The Wealth Redistribution Myth

Social justice, economic justice or wealth redistribution what ever term is useed the idea is the same. The myth is that through taxes the Government takes the wealth of the rich and redistributes that wealth to the poor to raise them out of poverty.

 

The idea of wealth redistribution is based on two false assumptions. 

• The total amount of wealth in the world is constant. One of the results of this assumption is the notion that becoming wealthy automatically means others become poor as a result.
• The rich just sit on their wealth such that it does nothing but make themselves comfortable.

The  reality is that the total amount of wealth is not constant because  the labor to turn raw materials into a product creates wealth that did not exist before. Furthermore since the people supplying that labor are paid they share in the wealth produced by their labor. Furthermore the rich do not just sit on their wealth leaving it in bins of money that they swim around in, they use it to buy things made by others and they invest it in one or more businesses thus providing work for others providing them with wealth they would not otherwise have.

 

Not only are these assumptions wrong but in practice most of the wealth taken in the name of wealth redistribution actually goes to those running the redistribution programs what portion the poor actually is just enough to keep them dependent on the system. If you doubt this look at the size of the salaries of bureaucrats some time. 

 

The final blow to this myth comes from look at the automate expression of the idea of wealth redistribution. If you took a population of people and confiscated all material wealth and then redistributed it equally to every one in area so that they all had an equal amount. If you then gave them the freedom to use it as they pleased with in a few years there would once again rich and poor they would not necessarily be the same people as before but the difference would still occur. This is the case because not every one would use their resources the same way. Some would blow their resources all on products the other would produce with their resources.

This is because material wealth is not the only form of wealth and no government can take away immaterial wealth. Every person as different abilities and they are a form immaterial wealth that one way or other can be used to acquire material wealth. The key is that we all have immaterial wealth and how we use that immaterial wealth often means more than what material wealth we start out with.

What is important is having the freedom to use your immaterial wealth to its greatest potential. If that freedom is taken away then that immaterial wealth gets wasted. Efforts to redistribute material wealth by force only encourage the squandering of peoples immaterial wealth making them poorer.

Myth Busted

The Scourge of Socialism

Socialism is the economic system where the means of production is owned and controlled by government. Socialism is of necessity is a form of slavery since the individual can not be allowed to pursue his own interests.  By definition if the individual is not given the freedom to pursue his own interests he own and controls the means perusing that interest.  So the individual must be compelled to follow the interests of the state which is by definition a form of slavery.

The theory behind socialism is that there is a fixed amount of wealth and that reason some people are rich and others are poor is that the rich have taken from the poor what is rightfully theirs. So the remedy is to take from the rich and redistribute it to the poor called social justice. Since the rich do not automatically give away all their wealth the government takes it by force to redistribute. This appalling to those those consider them selves poor because they led to believe that it will make their lives better.

The reality is that the total amount of wreath is not constant and that it is created by the labor and productivity of people. If people are not allowed to profit from their labor and can get the same results of not putting out the effort there is not incentive to be productive and the means of producing wealth is destroyed. So the more socialistic an economy becomes in time the poorer it becomes.

In practice socialism never evenly redistributes with the people in the government enriching themselves and their friends at the expense of the general population. As a result getting ahead in a socialistic system requires being able to get politically connected and learning how to work the system. To see the truth of this look at any communist (totally socialistic) country they all show the same pattern of a rich dictatorial elite ruling over an impoverished population. As a result socialism works great for those that run the system or know how to game the system but not for the average person. Sadly we are beginning to this in the United States.

Dealing with Capitalism’s Dark Side

The are several ways capitalism’s dark side can be managed. They are government regulation, and fostering a moral business climate.

Government regulation is one way of dealing with business excesses, but the down side is that government regulations ten to grow. Also there always the danger of a developing cronyism where big, rich companies get the government to cause regulatory harm to their smaller competition. There is also the danger of politicians fostering regulations to help gain favor among certain voting blocks. Government regulations do serve as a legitimate check business excesses as long as they are few and small; the danger is the tendency for them to become many, big and destructive.

The best solution, though not necessarily the easiest to achieve is fostering a moral business climate. If the businesses in a given area have a strong sense of morality toward how they treat, employees, customers, and other business then little or no government regulation is need,

In practice minimal helpful government regulations that help smooth relationships; rather than complicate them; along with a moral business climate is most work able solution.

An Introduction to Capitalism

Capitalism is also called the free market is defined as the economic system where the means of production is in private hands. The idea is that you are free to market your goods and services on the open market. Even in trying to find a job you are offering you skills, talent and labor on the open market.

Capitalism is the natural result of freedom. It is the economic system results from people being free to choose their own course in life as opposed to being forced down a path by the government, religion or other governing entity.

While capitalism comes with no guarantees, the potential rewards are endless. Under capitalism you are not forced to stay in your current employment but can seek other employment or strike out on your own and start you own business.  In a pure capitalist system there is nothing but your own personal limitation; most of which are self induced; to hold you back. Put simply the only thing standing in the way you own prosperity is yourself. Even the richest person around can’t stand in your way unless you let him.

If you look to some one else to give you prosperity you will be disappointed regardless of the economic system. So capitalism is the system in which the most people are prosperous. You can actually succeed because of what you know and can do rather than who you know.

Reduced to its simplest terms capitalism equals freedom, and any other system is a form and degree of slavery.

The Nature and Creation of Wealth

Wealth is often equated to money, but while money is a form of wealth it is not the only form of wealth. A person can have a huge income and because of how the spend it, have no wealth at all. A person can also have no income and because of what they have accumulated have a lot of wealth.

The best definition of wealth is the total amount of assets that a person has. By this definition most people a wealthier than they think, because true wealth includes such immaterial things such a person talents, knowledge and experience. In most cases these can be used to make money one way or another and so have financial value.

Contrary what some people think the total amount of wealth is not constant. It is created and destroyed all the time. However it not Government that creates wealth but individuals working to produces thing, both material and immaterial. Government can redistribute wealth, but they usually end destroying much of it in the process. Government can also destroy wealth by so regulating the means of producing as to reduce the amount of wealth created by a given amount of effort or reduce once profitable type’s efforts to worthlessness.