On Wealth, Poverty and Free Markets

Princeton University philosopher Harry Frankfurt says on page 4 of his new book, On Inequality:

In extracting from the economic wealth of the nation much more than they require in order to live well, those who are excessively affluent are guilty of a kind of economic gluttony.

Do you see what is wrong with that statement? Professor Donald Boudreaux of George Mason University explains:

Wealth in a market economy is not ‘extracted.’ Instead, wealth is created and produced. Therefore, there is no “economic wealth of the nation” that exists independently of the efforts of entrepreneurs, innovators, and producers to create such wealth. Such wealth, once created, can be stolen from its creators and producers. But it is a fundamental conceptual error to suppose that there is some national wealth that exists in natura, independently of human innovative and productive efforts.

Confused moral philosophers like Frankfurt think wealth is just something that happens, like the weather or something. No, poverty is what happens on its own, when nobody is working and investing, and creating wealth.

To his credit Frankfurt does not believe it is the job of social justice crusaders to eliminate inequality, but that the great difference between the very wealthy and the very poor is a moral issue that must be addressed, by government I guess he means.  He argues that we must eliminate poverty, that it is a moral obligation. He must have been in a deep Rip Van Winkle sleep for the last 50 years or he would have noticed that the government has been trying to eliminate poverty for at least that long, and it hasn’t worked. More than $20 Trillion has been taken from productive tax payers and devoted to eliminating poverty, and not one scintilla of reduction in the poverty rate has occurred.  All that money seems have disappeared into a black hole [I bet it mostly benefited a lot of people who are not poor].

Apparently poverty cannot be eliminated or even decreased by giving money to poor people.  Maybe it’s time for the government to get out to the poverty business and give the free market a chance to see what it can do.  It sure can’t do any worse, and might just find new innovative ways to create more wealth for more people. That’s what it’s famous for isn’t it? We just need to let people work and invest and create wealth, for themselves and others.  It’s always for others as well because nobody can make a sandwich or even a pencil on their own.

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