Sunday, 8 December 2013

On liberty and poverty...


We are frequently told that intervention by government is necessary for the elimination of poverty. And even that this poverty is a consequence of inequalities or other misfunctions of the market.

Here's a quote (via Don Boudreaux) that questions all this, rather suggesting that economic liberalism is the route to eliminate poverty rather than the mercantilist, directed economy preferred by our masters:

If bourgeois dignity and liberty are not on the whole embraced by public opinion, in the face of the sneers by the clerisy and the machinations of special interests, the enrichment of the poor doesn’t happen, because innovation doesn’t.  You achieve merely through a doctrine of compelled charity in taxation and redistribution the “sanctification of envy,” as the Christian economist the late Paul Heyne put it.  The older suppliers win.  Everyone else loses.  You ask God to take out two of your neighbor’s eyes, or to kill your neighbor’s goat.  You work at your grandfather’s job in the field or factory instead of going to university.  You stick with old ideas, and the old ferry company.  You remain contentedly, or not so contentedly, at $3 a day, using the old design of a sickle.  You continue to buy food for your kids at the liquor store at the corner of Cottage Grove and 79th Street.  And most of us remain unspeakably poor and ignorant.

This is the thinking that gives us the Oxfam approach to international aid - keeping subsistence farmers as subsistence farmers through grant aid. It also underlies the idea that rich people are rich because poor people are poor - therefore you remove money from the rich to give it to the poor and everything is fine. Markets aren't seen as social, engaging and cooperative things but as exploitative. But the examples cited - banks, farming, energy, housing, healthcare - are the very areas where government intervention and regulation is greatest (ergo where the efficient operation of the market is most compromised).

Hardly a day passes without a new call for regulation - to make prices lower, to protect inefficient distribution systems, to reduce competition, to do a multitude of things vaguely defined as 'protecting consumers'. And each of these intervention makes the market less able to work, less able to make its magic, ineffective at doing what it does best.

And the result of all this fussing, all this knowing betters, all these attempts to fix what isn't broken? Stuff is more expensive and because it's more expensive there is more poverty.


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