May

25

Entitlement in a good sense is not talked about much but is the effect of consumer surplus. Loosely defined, most of the gains from productivity over the last decade, generation, century, accrue to the consumer in the form of much lower prices, higher quality and often products and services that were not even available before.

The split is about 70-30%. The 30% goes to the capitalist who took the risk and deployed resources. But the other 70% of the value goes to the consumers.

For example, laptops cost a fraction of the cost 10 or 20 years ago. Sure, Dell deservedly gets rich. But with the surplus, millions of consumers can buy iPhones, something not even available a decade ago at any prices. Food cost as a percentage of income has declined steadily for decades. With that surplus consumers buy other things to better their lives.

It's a pretty good deal all thanks to competition, which drives down their returns on capital for suppliers. In growing open societies consumers take this entitlement almost without acknowledging it is there.


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