"Human Capital Runs the World"

Written by Libby Schauer

Hi everyone,

For my blog, I decided to write back to a previous blog titled “Who is really in charge?” by Kyle Petoskey. This is in no way intending to be rude. I simply want to present a different side of his argument. If you haven’t read his blog yet, I would suggest you do it quickly before you continue on reading mine.

I am here to say that our economy needs the top 2%. Sure, the distribution of wealth may not be even but you have to take human capital into account as well. The high paid CEO’s of Fortune 500 companies are in that spot because they can do what they do better than everyone else could. Back in December my class read a chapter from the book Naked Economics titled “Why is Bill Gates so much richer than you are”. And I found the answer; human capital is defined as the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a fast pitch. It’s what you would be left with if someone stripped away all of your assets-car, house, money- basically leaving you on the street corner with just the clothes on your back. Bill Gates is insanely rich because if that exact event were to happen to him as what I just described, he would be snapped up in an instant by another company. He would without a doubt have multiple companies fighting over him, and earn back everything he lost.

I'm sure well over half of the 98% left in the country couldn't do what the top 2% do to earn their money. They do have to work very hard for it. Compared to the rest of the world, the United States has one of the highest percentages of a middle class population, which is a blessing from our economic freedoms. Instead of criticizing the upper class and wanting more for the middle class, we should be extremely thankful we even have a middle class, because most countries have their top 2% and the rest of the 98% are dirt poor. The graph below shows an analysis about the distribution of wealth around the world…

As you can see, the United States is doing enormously better than the rest of the world, especially countries like Africa and Asia who have a much higher population than the red, dark green, light green, dark blue and light blue bars, thus meaning a lower standard of living.

So in summary, I submit to you that human capital is the basis for wealth. It’s really quite simple actually; want a better paying job, go to school and get an education to qualify for it,expand your human capital. People working to better themselves is the only way the United States will come closer to closing the huge margin of uneven wealth distribution. It should not be the governments’ job to redistribute incomes. That sounds a lot like socialism or communism, and as history has proven, those are both forms of government that ruin a country completely. Like I said before, we should consider ourselves lucky beyond belief to live in a country that has such a large middle class. That is rare elsewhere.