John Tamny | On October 15, 2019

Senator Elizabeth Warren speaking in New Hampshire, 2019. (CC BY 2.0)

It’s often said about 1960s and 70s Wall Street that a stockbroker could leave for lunch heavily in debt, only to return an hour later rolling in cash. Such was life in the financial world of a few decades ago. So high were commissions on stock trades that a big order placed with a licensed sales assistant or colleague manning the desk could make the stockbroker’s day, and sometimes year.

No doubt stories like that were traded between Wall Street veterans and newbies this past week. With the announcement that Charles Schwab and Ameritrade would no longer charge commissions on stock trades, yet another formerly expensive act was essentially reduced to zero.

Notable about Schwab’s decision was that it in a very real sense was inevitable. In a capitalistic society, the capitalists get rich by mass producing former luxuries, and relentlessly pushing down the prices of everything. Along similar lines, airplane flying was prohibitively expensive at the same time that buying and selling shares was. This rates mention since in the same week that Schwab and Ameritrade made their announcements, so did Southwest Airlines promote $49/one way sales. The Southwest fare sale is a reminder that within ten years private flight will be increasingly enjoyed by everyday Americans. Within twenty years, it will be very much the norm thanks to enterprising individuals who will earn billions for freeing us all from the TSA frustration. Bank on it.

All of this came to mind while reading a front page New York Times story by Alan Rappeport and Thomas Kaplan about Democratic presidential candidates Bernie Sanders and Elizabeth Warren, and their proposed wealth tax. The Times writers explained it this way:

“As they compete for the Democratic presidential nomination, Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have proposed wealth taxes that would shrink the fortunes of the richest Americans. Their plans envision an enormous transfer of money from the wealthy to ordinary people, with revenue from the wealth tax used to finance new social programs like tuition-free college, universal child care and ‘Medicare for all.'”

The Dems’ error is in presuming that money and wealth are one and the same. No, they’re not. Money is just an agreement about value that facilitates the exchange of actual wealth. Money is what governments can produce, while wealth is what we produce. If money were wealth, as opposed to a certain consequence of wealth, poverty could be stamped out with ease.

Warren, Sanders, and others vying for the favor of Democratic voters forget that a dollar in the hands of Nancy Pelosi and Mitch McConnell is nothing like a dollar in the hands of Jeff Bezos, Bill Gates, and Warren Buffett; the three richest Americans the individuals who would likely pay the most if a wealth tax were instituted. And while imposing a tax and collecting on it are two entirely different things (much as money and wealth are), that’s a column for another day.

For now, it’s worth thinking about people like Bezos and Gates, along with what someone like Buffett does when allocating capital. While it used to be that only the richest of the rich had access to the world’s production, and only after incredibly expansive travel around the world, Bezos democratized access. Nowadays anyone can purchase the world’s plenty, at prices that continue to fall, all with a click of a mouse.

In Gates’s case, he attended elite Lakeside School in Seattle. This rates mention because Seattle’s fanciest school had incredibly primitive (by today’s standards) computers that students could utilize. Gates was an eager user. Readers can rest assured that computers weren’t the norm in Seattle schools back in the late ‘70s, or anywhere else for that matter. And that’s the point.

Gates, Steve Jobs, Michael Dell and others turned nose-bleed expensive computers and the software that gives them life into common goods. Getting into specifics, all three grew incredibly rich by virtue of mass producing former luxuries that once could only be found in the vicinity of the rich and their offspring.

Buffett comes in as the investor whose capital allocations made and make all this possible. Investment is all about the production of more and more goods and services at costs that continuously shrink. Without investors willing to back dreamers like Gates, Jobs and Dell, economic advance grounds to a halt.

So with it hopefully established that individuals get rich by virtue of them democratizing access to formerly unattainable goods and services, while cheapening others (that Charles Schwab is a billionaire is a major-league redundancy), it’s useful to pivot back to the Dems’ tax plan. They want to take money from the rich in order to give it to those who aren’t.

The problem is that no one wants money, they only want what money can be exchanged for. Think about it. Crucial here is that a dollar today is exchangeable for exponentially more goods and services versus decades ago, not to mention that it commands goods and services that very few (rich or poor) could have imagined decades ago. Translated, Sanders, Warren et al want to take from the very people who got rich by powerfully improving the living standards of the poor and middle class through copious production of what was formerly out-of-reach for those same individuals. You can’t make this up!

To be clear, this is not a piece about incentives, and taxes blunting incentives. With the entrepreneurial, there’s an argument that tax rates don’t much inform what they do. But availability of capital most certainly does inform what they do.

This is important as Dems’ wax rhapsodical about the $2.6 trillion that economists Emmanual Saez and Gabriel Zucman promise a wealth tax will raise. Ok, but so what? It’s not the $2.6 trillion that matters, it’s once again what it can be exchanged for. And in shrinking the amount of capital that could be directed toward innovators (what can inheritors or producers of great wealth do but thankfully invest it?), the Dems will slow the process whereby the poor and middle class will be able to attain goods and services previously unattainable for anyone.

Translated, the Democrats in their parallel universe are bragging about plans to shrink by trillions the investment that would vastly improve the lives of the presumed “have nots.” All to give them “money.” Except that money has exponentially fewer uses minus the genius of the individuals (and yes, heirs) they choose to neuter. Something to think about.

This article originally appeared on Forbes.com.

John Tamny

John Tamny is a Forbes contributor, Director of the Center for Economic Freedom at FreedomWorks, editor of RealClearMarkets, and a senior economic adviser to Toreador Research & Trading. He’s the author of “Who Needs the Fed?” (Encounter 2016), along with “Popular Economics” (Regnery, 2015).