Thursday, 20 August 2015

Riches and Poverty

(Neil's Note: Three more brief sections from "Honest Common Sense.")


The “rich” get a lot of sneers directed at them. Like “the 1 per cent,” “fat cats,” “idle,” or “uncaring.” Which raises the question: which, if any, rich individuals deserve such censures?

I prefer to separate the question into two. First, how do people become rich, and which of the methods of becoming rich are sneerworthy? And second, when people have control of riches and thus economic power, how do they use their power, and which of those uses deserve scorn?

As to the first question, I see, broadly, seven ways to get rich. First, earning it through honest business in the market. Second, getting it through canny investment. Third, luck – say, inheriting Daddy’s honestly earned millions, or winning a big lottery prize. Fourth, parasitism. That is, while not actually being violent or fraudulent, sucking wealth from the system like a parasite. For example, through commodity speculation, or through asset-stripping of companies.

Fifth, scheming – that is, gaming the system to your own advantage. For example, accepting subsidies, or lobbying for advantages or to harm your competitors. Sixth, the criminal means – such as theft, fraud and intimidation, as practiced by organizations like the Mafia. And last, the political means – which I’ll here characterize as the criminal means plus a false claim of legitimacy. Taxation and currency inflation are good examples of the last category.

With the second question, there is a wrinkle. All of us wield, as individuals, an economic power in proportion to our own wealth. But some – in fact, a small minority – have far more economic power than everyone else, because they also control the spending of organizational budgets. And most are governmental or corporate bosses.

Whether personal or organizational, I see three main ways in which economic power can be used. First, constructively – such as investing in new, innovative businesses or in good, truthful science. Second, neutrally – for example, for your own pleasure and the pleasure of your loved ones or friends. And third, negatively – such as a company screwing its suppliers into dependence, or a government making wars or growing its bureaucracies.

Taking into account all these matters, dear reader, I leave as an exercise for you the following question: Of those who practise the various ways of acquiring and of using wealth, which deserve censure? Or, alternatively: At which of the ‘rich’ should we bitch?

Poverty – Causes

The opposite of rich is poor. Many, many people in the world are poor. A lot of them are very poor. And many more, while not destitute or near it, are far poorer than they deserve to be.

There are many different reasons why individuals are, or become, poor. But all these reasons can, I think, be put into one of four categories. One, lack of access to the free market. Two, lack of ability to create wealth. Three, lack of just reward. And four, debt.

Lack of access to the free market can be due to a variety of causes. For example: Wars or political oppression. Regulatory burden, such as business licensing. Putting people in prison, who aren’t any real danger to anyone else. Tariffs, prohibitions or sanctions. Anti-business culture. Or minimum wage legislation, which prevents people not yet skilled enough to earn the minimum wage from getting jobs at all.

It’s sobering to realize that most, if not all, of these causes of lack of access to the free market come from the acts and attitudes of political governments.

The causes of lack of ability to create wealth divide, for the most part, into two types. First, things which are the individual’s own fault; for example, if they’re too lazy or too dishonest to make the effort to use Oppenheimer’s economic means. And second, things which are no-one’s fault, like illness or disability.

Lack of just reward can sometimes be caused by exploitation of the individual, for example by criminals or by family members. But more commonly, it’s caused by political action, such as taxation or currency inflation. Or by a dishonest, unstable banking and financial system – check out Cyprus. Or by lack of respect for property rights.

Lastly, debt is sometimes a self-caused source of poverty, such as when individuals have spent on credit beyond their means. But debt for individuals can also be caused by others. For example, by overblown legal damages, such as maintenance payments after a divorce. Or by a rapacious state that tries to force its debts on to individual citizens.

Poverty – Solutions

To look for solutions to poverty, I’ll re-arrange the causes of poverty, as above, under three headings. First, things which are the individual’s own fault. Second, things which are someone else’s fault. And third, things which are no-one’s fault.

If an individual’s poverty is caused by that individual’s own fault, the remedy is in the individual’s own hands. No more need be said than: get earning, and if you’re still in debt, pull yourself out of it.

If, however, individuals are poor through someone else’s fault, then it must be the responsibility of those at fault to fix the problem. And those at fault, almost always, are the political class and their cronies.

So, why not help the economy to become sustainable, by taking away the unearned privileges of those responsible for others’ poverty – such as politicians, bureaucrats and corporatists? Why not simply replace redistributory taxes, bureaucracies, regulations and anti-business culture by justice, competition in a fully free market, pro-business culture, property rights and a stable, honest financial system?

That would go a long way towards eliminating poverty among civil human beings, no? And wouldn’t winding up morally and financially bankrupt political states, and distributing their assets among those they taxed and other genuine creditors, help a lot as well?

Furthermore, the Law of Restitution should apply. Those that denied access for the poor to the free market, or supported or benefited from unjust and dishonest institutions or policies, should be made to compensate those they harmed, and if appropriate punished for their crimes too.

In the last case, where individuals’ poverty is no-one’s fault, then it’s appropriate to set up schemes of insurance or mutual aid. Such schemes existed in the 19th century, for example the friendly societies. But they were elbowed out by welfare states. In a totally free market, re-vitalization of such schemes should be enough to ensure that no-one is poor through no fault of their own. But even so, charity is always available as a final back-stop.

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