The woman in this video uses the "there's only so much a person needs in life" argument against Economist Milton Friedman to explain why redistribution is the right path to take over free-market capitalism.
However, when pressed as to whether or not she thinks they hide their money under their pillows, she admits that they "invest it."
Friedman explains the very simple fact that investments enable companies to acquire capital. For those of you who are unfamiliar with the term, capital refers to the factories, machinery and equipment owned by a business and used in production.
Free-market capitalism provides a system in which those greedy millionaires (selfishly seeking their own interest through a return on investment) invest their savings in companies, who use that money to buy equipment and factories, which necessarily requires they hire more workers to operate the equipment and run the factories, which gives those "impoverished people who try to get up in the world" she refers to the wages and skills they need to do exactly that.
Those millionaires everyone tends to blame for the poverty in this world are the very people that are providing companies the ability (and need) to offer a way up in the world to those who need it the most.
It happens in 7 simple steps:
1. An individual thinks of a way in which they can provide a good or service at a better quality and for a more affordable price than what is currently available, and begins to produce it.
2. People see this more affordable, higher quality product and begin buying it from that individual instead of from their inefficient former providers. The individual is happy because he can make money off his product and the consumers are happy because this individual provided them a way to get a product at a higher quality and a lower price than what they were getting before.
3. The individual understands that in order to provide his superior product to everyone in society that can benefit from it, he needs to increase his "capital", or means of production, such as machines, raw material and factories so he can produce more of his product to sell to the increasing amount of people who want to buy it
4. In order to pay for this capital, the individual sells part-ownership (or shares) of his company to people who can afford the expensive capital necessary to increase production in return for their personal contributions to acquiring such capital for the company. They share the risk in doing so and form a "corporation," which has enough money between all the part-owners (or "shareholders") to buy the capital necessary to produce the amount of the good that society demands, and they do so.
6. Realizing that the relatively small number of investors have neither the skill nor the time to operate the capital they just produced, they decide to hire people that do. So the investors offer jobs to people who will do so for money those people wouldn't otherwise have had in return for the labor these potential workers are able to provide to the corporation.
7. The corporation is now able to provide the low-cost, high-quality product to the entire society while providing wages to the people who agreed to trade their labor for them and providing profits to the people who took the risk of investing their money and time in an uncertain enterprise. (Not to mention the taxes they provide to society and the costs of governmental regulation imposed on their product and organization)
As this corporation sells more and more of their product to those who want it, the corporation is able to generate a profit, which makes the enterprise beneficial to everyone involved.
The consumers are better off because they are able to buy a product they need at a lower cost and a higher quality than they previously could have.
The hired workers are better off because the investors gave them the wages/salary they wouldn't otherwise have had otherwise in return for their work. They also learned skills they would not have otherwise learned with which they might be promoted within their current corporation, be hired by another, or decide to use both the money and the skills they earned from this corporation to begin their own.
The individual who began the entire enterprise is better off because as a part owner in this company, they made enough money that they are now able to invest it in other companies, providing for more machines, factories, jobs and workers' wages in the companies they invest in.
The shareholder is better off because the risky investment they took provided the company with what it needed to become profitable (and thus they were paid for taking the risk that others were unwilling to take)
As you can probably see, nobody is at a disadvantage in the free market.
- The consumer benefits because they are offered a more affordable, yet higher quality product in return for the price they are willing to pay for it.
- The impoverished and unemployed benefit because they are given a job, wages and potential skills (necessary for a "step up" in the world) in return for their labor.
- The inspired and motivated entrepreneurs benefit because they are given a chance at achieving the American Dream through profit in return for taking a risk and working hard to provide for a societal need.
- The risk-taking investors benefit because by investing in the entrepreneur's company, they give it the resources it needs to succeed and thus are able to share in the profits it generates.
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