The Call of the Entrepreneur

There’s a fantastic new documentary film, The Call of the Entrepreneur, which is currently touring major cities with limited special previews. The makers of the film expect it to be released (most likely in independent film houses) shortly after the tour. The film follows three entrepreneurs whose businesses range from small and rural to very large and international. The common thread tying the owners together is the presence of “entrepreneurial spirit,” which is something few people have. It’s a combination of economic foresight, creativity, persistence, and most importantly, a willingness to take huge calculated risks.

Why do I want you to see this film? Well, without giving too much away, it’s because I want you to see how over-bearing governments push the smartest and most creative people, the innovators, away. One of the business owners in the film is international media mogul Jimmy Lai, whose family’s wealth was stolen by Mao Zedong’s Communist China. Working as a train porter in mainland China in the 1950’s, Lai only learned of a world outside the People’s Republic when he tasted a Hershey Bar given to him by Hong Kong business man whose luggage he carried. His family scraped together about $300 to smuggle him to Hong Kong at the age of 12. He risked never seeing his mother again for the mere possibility that outside world had something more to offer.

Lai credits Democracy and free markets for his success as the founder of one of the largest listed media companies in Hong Kong. He calls Communist China “a monopoly that charges a premium for lousy service.” When people ask him what his media and clothing companies do, he says that he is “selling freedom.“

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The Myth of “Rising Inequality” in America

A new study by the treasury department, summarized in a Wall Street Journal article, refutes the long-proselytized talking points of Democratic (and black-sheep Republican) presidential hopefuls such as Mike Huckabee and John Edwards– that the rich are getting richer and the poor are getting poorer. The study, which analyzed income tax returns from 96,000 Americans from 1996 to 2005, shows that upward mobility exists, as it always has in a free economy, and by and large EVERYONE is getting richer (except the richest 1%)…in terms of inflation-adjusted real income.

In fact the poorest people (those in the lowest tax bracket) experienced the greatest gains, with 58% reaching the next higher tax bracket in the ten year period. Nearly 25% of the poorest moved up two tax brackets or more, and 5.8% of the poorest Americans working full-time jobs reached the highest tax bracket. Inflation-adjusted median income for the poorest Americans increased 90.5% in only 10 years.
In the second poorest group (those in the second lowest tax bracket), nearly half moved up at least one tax bracket…while only 17% dropped into the lowest tax bracket. Inflation-adjusted median income for the second poorest Americans increased 34.8% in only 10 years.

Relatively speaking, higher-earning Americans increased their income much less than lower income Americans. The top quintile of earners saw only a 10% increase in inflation-adjusted income over the ten year period. The only group that saw a decline in overall spending power were the richest 1% of Americans. They lost 25.8% of their income. And more than half of them dropped into a lower tax bracket during the period.

Overall these patterns demonstrate two things:

(1) America is a place where the opportunity for wealth creation exists for everyone who is willing to work. The statistics of this new study mirror those of studies measuring the upward mobility of Americans in the 60’s, 70’s, and 80’s. Meaning it’s not any more difficult to get ahead now than it was 40 years ago. In fact, its probably easiser: with the rise of immigrants and young workers flooding the low-income job market in the past 10 years, the data should be skewed against a trend in upward mobility.

(2) Any politician who reads this study, accepts its methodology, and still cries “growing income disparity,” is spewing populist propaganda. Overwhelmingly, the poorest Americans improve their real income and quality of life by a much wider margin than wealthier Americans. And the richest of the rich, those arrogant billionaires than nearly anyone can resent, by and large are able to earn significantly less over time.

The irony – Distributivists (Socialists’ awkward cousin), in the name of creating income equality, propagate tax hikes and other measures that kill the pioneering incentive required for people to increase their wealth in the first place.

America is still the land of opportunity…

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