- Capitalism and Alternatives -

Mind the wealth 'gap'

Posted by: Gee ( si ) on March 30, 1999 at 15:48:28:

Since the beginning of the industrial revolution human productivity has proven to be greatly expandable. The economist Angus Maddison has been studying economic growth since the 1950's. In 1995, under the auspices of the Organization for Economic Co-Operation and Development, he published a book, Monitoring the World Economy 1820-1992. The earth had fewer natural resources and no more farm land in 1992 than it had in 1820 and in that period the earth's population multiplied by five. But (in 1990 US$) the value of everything produced in the world grew from $695 billion in 1820 to almost $28 trillion in 1992 and the amount of that production per person went from $651 to $5,145. If mony is not your thing then simply compare what can be done now in terms of farming, building, communications compared to 1820. That is wealth creation.

To such is levelled the popular bromide "The rich get richer and the poor get poorer." But there is no statistical evidence of this except for various realtive charts comparing rich to poor without reference to any constants - its al relativism. Im poor compared to Bill Gates, A nigerian farmer is poor caompred to me, and ethiopian orphan is poor compared to him - which is the real poor person? The United Nations Population Division's "World Population Prospects: 1996 Revision" contains past and present statistics on infant mortality and life expectancy at birth. These figures don't present the same averaging problems as per capita world product. No matter how rich the richest people in a country are, its members aren't going to live to be 300 and distort the averages. And if the few rich babies in a country live and the mass of poor babies in a country die, that country will not have a "normal" infant mortality rate but a very bad one - small amounts of rich folk dont really affect such statistics. Infant mortality and life expectancy are reasonable indicators of general well-being in a society, although you may disagree.

In addition to giving figures for individual countries, the U.N. consolidates averages into three groups: "More Developed Regions," "Less Developed Regions," and "Least Developed Regions." The last meaning countries that are very poor indeed; Laos, Madagasgar, Chad for instance. Lets compare infant deaths. In the early 1950's the richer countries in the world had an average of 58 deaths per 1000 live births. They now have an average of 11. Over the same period the poorest countries went from 194 deaths per 1000 to 109. The "gap" was 136 dead babies 40 years ago and the "gap" is 98 dead babies now. This is still too many dead babies, in my opinion, but the difference isn't increasing. The rich are getting richer but the poor aren't becoming worse off. So is the issue "too many dead babies compared to the west"? Thats relativism.

Life expectancy is similar. In the early 1950's people in rich countries had a life expectancy of 66.5 years. Now they life 74.2 years. In the poorest countries average lifespans have increased from 35.5 years to 49.7 years. The difference in life expectancy between the world's rich and poor has decreased by 6 1/2 years. The rich are getting richer. The poor are getting richer. We are all living longer. So is the issue that "people in poor countries die too soon compared to the west"? More relativism.

So really the goal should be making everyone richer, not stopping westerners - these gaps are relative, they dont cost other people, there is no need for re-distribution, but for creation. Unless ofcourse the goal isnt wealth creation, but equalisation - no matter what the cost.

Perhaps its useful to rethink negative views on wealth. Instead of worrying over wealth gaps start thinking about wealth. Wealth is good. Everybody knows that about his own wealth. If you got rich it would be a great thing. You'd improve your life. You'd improve your family's life. You'd purchase education, travel, knowledge about the world. You'd invest in wise and worthwhile things. You'd give money to worthy causes. You'd help your friends and neighbors. Your life would be better if you got rich. The lives of the people around you would be better if you got rich. Your wealth is good. So why isn't everybody else's wealth good, too?

Money is just a tool, tools can be used for harm and used for good. When a carpenter has a lot of tools we don't say to him, "You have too many tools. You should give some of your saws and planes and nails and chisels to the man who's cooking omelettes." We don't try to close the "tool gap."

Redistribution is not an effective answer to poverty, wealth creation is much better. Is that something agreeable?

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