In going over the concept of the ownership of capital I come to the conclusion that wealth will tend to pool over time. Is this a correct conclusion?
Yes, I understand. I'm just saying he shouldn't be so quick to dismiss the idea. It's a powerful counter-argument to the leftist fallacy I mentioned. Thanks for pointing out the missing word in my post.
-Jon
I cannot be caged. I cannot be controlled. Understand this as you die, ever pathetic, ever fools.
Irenicus' Diaries.
histhasthai:capital is an accumulation of money
Surely the poster means "means of production" by capital. An engineer degree, a tractor, etc. I do agree that it's hard to tell what he's saying.
Franchises, like McDonalds, Pizza Hut, Blockbuster, etc are all over the world and the capital here is owned de-centralized, they provide some structure and the brand, so I think these successful organizations poke holes at that conclusion of Pliny.
Equality before the law and material equality are not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time. -- F. A. Hayek in The Constitution of Liberty
Ok. I mean in a completely unregulated market all forms of capital - capital goods, means of production, money, wealth, whatever can be termed capital - will tend to pool over time in terms of generations and form a class system. Strictly hypothetical. My concern with this would be the rigidity of the class structure. I think the Mises quote from Lancett best answered that question and that it would remain fairly fluid, if in fact it even evolved that way. It is just a model from the information, admittedly; woefully inadequate, I have.
I run across in discussions that it is necessary to redistribute wealth through a tax system or the rich-poor divide will widen. To refute this I simply point out that the rich-poor gap is widening but I have been attempting to figure out what would happen without intervention from a redistributive tax system.
Pliny:I run across in discussions that it is necessary to redistribute wealth through a tax system or the rich-poor divide will widen.
What about inflation that benefits those with close relations to politiceans, bailouts of creditors, subsidies to big industries, land expropriation to build a shopping malls, tax benefits, etc. Those are all redistributions of wealth as well. :P Besides, a lot of the redistributions those guys are thinking about are provided in the form of services. Special interests form lobbies for professional associations and what have you to suck all that money. Milton Friedman advocated replacing welfare programs by simply giving enough money to everyone each month -- which you'd take from an income tax, and so you can see how it would balance out -- that would avoid all the overhead and special interests from those that work in the system, and would more easily be replaced by a moral charity system that would focus more in making people self-relient rather than depedent.
Anyway, Adam Smith already made the case a couple of centuries ago, and we have a lot of history to back up it, that economic freedom and prosperity go hand by hand.
A lot of these redistribution of wealth programs also make the people contempt about their situation. Here in Portugal they have been trying to motivate people that are in welfare to take highschool classes. Very few of these people even appeared at the classes! Do you know their solution? As long as you go to the classes, you will get the highschool diploma! No exams needed, unless I guess if they want to apply for college, they just need to attend the classes.
Poor neighbours have a lot of issues -- my mother used to school in such places --, booze and drugs, domestic violence, child abuse are everyday occurances. But they have houses -- the city actually gives them the houses in the hope they will take better care of them --, food, utilities, education, health care, etc. The problems now are social, not economical. This kind of help instead of make them self-relience, facing life with optimism and help them take care of their families (a lot of times, the guy actually abandons the family), de-motivates them into looking for work and make them spent the days in bad habits.
In opposition, my grandfather started out of nothing from Brazil, to work in farming, then selling cook oil door to door and farm products at the marketplace. Then he open a mini-market and started a business as a bulk retailer as well. And from there, he adventured into a couple of other stuff -- not being good at managing employees, he never really expanded things. You don't see stuff like that nowadays. Even young entrepeuners use bank programs to finance and organize them through. I'd like to know what's the experience of life of these people that moan about capital accumulation. What enterprise have they started that made them so unhappy about the system?
Good argument, Blacksheep. Thanks!
Is the main premise here, "The rich get richer and the poor get poorer" ?
This can only be true if wealth is a zero-sum game. That means that there is a fixed, finite amount of wealth, which cannot change over time. Every trade has a winner and loser, rather than a mutual gain. Furthermore, as the population grows, this would mean that society as a whole will become poorer and poorer.
Such a view is preposterous. All wealth is created from some kind of labor, whether that labor is in creating capital goods or consumer goods. Considering that most people work most days of the week, wealth must be growing. Population growth is a net economic benefit, if it provides more labor rather than just more consumption. Wealth may grow for some people faster than others, but these people will generally be creating more wealth per workday.
But even with such a promise of infinite wealth, we don't get a thriving economy. Division of labor and money go hand in hand and provide the missing elements to a highly efficient economy, where capital investment can occur, allowing more wealth to be created without an increase in quality of labor. Just as population growth allows greater division of labor and greater economic efficiency, capital growth allows greater amounts of capital to be created, as well as greater diversity in capital and greater numbers of capital owners.
Given that our money system is monopolized and our economy is regulated, we should see some fuedal abuse, where the rich and powerful become richer and more powerful; but the extent of this is fairly limited. Many of the richest Americans came to fortune through the market, and their products have improved the lives of millions of people. Many poor people become millionaires. And even the poor have become richer.
Check my blog, if you're a loser
Preposterous. Yes. You must be American. Definitely not Danish where the poor all disabused of the idea of being a millionaire. Expending that much energy must have something wrong with it.
When I was a kid in Canada (when I still had the common Canadian attitude) I used to bring my grades home, excited, and say "Look Dad! I got above average!" And he would say "That's stupid! Forget about the average, you got B's and C's. You can do better than that. Don't compare yourself to other people, compare yourself to yourself" Sort of an apples and oranges thing. We're all different; some of us have what it takes to become rich; it doesn't matter what your nationality or skin color is.
The poor in Western nations have a quality of life that exceeds the quality of life of the middle class 100 years ago. In America poor people have been (certainly not always) upwardly mobile. A free market allows the poor to make something of themselves, even a millionaire or billionaire. In America there is an attitude (that is being killed by big government, public schools and the examples of people like the Kennedies, Clintons, Hiltons, etc.) that anyone who is willing to provide the market with what it wants can become rich. I don't know the Danish view, but I'm proud of the American attitude (what's left of it) and it's why I left Canada (where the view is that expending that much energy must have something wrong with it).
In response to the initial question:
In a statist society wealth will pool amongst those who have political power. In an ideal world those people would also be the people who contribute the most to their society. In an ideal world puppies would also crap rainbows.In a market economy wealth will pool amongst those who are best able to earn the most money (by providing the most value the most competitively to the most people... "greatest good for the greatest number") while squandering the least (i.e. by putting their money back into investments that will continue to make money and provide even more good). Of course eventually that person will reach diminishing marginal returns (They will get too busy to run so many businesses eventually).
I had a little Marxist day-dream where I was a kid--what would it be like if I owned the whole world. First I had to establish my assumptions: how did I get to own the whole world? Well I had to provide something of value, obviously (I also had to kick some serious butt with my sweet laser rifle, but naturally not everyone, or there would be no point in owning everything). So I had to get rid of all the bad guys and I had to provide something of value and at the same time I had to enjoy myself. So I had super-efficient robots that could do everything for me. As my rise progressed I ended up with robots making more robots until I had a few robots for every customer providing everything they needed at a price nobody could beat until capital drove labor out of the market completely. Then suddenly I didn't have a market to sell to. I had become a benevolent ruler asking for nothing more than a life of robot slaves, wine, women and song.
Cheers,
Rick
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