Inequality

Inequality, Aid, and the Nature of Governments

Posted 4/10/08 ( by Travis)

Chen: China should decrease state holdings
Yale Daily News ^ | 4-9-08 | Helen Gao

Chen, who studies the Chinese economy, argued in a lecture Tuesday that the Chinese government ought to decrease the stake it holds in its economy in order to even income distribution among citizens.

Presenting data that he said reflected an inverse relationship between the number of state-owned enterprises and the level of economic development, Chen argued that instead of promoting economic equality, state ownership centralizes wealth and produces a wider gap between the rich and the poor.

Posted 7/29/05

Useful Idiots alert. How the United States is propping up and perpetuating Communist Regimes. These regimes use our aid to pay off supporters and increase their power. The aid doesn't help because the underlying problem is not a 'lack of anything', but rather the political structure, which this aid perpetuates. In North Korea aid workers are not allowed to touch foot on land: (The foreign sailors are not permitted to disembark.)

U.N.: Starving N. Koreans Scavenging for Acorns, Grass and Seaweed

7/26/05 NewsMax

The WFP tries to feed about 6.5 million North Koreans, or more than one-quarter of the country's population.

The United States has promised to send 50,000 metric tons of cereals to help feed millions of malnourished North Koreas.

Castro Warns against 'Acts of Treason'

7/27/05 Miami Herald

The population has grown increasingly weary from blackouts that last for hours, spoiling already depleted food supplies. Small, sporadic antigovernment acts have been reported across the island.

The audience, including hundreds of Americans who arrived this week with an aid shipment, gave Castro a standing ovation.

We are doing the same thing in Zimbabwe, another murderous Marxist dictatorship.

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Posted 7/29/05

In my last point I discussed how the United States was aiding Communist dictatorships. The United States is also, arguably, the largest perpetuator of poverty in the third world and on the African Continent and at the same time has done more to bring developing nations out of poverty than any other country. How can this contradiction exist? Because US foreign investment, trade, military stability (pax Americana) and political ideas/culture is bringing poorer countries out of poverty while our massive government and private aid is working to keep them subjugated, socialist (corrupt), and therefore poor. Leftists, who believe we are responsible for poverty around the world because our government doesn't confiscate enough of our citizen's wealth and our companies exploit the third world, are, again, 180 degrees from reality. The (relative) freedom, economic and political, we have here, results in large amounts of private aid (3x the amount government steals from us) being directed at less free countries. This prosperity we experience only exists because our government is limited (less criminal) than that of corrupt poorer nations. For more on this see 'Charitable Corruption', 'Causes of Poverty in Developing Nations', and these two articles: ONE and TWO.

In order to more clearly illustrate the realities of this line of thinking I've constructed the following crude chart:

This chart is backed up by posts throughout this website. For example, I've posted about the difficulty of real estate dealing in Russia, on how 80% of Iranian industry is controlled by the government, on starvation in North Korea and Zimbabwe, and on Venezuela's Chavez.

A few clarifications are worthy of mention. I state that one could reverse the graph for immigration. This isn't entirely correct because some of the more oppressive regimes imprison their citizens in their own countries. For example, in Cuba, boats are outlawed to prevent escape, and prospective North Korean immigrants are killed and/or tortured if they try to escape to China.

North Korean criminal law prohibits unauthorized departure, a violation of the fundamental right to leave one's own country. Article 47 of the Code provides:

One who escapes to another country or to the enemy in betrayal of his motherland and people, or who commits treacherous acts towards the motherland such as espionage or treason, shall be punished by at least seven years or more labor-re-education. If it is a serious violation, he shall be punished by execution and forfeiture of all property.⁷⁰

Also, during the great depression, when 'Republican' Herbert Hoover shrunk the money supply, slapped huge tariffs on goods (Smoot-Hawley Act), raised the top income tax rate from 25% to 63%, and FDR ushered in American socialism, for the first time in history the United States experienced a net exodus of population.

You may wonder why I placed 'United States 1900' to the left of the graph. This is because the 'gilded age' was the most free man has ever been from government interference and the United States underwent the greatest productivity and wealth creation boom in the history of the world. Here is an example of how limited the government was and how much wealth was produced by capitalists:

He [JP Morgan] was also identified in the distribution of government bonds, and in 1877 in co-operation with August Belmont and the Rothschilds, floated $260,000,000 in U.S. four percent bonds, thus relieving the government from serious financial embarrassment. After the financial panic of 1893, the gold of the country becoming very scarce and threatening the stability of the treasury, he joined with other prominent bankers in buying $200,000,000 worth of government bonds and paying for them in gold. This transaction undoubtedly preserved the credit of the United States, but Morgan and his associates were denounced by the public and in congress for the large amount of commission asked for the service. In the threatened panic of 1896 he again offered his services and supported the administration in the funding of a popular loan.

Private citizens were begged by the failing government to help with its finances! Citizens looked, not to government, but to private bankers to rectify economic situations. Could you image this happening today? Today government would just legislate, pass a tax or regulation, or threaten one, in order to 'shakedown' whatever deal they need. This is what I mean by equal rule of law. In 1900, the law prevented government from stealing from its citizens!

Contrary to popular opinion, this 'robber baron' capitalism brought prosperity to millions and made the United States the world's leading superpower. More on this and so-called 'evil' monopolies later.

Now, you may question the idea that inequality increases as government power increases. This is undoubtedly due to leftist and media propaganda that socialism increases equality. Taking money from the rich and giving it to the poor makes everyone more 'equal' right? Wrong. However, there is a grain of truth to this that requires careful analysis to root out this pervasive fallacy.

There are two types of inequalities, pure financial inequality and practical inequality. Pure financial inequality is what is commonly, and misleadingly, parroted as the only sort of inequality that we should be concerned with. The most wealthy, prosperous, and capitalistic nations have, by definition, the greatest financial inequality. But this is not a bad thing, in fact, this should be a goal of policy makers and should be lauded by the media. Should. Wealth creation occurs at different rates by different individuals and by penalizing the top wealth creators for their innovations and productivity and limiting the natural conditions for their activities, exponentially less total wealth exists for the country. In socialism, these wealth creators are assaulted by a corrupt and thieving government, resulting in overall less wealth creation for the country, but less 'financial inequality'. Taken to the extreme, in true Communism, nobody produces anything and everyone is equally dead. :) As Winston Churchill said: The inherent vice of capitalism is the unequal sharing of the blessings; the inherent vice of socialism is the equal sharing of the miseries.

However, if we were to examine 'practical inequality', what the average citizen owns, food, health, security, as compared to the wealthy, we would find a stark contrast. In socialistic countries, average people are quite poor and have less ownership, poorer health, more wars, less consumption, and less consumer goods, while the politically connected have many luxuries that are out of the price range of average citizens. In freerer countries, the average citizens are more prosperous and share many or most of the luxuries that the wealthiest citizens own, despite being more 'financially unequal'. I quote a Heritage Foundation report in 'Welfare; History, Results, and Reform':

The following are facts about [United States] persons defined as "poor" by the Census Bureau, taken from various government reports:

· Forty-six per cent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one and a half baths, a garage and porch or patio.

· Seventy-six per cent of poor households have air conditioning. By contrast, 30 years ago only 36% of the entire U.S. population enjoyed air conditioning.

· Only 6% of poor households are overcrowded. More than two thirds have more than two rooms per person.

· The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens and other cities throughout Europe. (Note: These comparisons are to the average citizens in foreign countries not to those classified as poor.)

· Nearly three-quarters of poor households own a car; 30% own two or more cars.

· Ninety-seven percent of poor households have a color television. [by the way, I don't own a color television or any television for that matter] Over half own two or more color televisions. Seventy-eight percent have a VCR or DVD player. Sixty-two percent have cable or satellite TV reception.

· Seventy-three percent own microwave ovens; more than half have a stereo, and a third have an automatic dishwasher.
I discuss the skewering of Inequality further in 'International Poverty Rates', which also contains this illustrative graph:

The Australian treasury department did a study which looked at world per capita income levels Chart 50 (91):

Using the commonly used poverty standard [Inequality], more impoverished people exist in 2000 then 1900. This is a ridiculous notion.

In the above graph, pretend the United States is on the right (2000) and (socialist) Sweden is represented by the left (1900). This is what I mean by the United States being more 'financially unequal', but more 'practically equal', because we are all better off.

For example in North Korea:

In most rural areas there is no medicine, running water, heating, food, or bandages where as the capital city, Pyongyang, glitters with nightclubs, casinos, luxury hotels, gourmet restaurants and state-of-the-art hospitals.

In Canada, politicians and their cronies can jump the often fatal waitlists of the Canadian health care system.

In Marxist Zimbabwe: Robert Mugabe, the president of Zimbabwe, is building a lavish palace costing £3.75m on the outskirts of the capital, Harare. Furnishings and security are expected to send the cost to more than £6m at a time when nearly half of Zimbabwe's population is dependent on international food aid.

History is replete with examples of socialist African dictators and government officials compiling wealth, Middle Eastern Socialist ruling classes rolling in oil money, and the gentrified classes of Europe. So, it is clear that socialism results in more inequality, not less.

A last point of contention on my original chart might be the aid flowing to Europe and Japan (you could include South Korea in this) from the United States. Even excluding the fact that the United States rebuilt and set up the political structure in the post WWII years that enabled the citizens of these countries to create wealth freely, we still offer substantial aid to these countries. Humanitarian aid flows (government and private) to Eastern Europe and the Baltic states and US foreign investment and consumption (trade) drives economic growth. But most importantly the United States military protects this trade and provides for the defense of these countries. It was the US military that stabilized Kosovo and prevents the Chinese and North Koreans from attacking Taiwan and South Korea.

In 'John Kerry and Foreign Policy' I state:

During the recent US military reorganizations, South Korean and German officials came to the United States to lobby against the removal of US troops. When has this happened in the history of the world? In Eastern Europe, citizens feared the Red Army of the Soviet Union and cheered when Soviet troops finally withdrew (Russia is currently occupying Georgia against the wishes of its president). All over the world, many countries not only welcome, but often proactively seek to draw American troops to their countries. For example, in the past week US defense Secretary Donald Rumsfeld visited Romania:

In a sign of Romania's eagerness for Americans to use the facility, officials renamed one street on the base "George Washington Boulevard," honoring the first U.S. president. If yes, the move would signal closer U.S. ties with its NATO ally and funnel millions of dollars into the Romanian economy. "I hope so, but it's not in our hands," Pascu [Romanian Defense Minister] said. (51)

Japan and European countries have signed onto the US missile Defense system.

Why is it that the United States has such a powerful military? How do we have such a powerful economic base to support it? In 'Tsunami Tyranny' I conclude:

However, the most interesting part of this entire analysis, and the key point of this paper, is that by respecting the property of our citizens the most we also assure that the largest and most important aid contributor in the Tsunami relief effort are the private citizens of the United States of America and their military.

Property is respected by limiting the theft of it by government.

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Posted 9/10/05

Added to 'Inequality, Aid, and the Nature of Governments' (and it could also be added to Media Bias')

China's widening income gap threatening social stability: government

8/22/05 The income gap has become increasingly worrisome for the government of once-egalitarian China, especially as low- and middle-income earners are increasingly quick to accuse officials of pilfering state assets in the country's dash toward market capitalism.

I've posted this to reiterate the Left's fascination with inequality. 'Once egalitarian'? You mean when 60 million Chinese equally starved to death? There is not a total amount of resources that is divided among people! Any given person can create wealth and add to the total pie independently. As stated in Inequality, Aid, and the Nature of Governments, the richest, wealthiest, freest, most prosperous countries will be the most unequal financially, by definition. But, also by definition, they will be the most equal in terms of what all citizens can afford and quality of life.

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Posted 9/18/05

Bangart made some good comments on a 7/29 post: Inequality, Aid, and the Nature of Governments that I had been meaning to follow up on. In the graph I have aid going from rich (free) countries to poor (corrupt) countries. Poorer countries with no capital are aided by foreign investment from rich countries, which are rich because their governments don't steal their citizens money. A formerly oppressive poor country will become prosperous by allowing foreign companies, and their own citizens, to freely utilize the cheap labor of its citizens. In other words, foreign investors will aid in bringing prosperity to a poor country as long as they are assured of not having their assets looted by the corrupt governments (as often is the case). However, what I left out of this post is that once wealth is created in corrupt poor countries, it is often transferred from poor countries to rich countries because the owner can get a better return on his money in a rich country because the government is not as criminal as his poor country (which is why poor countries are poor and rich countries are rich). As we might expect, the thug leaders of poor countries don't even feel safe keeping their own assets in the country that they have looted because of the instability they have thrust on their country through their criminal behavior. This is why Saddam Hussein, Mugabe, Kim Jung Ill and most African leaders all have/had bank accounts in free countries like Switzerland and the Bahamas, which have strong property protecting laws.

Because of our relative freedom here in the United States, the US received the most foreign investment every year until a few years ago when China passed us. This is a troublesome indicator as one could draw the conclusion that the Chinese government is now less criminal than our own government, a conclusion most Americans would dispute - yet with the government spending (stealing) $2.3 trillion a year from US citizens and taking into account the rampant and spreading socialism here in the United States, the idea certainly deserves consideration. Of course, China might just be experiencing a short lived boom. If you recall, in the 80s, ignorant politicians bemoaned the fact that Japan was 'buying America'. It was best said by Milton Friedman:

It is a mystery to me why... it is regarded as a sign of Japanese strength and American weakness that the Japanese find it more attractive to invest in the U.S. than Japan. Surely it is precisely the reverse - a sign of U.S. strength and Japanese weakness.

This recent trend of 'outsourcing', is bemoaned for the wrong reasons, the fact that some Americans may (in the short term) loose jobs, is somewhat irrelevant compared to the bigger concern of why companies find it more attractive to set up shop overseas. In China do you have to pay Medicare, Medicaid, and SS tax? It is not simply the cheaper labor that companies go overseas for, if that were the case then they would most likely just import the labor here in the form of increased immigration. Yet, blocking this immigration is facilitated, again, by the Federal government of the United States , including many so-called 'Conservatives'. What business of it is the Federal Government's, whom businesses employ on their own property? Or where they house them? Or what they pay them? Or how many immigrants come here? Such things occurred naturally throughout our early history, and would still be occurring today, except that Government has given itself the power to 'regulate' and block such actions, and it does so, hilariously enough, in the name of 'saving those jobs for Americans'. Again, Government accomplishes the opposite of its intentions, as it indirectly encourages both outsourcing and capital deflection.

But the main point is that, looking at the shown graph, there should be another arrow indicating the flow of capital from poor countries to rich countries. This is not the 'aid' money, that flows from rich to poor countries, and it is true that a poorer country that is newly liberalized will see substantial foreign investment due to cheap labor, but in most corrupt countries of the world, citizens that manage to create wealth are quick to send it away from the thieves that run their countries, and, as shown in the 9/17 post below, are also likely to leave the country themselves.

LOL! In re-reading what I wrote above, I said: "This is not the 'aid' money, that flows from rich to poor countries." But I am wrong because much of this money actually IS the same aid, recycled, accumulated, stolen, and shipped to safety in the bank account of the tin-cup dictator and his cohorts! Apologies for the error... :)

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