WHY POOR?

Before proposing solutions it’s important to ask the question as to why people are poor. No, I’m not having a California “d-uh” moment. Sure, people are poor for lack of money and/or possessions of value. But as a layperson with only a single college course on the economy under my belt (perhaps a plus, considering the track record of the “experts”), I’ve struggled to dissect out the various factors that makes one person or group poverty-stricken as opposed to another.

On the simplest, and individual, level, if someone is unproductive due to laziness or disability, it’s easily understandable how they would be indigent. But there are many hard-working, physically robust individuals in that camp as well. Clearly, skills that are widely available in the marketplace will command lower compensation, assuming a market-driven economy.

But nations are made up of diverse peoples; clearly a nation can’t be categorized as “lazy” or “disabled.” So why are some wealthy, while others are not? Nations are macrocosms of the human traits that built them. An abundance or scarcity of desirable natural resources is equivalent on the national level to the God-given abilities of the individual, or lack thereof. But this explains only part of the picture. Mexico has abundant natural resources and hard workers, but is a third-world nation abutting a (hopefully not erstwhile) economic powerhouse. Japan has few natural resources and has been a dominant player for years, despite being defeated in a World War. “Laziness” has a national equivalent in the form of government and the values of the ruling class. In the financially sickest nations you can find the greatest degree of corruption. Whether it be a dictatorship that keeps most of the wealth sequestered at the expense of the people, or a less power-centric entity that is riddled with corruption from top to bottom, the outcome is the same: no infrastructure, no middle class; a “lazy” economy.

A knee-jerk attempt by those of good heart to fix this  is the call for “social justice.” In its purest form, it’s called socialism. It’s been tried over and over and always fails. Why? It’s based on a faulty premise of guaranteed equality of status rather than equality of opportunity (the principle upon which our nation was based, although many have forgotten this). It is human nature to want and expect remuneration to track effort, and the maxim “from each according to his ability to each according to his needs” runs counter to that. The needs invariably exceed the ability to meet them and the economic system, and with it the society, fails.

Capitalism, on the other hand, perfectly aligns incentives, fueling productivity. It is the best system devised, self-correcting, and clearly smarter than the rulers trying to manipulate it. Then why is capitalism heading into a tailspin? Once again, corruption. An inherently bad system such as socialism will always fail, and saddled with corruption it does so more quickly (the Soviet Union made it 70 years). Unfortunately, even a good paradigm such as capitalism can be corrupted to extinction—it just takes longer. Knowing how it is being corrupted is the key to finding the solutions, not moving backwards to an inherently flawed system such as socialism.

Next rant: Getting the bugs out.

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3 Responses to “WHY POOR?”

  1. theseep Says:

    You’ve been reading too much Ayn Rand. People are poor for a myriad of social, economic, educational, psychological, and other reasons. I think you’re trying to oversimplify an extraordinarily complicated issue. What some call socialism, others call adequate education and opportunity to succeed. Capitalism is inherently flawed by encouraging greed, oppression, and corruption just like socialism is inherently flawed by stifling innovation and decreasing incentives to contribute. Sweden does a good job with their version of Democratic Socialism – everyone has education, healthcare, housing, and basic necessities, but there is plenty of opportunity in their regulated free market to succeed. Unfortunately this comes at the cost of a 60% tax rate. Despite their high taxes, people in Sweden tend to be happier and healthier than in most other nations. That being said, I agree that we need to add personal responsibility into our entitlement systems but at the same time we need to enforce strict regulation on industry to keep them from polluting and oppressing. Along the same subject, I find the Right’s recent attack on the EPA laughable, as by allowing industry to pollute more, the cost of cleanup and health problems are then transferred to the taxpayer and everyone except for the shareholders lose. Wonderfully short-sighted thinking. Looking forward to seeing thoughts on how to fix it!

    • Davecor@aol.com Says:

      Thanks for your thoughts. If I’m oversimplifying, it’s because I’m trying to wade through the morass and get to root causes. I agree that no system is perfect, but they can be made a good deal more imperfect by allowing them to be corrupted. I still stand by my contention that socialism is inherently flawed relative to capitalism. Sweden is often cited as an example of successful socialism, but it is a small, homogeneous country that doesn’t require much of an outlay for defense. You might liken it to a small insect that needs only a primitive, open circulatory system to thrive (no disparagement to the Swedes intended). I also agree that there has to be environmental regulation; as usual, the devil is in the detail of where that line should be drawn. Strangling the economy with draconian decrees is no more useful than doing the same by trying to shrink our bloated government overnight. I see that we agree that personal responsibility must be resurrected. Ultimately, our values will determine our actions which will determine our fate. And it is very difficult to legislate values. As for reading too much Ayn Rand, we will see how you feel in a few years if the appropriate steps aren’t taken soon to stop the downhill slide. Keep an eye on the canaries in the coal mine, namely Greece and Spain. All is not yet lost, however. Canada pulled itself back from the brink in the ’90s by raising taxes but making much steeper cuts in spending. Let’s see if wisdom can overcome greed south of the Canadian border.

  2. Clint Slaughter Says:

    Well said, Dave. I do think that properly regulated capitalism could indeed be the best economic model to encourage innovation and prosperity, but it needs to be backed with a social safety net that provides basic services for those in need and a health care system that is affordable for the middle class without government subsidy. I still think we need a public option for basic coverage at $100-150/month with a $1000-$2000 deductible and pre-tax Health Savings Accounts. Those below the poverty level that qualify and choose to enroll in government assistance would still have some sort of deductible to encourage mindfulness about resource utilization, they would have to follow rules regarding emergency use, not be allowed to smoke, and would have regular preventative visits with nutrition, exercise, and lifestyle counseling to reduce illness in the future. I’m sure the ACLU would have something to say about it, but it makes no sense to pay for someone’s albuterol and cardiac caths while they continue to smoke – the last figure I read was $167 billion/year in tobacco related illness in our country. Pure insanity.

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