Sunday, January 26, 2014

Creating (not sharing) wealth is the solution to #poverty

It is generally accepted that socioeconomic problems and a host of social dysfunctions that persist in human society are "evils" which need to be addressed. In the Philippines and Latin America, we have some of the highest levels of economic inequality. Persistent poverty has in turn bred other kinds of social dysfunctions — organised crime, pervasive violence, narco-trafficking, and on a more individualised level, mental illness, imprisonment, teenage pregnancy, obesity, drug abuse, and poor education.

But these "evils" persist not because society has failed to ensure equality of outcomes where the "haves" are made to share their wealth with the "have nots" to make everything simple and fair. Rather, we have poor people in the world because WE FAIL TO PROVIDE THE EQUALITY OF OPPORTUNITY TO BECOME WEALTHY.

Every economic success story since the 1950s — from South Korea and Singapore in East Asia to Europe, and more recently, in Latin America — has shown a significant correlation between economic growth, the reduction of poverty, the development of a democratic society and free markets. Free societies/markets have allowed for the transformation of even backward agricultural societies into major industrial powers within the comparatively short period of a generation. Democratic institutions help strengthen the legitimacy of those countries' political systems and allowed for the moblilisation of various social groups — students, trade unions, church groups, civil society, etc. Something unheard of in socialist (and socialist leaning) societies.

On the other hand, the thinking that wealthy people need to "share" their wealth only created a "Robin Hood mentality" where the state undertakes policies to redistribute wealth through various channels — excessive taxation, welfare, subsidies, etc. This in turn has proven to be terribly destructive, resulting in a massive, unsustainable DEBT and a polarised, antagonistic society. In fact it was the desire to redistribute and share wealth that created the financial crisis of 2008-2009.

History has shown us that if we want to eliminate society's "evils" and put an end to poverty, we need to CREATE MORE OPPORTUNITIES FOR WEALTH. We shouldn't be thinking up ways to take wealth away from one segment of society in order to give it away to another. That will only result in EVERYONE being EQUALLY POOR.


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