Yes, government does (help) create wealth

In the United States, the notion of government as a provider of the resources necessary for wealth creation is met by many on the right with something like an allergic reaction. "Why should government redistribute wealth?" they demand.

To answer their complaint, a false assumption must first be corrected. The false assumption is that the government does not participate in the distribution of wealth in a market economy. But of course, government surely does play a role in distributing wealth in a market economy. A person doesn’t get rich or stay rich without the services provided by government, including its protection of intellectual property. In other words, the heavy concentration of wealth among the very richest people could not happen without government to begin with. So when government redistributes wealth, it is merely correcting a problem it helped create.

This argument does not settle the issue of how much redistribution ought to be done, of course. That has to be decided democratically. But conservatives are wrong to suggest that redistribution is simply arbitrary meddling by the state in a purely voluntary market system. There is no such thing. The state is necessarily implicated in the existing distribution of wealth, whether it be to the advantage of the rich or the poor. To support conservative policies is to endorse the advantage of the rich.

Of course, for conservatives, the heavy concentration of wealth among the rich few is not a problem for the state to address; indeed, it is not a problem at all. It is simply a result of some people being smarter and harder-working than others. But as I argued before, smarts and hard work alone do not get us the degree of inequality we see – government helps. Without it, there would be no way to get your due if someone reneged on their contract or stole your idea and made money off of it that rightly should be yours. To acknowledge the role of government in fostering wealth creation is not to deny the importance of intelligence and work ethic. It is simply to acknowledge that a market economy requires the support of a strong government able to enforce the rules. No one person, however smart or hard-working, can create such favorable social conditions on his or her own.

Contrary to right-wing myth, government does create wealth. That is to say, society collectively enables individuals to prosper by providing a system of laws that protect property rights as well as physical security. When those who prosper most in that system are taxed the most to support it, they are not being penalized. They are paying to support the system that nurtures them.