Acton Institute Powerblog

Wealth: What is it good for?

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On the Economix blog at the New York Times, Uwe E. Reinhardt wrote a post titled “How Businesses Create Wealth.” That elicited attention from a commenter who wondered where he was “trying to go with this essay.” Reinhardt, an economics professor at Princeton, answers with “Companies: What Are They Good For?” He also cites an article from Acton’s Journal of Markets & Morality: “A Communitarian Model of Business: A Natural-Law Perspective.” Reinhardt:

Actually, I was not trying to go anywhere with my analysis, other than to point out that businesses create value and wealth beyond the usually narrow slice that accrues strictly to the owners.

In most firms, the largest fraction of the gross value that businesses create with the goods and services they produce is channeled to employees. That allocation helps create household wealth, which may be held in the form of a home or other real estate, pensions or investments in mutual funds, or highly productive human capital — that is, highly educated offspring.

With their chronic suspicion of for-profit business, commentators on the left of the ideological spectrum insufficiently acknowledge that major contribution that business makes to social welfare.

John Couretas John Couretas is Director of Communications, responsible for print and online communications at the Acton Institute. He has more than 20 years of experience in news and publishing fields. He has worked as a staff writer on newspapers and magazines, covering business and government. John holds a Bachelor of Arts degree in the Humanities from Michigan State University and a Master of Science Degree in Journalism from Northwestern University.

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