Mon, 07 Jul 2008

Cut Poverty in Half??

There seem to be multiple campaigns to "cut poverty in half". I'm whopperjawed. How do you cut poverty in half? Lower the poverty level so that only half the people fall below it? Take money from rich people and give it to poor people so half of the people below the poverty level have incomes above the poverty level? Or do you ignore the poverty level completely and simply make everybody poorer so that you can't tell who is poor and who is merely middle class? Or do you simply cut poverty in half and not worry about the details?

There is absolute poverty and relative poverty. For absolute poverty, we can say "If you don't have X, you are poor." Then, with an appropriate list of X (e.g. clean running water, indoor toilets, 1200 calories per day, clothes that are frequently washed, etc etc) then when we have reduced the number of people without X in half, we have halved poverty. That's great! It's a possible and worthy goal. We can even decide as a society to make some people poor again by redefining X, and then getting X to them. Clearly you can half poverty again and again and again. In time, you can eliminate poverty (although I suspect that the MOGW's would simply add things to X, because if poverty went away, the MOGW's would have nothing to do.)

For relative poverty, it is impossible to get rid of poverty. As long as one person works harder than another person, they will have more. As long as work is rewarded with wealth, they will have more. With relative poverty, as long as there are any rich, there will be poor. Whenever people try to measure poverty using a relative scale, or they speak of inequality, you can be sure that they mean to eliminate poverty by eliminating the rich.

Unfortunately, eliminating the rich means eliminating prosperity. It is not for our good health that the rich labor. It is for their own. The fact that free markets require them to help other people is not an argument against the rich, as Keynes would have it, but is instead an argument against controlling markets in an effort to improve them.

The problem with trying to control markets is that they are too complicated to improve. When you try to improve markets, you only make them worse, because you do not have, and cannot get, the information necessary to steer the market beyond the transactions you yourself make in the market.

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