Thursday, December 07, 2006

The Wealth of Nations

For some people the purpose of government is to redistribute the wealth so that all can share equally. This of course was the foundation of that cornerstone of Marxism “From each according to his abilities, and to each according to his needs.” Of course this didn’t work well in practice because very quickly those with ability stopped producing and joined the ranks of those in need. The result was the grinding poverty, hunger, and alcoholism that characterized the Soviet Union. However the failure of Marxism has not deterred those “progressives” who feel it is their moral duty to take the earned wealth of the few and distribute it to the poor. These programs were first introduced by Robin Hood in the 12th Century and not unexpectedly were hugely popular with poor but less popular with those who were being robbed. Since that time the Robin Hoods have abandoned their weapons and become politicians who now use the power of government to legally take the wealth of the industrious and distribute it to the “needy”.

Those individuals who have resisted this governmental robbery have been labeled “filthy capitalists” who exploit the poor for profit. Of course “poor” is a relative term, much like “rich” but those who feel they must provide for the “poor” never actually want to define precisely who is “poor” and who is “rich”. So precisely who is “rich?” In a shocking study conducted by the Helsinki based World Institute for Development Economics Research of United Nations, it was discovered that the world’s wealth is more unequal than the world distribution of income. In this study wealth was viewed as “assets minus debts”. On this basis, assets of $2.200 per adult was enough to place a household in the top half of world wealth and assets of $61,000 would place the household in the top 10%. For those with assets of $500,000 or more, they are in the top 1% of the world’s wealthiest people, which equates to approximately 37 million people, not exactly an exclusive club.

What is missing from this study is any correlation between the government and the wealth of individuals. The collective wealth of those countries with Socialist Governments amounts to 23%:

Germany == 4%
Italy ==4%
France == 5%
Britain == 6%
Netherlands == 2%
Canada == 2%
Spain == 1%
Switzerland == 1%

However, those countries with a capitalist economy account for 65% of the top 1% of the wealthy:

United States == 37%
Japan == 27%
Taiwan == 1%

It is worth noting that both Japan and Taiwan are small countries with relatively small populations, yet these countries account for more individual wealth than France, Germany, Italy, and Britain combined. Of course the socialists tax profits at confiscatory rates and in general consider it the responsibility of government to redistribute the wealth and to assure all citizens are comfortable. This comfort also translates into lower productivity because the attitude of these socialists is that work is the means to pleasure. The United States and Japan have the highest productivity in the world and control 64% of the total 1% of world wealth and the prevailing attitude is that work is pleasure, yet both countries have considerable tax requirements.

Naturally this opens the argument regarding the “quality” of life. The Europeans are more relaxed, have more fun, and don’t work as hard as the Americans and Japanese. But is that really true? Do Americans work for money like the Europeans or do they work for pleasure? If they work for pleasure then they are having as much fun as the Europeans and are living considerably better. Americans have greater material wealth in the form of assets – which equates to single family homes unlike Europeans who generally live in apartments. The list of course is virtually endless but the end result is that the Europeans have fewer possessions but more vacations. They have high unemployment but the government subsidizes the poor through the high tax burden, which penalizes the industrious and leaves them little money to invest or save – if they are to enjoy their vacations.

It seems that the lesson here is that the capitalist countries have higher productivity, greater wealth, lower unemployment, and a better life in general than those socialist countries who hold themselves up as superior but in reality have considerably less other than vacations.

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