George Rebane

Irving Kristol, the father of neo-conservatism and celebrated observer of our political progress, died yesterday at the age of 89.  His legacy has informed many of us and focused the ire of many more over six decades of public punditry and wordsmithing.  The following excerpt is from one of his regular articles – Income Inequality Without Class Conflict, Dec. 18, 1997 – that appeared in the WSJ.

It is often said that capitalism—that is, a market economy—is morally obnoxious because its “trickle-down economics” inevitably creates inequality of income and wealth. Now it is certainly true that “trickle-down economics” has that effect. It is also true, however, that if you want economic growth and greater affluence for all, there is simply no alternative to “trickle-down economics,” which is just another name for growth economics.

The world has yet to see a successful version of “trickle-up economics,” an egalitarian society in which the state ensures that the fruits of economic growth are universally and equally shared. The trouble with this idea—it is, of course, the socialist ideal—is that it does not produce those fruits in the first place. Economic growth is promoted by entrepreneurs and innovators, whose ambitions, when realized, create inequality. No one with any knowledge of human nature can expect such people not to want to be relatively rich, and if they are too long frustrated they will cease to be productive. Nor can the state substitute for them, because the state simply cannot engage in the “creative destruction” that is an essential aspect of innovation. The state cannot and should not be a risk-taking institution, since it is politically impossible for any state to cope with the inevitable bankruptcies associated with economic risk taking.