Thursday, 31 August 2017

You can’t fix poverty with loot-and-plunder economics

Anti-poverty campaigners in general exhibit little understanding of what it would take to actually relieve poverty.

They claim, for example, that high taxes and a so-called “living wage” will alleviate poverty and raise general wealth, without realising that it is the goods and services those wages buy (that must first be produced) that constitute the real wage by which everyone is finally paid – that production of these goods and services, this wealth, cannot be raised simply by legislative fiat.

They fail to grasp that it is actually poverty that is mankind’s natural state, and that it is past wealth production (not redistribution) that has been rescuing people from poverty worldwide in ever-expanding numbers – the great (but almost unheard) story of our era --  but the campaigners’ own knowledge of (and interest in) the process whereby all this wealth is produced is less than that of a small child – and their efforts to simply legislate higher wages by law amounts to little more than a “loot and plunder” approach to economics.

The science of wealth production (which used to be called political economy) begins with the observation that one person alone can barely produce enough to satisfy a small percentage of their wants, as George Reisman explains:

A man can do the labour of one but would like to benefit from the labor of many. Thus labour is scarce and needs to be made more productive.
     Unemployment is not the result of a lack of work to do, but of wages that are too high and a capital supply that is too low.
    A fall in money wages and increase in capital supply can quickly achieve full employment, and at rising real wages [i.e., at increased amounts of goods and services able to be purchased with a given money wage].
    But our contemporaries think that prosperity can be achieved by forcing up wages and taxing away additions to capital. These beliefs, which are held by most of the educators and journalists who shape public opinion, are responsible for mass unemployment. People just don’t know that wealthier capitalists and more capital translates into a larger supply of products and greater demand for labour.
     Minimum wage laws violate the freedom of opportunity. They deprive people of the opportunity for employment by making money wages too high. The higher are wages, the smaller is the number of opportunities for employment offered in the market.
    For example, at a minimum wage of $15 per hour, all the jobs that would have been offered at wages below $15 are prohibited. All those employment opportunities are wiped out. A rising minimum wage traces a path of declining job opportunities. A free labour market [by contrast] reates employment opportunities equal to or greater than the number of workers seeking employment.
      Advocates of minimum-wage laws are both profoundly ignorant and implicitly advocates of physical force. Only the threat of physical force is what makes employers pay the minimum wage. Advocates of minimum wages know nothing of economics and want the government to use physical force to raise wages.
    The fundamental policy tools of statist politicians are clubs, guns, and prisons... What allows statist politicians to conceal the fact that they’re thugs is the belief that they have a special account with Santa Claus. As though Santa Claus, rather than extortion, were the source of the funds extorted by the politicians.
      The statist politicians and the leftist “intellectuals” dismiss the teachings of sound economics by calling it “trickle down.” They do not allow themselves to see that their theory of economics is the loot and plunder theory. They propose to enrich the country by plundering its capital through ever higher taxes and reducing the buying power of what remains.


1 comment:

  1. Yes, Our man is wanting $20 minimum, Government entry into the housing business, buy back the Electricity market when the shares fall, and in exchange we get a referendum, and maybe some hold back on the dispersion of productive land to the peoples Army.. From the hysteria it seems we might all benefit from the new free money, and with a substantial effort at increased tax evasion the future looks good. .


1. Comments are welcome and encouraged.
2. Comments are moderated. Gibberish, spam & off-topic grandstanding will be removed. Tu quoque will be moderated. Links to bogus news sites (and worse) will be deleted.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say it, it's important enough to put a name to it.
5. Above all: Act with honour. Say what you mean, and mean what you say.