Blog Action Day 2008: Two kinds of poverty
Here is my contribution to the world wide Blog Action Day 2008. The topic this year is poverty, and the goal is to initiate global discussion about how to alleviate it (or something like that).
There are basically two kind of poverty in the world: natural and man-made.
The natural variety is the result of things like drought, disease, natural disasters, and just generally a natural lower degree of transformation of natural resources into beneficial goods. As civilizations' technologies advance they have increasing ability to transform resources and thus improve their standards of living. A lot of this we have little control over (i.e. we can't just protest in the street and suddenly have a futuristic civilization where everything is thousands of times cheaper and of better quality and sickness and disease are historic curiosities).
The man-made variety of poverty is much more interesting. This is what results when someone causes, through means that are not mutually voluntary, someone else to be poorer than they would have been otherwise.
So, if I go to Bill and say that he can't operate a taxi service unless he takes some classes that I offer, passes my tests, and pays me a bunch of money for a taxi license (and that I get to take his money and lock him away somewhere if he operates the business without my approval), then I have just made Bill poorer than he otherwise would have been, either because of the time and money I force him to spend or because he opts not to go into business. In addition, I've made Bill's potential customers poorer, as they now have to either spend more in the now less competitive taxi market or spend more by finding a more expensive way to get around. The same applies to anyone I want to prevent from doing business without my official license: real estate agents, doctors, nurses, lawyers, plumbers, electricians, hairdressers, or street performers.
Another form of man-made poverty is full-fledged prohibition of something. For instance, if Jack wants to start a business delivering letters and I tell him that I only want one organization to deliver letters and will forcibly lock him up if he tries it, I have just made him and his potential customers poorer than they would have been. The same forced poverty is involved if Jack wants to start his own passenger train service, crime prevention company, court system, etc.
More man-made poverty is created if I tell Mike that he can only offer insurance plans if they cover certain risks and are priced below a certain maximum level that I've set. The subset of Mike's potential customers who would have bought the now illegal insurance policy but now are forced to go without insurance or pay more for a policy that is beyond what they need are now poorer, and of course Mike is poorer because he is forced to forgo a certain amount of business he would have earned absent the rule. Furthermore, with maximums on what Mike can charge, his customers as a whole are made poorer as he has to raise everyone's rates to make up for the loss incurred on any policies whose natural market price is he not allowed to charge. Many of his customer end up paying more than what they would otherwise, and some are again forced to go without insurance because they can't afford the new cheapest policy.
Now we come to another way for me to create poverty. Jane wants to open a business providing some valuable good or service. She knows that teenagers and other unskilled workers would do really well in her business, and that's perfect because she can only afford to open the business if she can find employees that will work for $4 per hour. She goes around and talks to some teenagers eager to start learning some job skills and homeless and poverty-stricken people that can't find work anywhere else, and they're excited to come work for her and start getting work experience or working their way out of poverty. But then along comes good ol' me, with the threat of force to back me up, and I tell Jane that I'm really sorry but I can't allow her to pay her employees anything less than a minimum wage of $8 per hour because it would just not be right. Not wanting to be imprisoned, Jane cancels her plans to open the business. The teenagers return to whatever they were doing before, now missing out on a great chance to start developing job skills that would put them on the road to success, and the homeless and poverty-stricken are prevented from having the opportunity to starting climbing the economic ladder.
Now we come to a really interesting point in our investigation. Man-made poverty is also created when I force Sally to turn over part of her income or wealth to me so that I can provide things for the 'common good.' If something is really for the common good, it shouldn't require compulsion in order to fund it. On top of that, I need to spend a big chunk of the money I took from Sally to pay for my gang of heavily armed enforcers, my army of administrative and regulatory personnel, my court system that conveniently will decide any cases in which I might be accused of doing something wrong, etc. But the real kicker is that a lot of the money I'm taking from Sally I'm using to provide welfare checks and related benefits to those people whose poverty I'm responsible for. Most of the rest of it goes to pay for the poverty-creating policies mentioned above and many more that there's no time to go into now (i.e. the FDA, NASA, public housing, banking regulation, public schools, drug prohibition, etc.). And not to worry, if I run out of tax money to spend on my programs, I'll just print more money! Yes, it will devalue the currency and make everyone poorer, but hey--at least I can say I'm "doing something" and get enough of you people to fall for it that you'll vote for me again in the next election.
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