“2. Incomes differ because people differ in their economic ability. Men are not created equal in economic capacity, and these differences cannot be corrected by law or by governments. The things that law and governments can do are to give everyone more nearly equal economic opportunities.”

The differences in ambition and economic/intellectual ability are underlying characteristics of human existence—it’s simply what we are. It is precisely because we are imperfect that we seek to engage in social interaction, in voluntary and mutually beneficial exchange. This is the primary cause of specialization and the division of labor, why some teach our children, others work at banks, and why some clean the streets. All of these professions are noble, but most importantly of all, they’re necessary.

There’s nothing desirable about replacing individual error with institutionalized government error.

Printed in “American Thinker” 11/02/09 http://www.americanthinker.com/2009/11/but_what_about_the_poor.html

But What About The Poor?
The left avers that many Americans are poverty stricken, that we need to do more to alleviate their plight, and that the primary role of government is to help them. Let us examine these claims.
‘Poverty’ may be viewed as harsh deprivation, such as in Biafra or the Congo. Yet nobody in America starves to death. It is true that the standard of living of illegals from Mexico is far below ours, yet even they are far better off than the inhabitants of third world countries. Nor do the poor in America suffer as did those during the Great Depression. Consider the article “How Poor Are America’s Poor? Examining the ‘Plague’ of Poverty in America” by Robert Rector, August 27, 2007. (http://www.heritage.org/research/welfare/bg2064.cfm). Using the Census Bureau definition of ‘poor’ he shows that: 80% of poor households have air conditioning; 75% own a car; they grow up to be an inch taller and 10 pounds heavier than the GIs who stormed Normandy. Most of America’s ‘poor’ live in material conditions that were considered comfortable a few generations ago.
I would add that the monetary value of their benefits package does not include other sources of income. Many have jobs that are off the books, and income from dealing in drugs, gambling, prostitution, and fencing stolen goods. This is not to deny that there are those in dire circumstances. Rather it is to claim that the description by the media (of the poor in America) is inaccurate.
Then consider Dr. Rector’s study on what ‘poverty’ costs taxpayers. “Morning Bell: What The Poverty Advocacy Complex Costs You”
http://blog.heritage.org/2009/09/16/morning-bell-what-the-poverty-advocacy-complex-costs-you/
Over the next decade (2009-2018), President Obama will spend $10.3 trillion on welfare programs. Of this spending, $7.5 trillion will be federal spending and $2.8 trillion will be state government matching contributions to federal welfare programs.
Over the next decade, welfare spending will amount to $30,000 per person per year, and $120,000 for a family of 4 per year, 56% of which (or $67,200) goes to the recipients.
Moreover, these direct costs do not cover the concomitant costs for enterprises. That is, many organizations apply to whole populations, although their justification is the needs of the ‘poor’. For example, most people can afford education, but to guarantee it for the poor, there is public education for most, as well as subsidies. The same holds for establishing Social Security, Medicare, Housing, Health Insurance, and Industrial Policy. There are then huge additional costs to the taxpayers, and to the recipients of services who are not ‘poor’.
All of the programs for the ‘poor’ are forms of redistributing wealth. Support for this derives from the view that there is unfairness in life. Yet aside from criminality (which must be prosecuted) nature rewards productivity and punishes ineptitude. To deal with unfairness, happenstance, or the opportunity for the poor to better themselves, private charity is best. Public charity (while imperative for emergencies) is far from local oversight, and susceptible to moral hazard & fraud. Wealth distribution also derives from envy. Yet the desire to punish the rich, or even to covet what they have, is immoral and destructive to society as whole.
Let us consider what would be optimal for increasing jobs and wealth in general. History (or natural law) has evolved the tried & true techniques for doing so, such as the division of labor, and the quantification of value by money (provided of course that private property and contracts are ensured). Herein, man utilizes land, labor, and time, to provide the anticipated desired products (while employing the intermediary capital goods to do so). Consequently, optimizing economics requires: safeguarding our rights; furthering the time-tested methods for increasing production, distribution, & calculation (while in particular, allowing entrepreneurs to experiment for profit); and letting nature take its course in weeding out failing and uncompetitive ventures. Surely this runs counter to intervention to aid the poor.
Yet the central issue is ‘What is the role of government?’ Most say it is to provide benefits, especially to the poor. Yet I counter it is to protect the freedom of the citizenry to earn their own benefits. Each of our institutions (e.g., finance, military, industry, medicine) has its essential and unique role. In no case is it to be helpful to the poor. Our financial systems must be solvent, our military structures must protect against aggression, and our domestic systems must deal with emergencies (including harm to life and limb). Our Founders had it right – the role of government is to protect the inalienable rights of its citizenry. This includes ensuring that our cultural institutions (including charity) be free of government.
‘Justice’ is the cornerstone of civilization. It cannot be achieved by immorally distributing wealth or by rewarding failure. For liberty, it is imperative that people own what they have earned, rather than permit government to transfer it to others.
In Sum: few suffer from poverty, we have done too much to relieve it, and the role of government is elsewhere;
the direct costs do not include the huge concomitant costs;
the premise that poverty is due to unfairness is mistaken and misleading;
to increase jobs & wealth, the best approach is to employ the tried & true mechanisms of the market, especially the failure of uncompetitive ventures;
government must be restored to its proper functions for protecting our liberty;
and justice requires that people own what they have earned, rather than have it transferred to others.
From the top: man has free-will, and the right to his property. Whereas the role of government is to protect him, it violates that right instead. Consequently, rather than having a flourishing economy, we have failure, and the propaganda for more of the same.

“Since the Left depends entirely on the assumption that taking from the rich to give to the poor reduces inequality, it would be utterly demolished by the opposite-most conclusion, that it didn’t reduce but increased inequality.

There is a praxeological basis for that conclusion, but it’s new to the Austrian School, or was when first presented to it over a quarter century ago. But, being new, and an affront to anyone who hadn’t thought of it first, it is resented and shunned by the Right as much as the Left.”

From The Forbidden Theory of Redistribution at
http://econotrashtalk.org/#The_Forbidden_Theory_of_Redistribution

Thanks Dr. Ebeling. Nice addition to the discussion. I treasure my own dog-eared copy of “The Ethics of Re-Distribution.”

Prof Ebeling,

As you quoted Mr. de Jouvenel, he said that the issue of redistribution should be a simple matter, and then went on to complicate it. He had to, for he missed the point that would have made it simple:

Taking from the rich to give to the poor does not reduce but increases income inequality.

All of the moral, social, and political arguments against redistribution still leave the economic arguments for it. And all of the other economic arguments still leave the argument that it reduces inequality.

Only the argument that it doesn’t reduce but increases it would wipe out all other arguments, moral, social, political, and economic, for it.

That is the argument that has been virtually banned in the Austrian School. This is not to ask for it to the exclusion of all else, just that it not be excluded, that there be some little place in the Austrian School for the most powerful overall argument against redistribution and for the free market.