America's Wealth

IBD Editorials

World Bank Economist Blames America For Its Wealth 

 Posted 01/05/2012 07:02 PM ET

Wealth: A World Bank economist is trying to shame the U.S. for being home to one half of the world's richest people, the so-called 1%. In reality, it's the world that should be red-faced for not creating wealth as America does.

Bank chief economist Branko Milanovic has come out with a book called "The Haves and the Have Nots," whose purpose seems to be to argue there's something wrong about America having an outsized concentration of the world's wealth.

Implied in the argument is that America's wealth comes at someone else's expense, and the solution is to have a bureaucracy redistribute it more to his liking.

Milanovic writes of wealth as a "one-way street" and calls America a "wealth ghetto."

Subtext: The world's poor countries can't win.

Frankly, that's about as dim and pernicious a conclusion as that of an teacher who refuses to distinguish winners from losers based on performance.

The fact is, wealth inequality between nations correlates strongly to their political systems.

Not a democracy? Count on a big hit in wealth. According to the 2011 Forbes billionaire's list, Venezuela has a grand total of two billionaires in a population of 28 million people, vs. the U.S.' 412 billionaires in a nation of 307 million. Democratically deficient Venezuela has one billionaire per 14 million people. Live-free-or-die America has one per 743,000 people.

In fact, the U.S. is home to 29 million people whose per capita income after taxes tops $34,000, which is Milanovic's definition of the global 1%. In other words, the U.S. has more rich people than Venezuela has people.

Even more important, the U.S. has economic freedom, ranking near the top of all global lists and drawing more ambitious, industrious immigrants than the rest of the world combined.

China, that vaunted "model" of centrally planned development touted by New York Times columnists Paul Krugman and Thomas Friedman, as well as President Obama himself, has 115 billionaires. Impressive, until you consider that it has 1.3 billion people. That means one billionaire per 11.3 million.

So much for state-led development.

The U.S., by contrast, still has a relatively free economy, respect for rule of law, low corruption and all the other elements that foster wealth creation.

We have nothing to be ashamed of for holding most of the world's wealth. After all, we created it. It's the rest of the world that should be scrambling to catch up.