or even with the original implementation, but the pollie-muppets “looked after” their donors and extended copyright protection from “the life of the author” to “life of the author plus 70 years” – purely and simply to protect Mickey Mouse coming out of copyright and Disney “losing” sales. This is VERY wrong.
    Copyright (and patent) exist on the basis that:
    1) the creator has a right to compensation for their efforts;
    2) by using the force of the state to protect such IP, it can be published and widely available – just not copied without permission;
    3) in compensation for the protections offered, the state requires that the author give up the exclusive rights to their invention after the specified period (different period for patent vs copyright).

    But money talks, and Disney is worth a LOT, so they talked a lot. Politicians got their donations and “protected” the IP – no longer the property of an individual, but of a company. This is very bad and has resulted in a slowing of science and engineering progress (at least compared to what it might have been without this stranglehold) al lin the name of protecting the income of, not the inventor, but his descendants. Copyright was NEVER intended to allow me to pass my exclusive rights to my IP on to my children, yet it is doing exactly that since being amended. Shameless.

  14. .

    120 years of copyright for a book ghostwritten by an anon. author and sold to their employer/contractor corporation is really bizarre.

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