CLOSING THE GAP BETWEEN THE RICH AND THE POOR
by DR. Lawrence Wilson
© July 2018, The Center For Development
Many people are concerned about the gap between rich and poor. This article discusses two main approaches to the problem. They may be called the libertarian solution and the socialist or Marxist solution.
Earlier in my life, I leaned more toward the socialist solution, which is to take money from the rich and give it to the poor. This is also called wealth redistribution and the redistributive societty. However, over 30 years and many experiences in life, I have changed my mind to a larger and larger degree. Let us discuss this issue in more detail.
Due to individual differences, upbringing and experiences of many kinds, some people are much better at:
Š Earning money.
Š Saving or holding onto their money.
Š Spending time working and earning. Others prefer to vacation or play video games.
Š Investing money.
Š Stealing money from others, legally or illegally.
Š Being victims of money-related scams, telemarketers and more.
A serious dilemma for any society. This is the dilemma of every society that uses money, and it has been a problem for millenia. It causes the unequal distribution of money, property and all that money can buy. It can also cause social problems, anger, resentment against the rich, and even revolutions, as occurred in France, Russia, America and elsewhere. Therefore let us look at the two basic solutions to this problem.
THE LIBERTARIAN OR PURE CAPITALIST SOLUTION TO UNEVEN WEALTH AMONG THE PEOPLE
This solution is essentially the following:
1. Rely upon private or voluntary wealth redistribution to solve the problems of the poor. In other words, rather than take money from the rich by force, through high taxes, to give it to the poor, help the poor and disabled and ill by
1) Encouraging private charity donations to churches, foundations, community groups like the Salvation Army, and others.
2) Encouraging industry to be able to offer people jobs, and
3) Encourage the wealthy to spend their money buying whatever they wish, which in turn employs people and spreads their wealth around.
Freedom, including private property rights, privacy rights, and political rights and freedoms are the key to this system is freedom for all to open businesses without a lot of government restrictions. The people must also have freedom of speech, freedom of assembly, and other rights so that they can work freely, and make informed decisions about their lives. The people must also be allowed to participate in making the rules in the government in a non-corrupt way that serves the best interests of all the people. In other words, monarchs, dictators and special interest groups of all kinds must not be allowed to run the government and make all the rules..
Wealth redistribution with this solution is mainly a private matter. This means each person decides how to save or spend his money, not the government. One person may hoard his wealth, while another may give it all away, and another will build a factory with it.
This solution tends to reward people who work hard and who save their money and invest it wisely. It also rewards people who become educated and learn new skills, and people who are innovative and provide new goods and services that people desire.
As for the people who are less competent, old, infirm, or disabled, they are cared for by a network of private welfare societies, church charities and all manner of community charities. These are actually extremely efficient and for about 150 years did a very excellent job of caring for the poor and the sick in America, for example.
Drawbacks to this solution are:
1. Large differences in wealth between people will continue. Some will become very wealthy by owning businesses, saving every penny, and/or by working very hard. Others will choose not to work much, or they cannot work much for some reason, or they lack skills, and they will not have nearly as much money. This seems very unfair to some people.
2. Also, the poor and others who cannot support themselves will be cared for at different levels depending upon where they live and which private charities they are connected with. In other words, there is no single universal welfare system to take care of them. In one town, the local church may be very generous, while in the next town the local churches or charities may not have much money, so the poor, elderly and disabled people will not be cared for as well.
3. Putting this system in place requires kicking out the monarchs, dictators, special interest groups and getting rid of rampant corruption in some nations.
This is a daunting task in nations that have suffered under solution #2 below for hundreds of perhaps thousands of years.
Solution #2. THE SOCIALIST, MARXIST OR COMMUNIST SOLUTION
This solution to the inequality of wealth is to redistribute wealth by force. The idea is that the government takes most of the people’s money through taxes and redistributes it to the poor to equalize things. Let us look at the benefits and problems with these two systems in more detail.
THE LIBERTARIAN SOLUTION
The libertarian solution was the method used in early America. Its benefits are:
1. Simplicity. It requires many fewer tax forms, attorneys, accountants, government bureaucrats, large police forces to track down tax cheaters, jails to imprison the tax cheater, courts to try the cheaters, time and money on writing tax laws, passing tax laws, judging the laws and enforcing them.
It was also simpler for the poor and those who could not work. They did not have to fill out long government forms to get welfare and unemployment checks. They did not have to report all their activities to the government and be under constant surveillance to make sure they did not earn money on the side, for example.
2. Lower administration costs. It is well known that government bureaucracies needed in welfare states are extremely costly, since billions or trillions of dollars must be collected, accounted for and moved through large bureaucratic organizations as they are redistributed throughout the nation. Such bureaucracies also “lose” a lot of money due to waste, fraud and abuse of the system. In fact, they create an entire new class of people who may be called the bureaucrats or paper pushers who oversee the massive redistribution process.
3. Time savings. Not having to keep detailed records for tax agencies alone saves people almost a month a year, most likely. Businesses may save even more time. This time can be used for creative activities instead of counting all the pennies under threat of a jail sentence or fine for making a mistake.
4. Increased creativity for those who are able to create. All the time saving can then be used to conduct business, invent new products, socialize or whatever one wishes.
5. Encourages taking personal initiative, working hard, saving money, improving one’s skills, catering to the needs of others in order to sell one’s products and services, and other positive values.
8. Builds community. When there is no government “safety net” , as welfare is often called, people got together in early America and elsewhere and formed thousands of community organizations to care for each other, to care for the poor, the homeless, the sick, the orphaned, the widowed and others.
This outpouring of community spirit, we might say, has never been duplicated. Only remnants remain today in groups like the Lions club or the Rotarians. But in former days, these were social networking and social welfare societies that were the lifeblood of the community.
Churches also played a large role in community services. Community health centers cared for the people until they were outlawed by the AMA because they put physicians on salary, an idea they did not like and lobbied against successfully.
9. Libertarian solutions build health. Once again, if there is no government safety net for health, it means one is on one’s own to take care of and build health. This leads people to eat better and care for the body better.
When a government health care system is put in, many people cease taking care of themselves as well and cease learning bout health. They figure it is of no need or use as they will be taken care of regardless of how they eat and how they care for the body.
10. Less concentrated political power and a smaller government means more power rests in the hands of the individual. A simple rule of thumb is that the larger and more powerful the government, the less power rests with the people, even the poor. So the American solution created a smaller government, leaving much more power and control and initiative with the people. This brings us to a spiritual principle.
10. Voluntarism is a spiritual principle. The libertarian solution is a voluntary one. One helps the poor voluntarily, rather than having it forced upon oneself through taxes, which are not voluntary. Voluntarism teaches many good lessons such as charity, goodness and more.
It was based on the concept that all are created equal and then it is up to each to make the most of his or her life. This system worked amazingly well. America became a land of plenty with quite wealthy people, relative to the rest of the world. Its government also remained quite small and with little power over the people because this important function of wealth redistribution was handled privately.
11. Learning new things and building one’s skills and abilities is also a spiritual principle. It gives the souls and bodies experiences and an opportunity to flex their muscles, so to speak. There appears to be a special value in working the body and mind.
Problems with the libertarian, capitalist, free-market economic solution to poverty.
1. The poor stay poor in some cases. This means that no one has to help the poor and the miserable. They may roam the streets, for example, if no one picks them up and helps them. They may cause crime and violence and other problems.
2. Freedom means there will be mistakes and excesses and abuses at times. There can be business failures, stupidity, cheating, recessions, and all that goes with freedom of choice in economic, political, personal and social matters.
3. The system may encourage selfishness and this is not good for society. This is a common complaint heart about America. They say it is all about the “me” and to hell with others.
There can be truth here, since some people may choose to keep all their money to themselves and not help others at all if they are not forced to do so. This is the basis for the story of Mr. Scrooge, a word that has now become part of the language for someone who is selfish in the face of suffering of others in the community.
4. Great differences in rich and poor will occur continuously. This is not necessarily bad unless the poor get so distraught they start rebellions, which has happened in many societies. Oddly, however, they are mostly in Communist nations.
They happen less in societies that teach that anyone can bcome rich, so that working hard and saving is possible for everyone. This was the American dream, but harder today than ever due to many factors.
THE SOCIALIST, MARXIST, COMMUNIST SOLUTION.
Just allowing the poor to be poor is not often best. This led, in the mid-1800s to the opposite solution. It was first formally written down by Karl Marx in his famous dictum “From each according to his abilities to each according to his needs”.
This spawned socialism, which is government ownership of the means of production in society. It also spawned communism and related systems of government such as Naziism or national socialism. This still exists in some nations, though it has not worked well. In fact, neither extreme seems to work perfectly. However, let us continue our comparison.
Benefits of socialism and communism include:
1. It, too, is simple in a way. It is simple in the idea that no one is permitted to own much of anything, except perhaps the clothes on one’s back. Everything belongs to everyone and that is that.
It is simple in another way. One does not really own one’s life. One is first a member of the whole society and only secondarily has a life of one’s own. This means the community can decide many things, like perhaps when and whom you should marry, where your should live, what job you will do and many more decisions are taken out of the individual’s hands.
This makes life much simpler, indeed. This is a problem for people who have lived under communism, for example. Suddenly they must make all sorts of decisions and they are not equipped to do so. Their education, often , does not prepare them for this as the government owns the schools in this solution and they don’t want people learning how to live powerfully and individually. So transitions from communism take generations, for this reason, and create great anxiety.
2. Less anxiety and fear in a way but more in other ways. One is taken care of by the government in every way by a government –given job, apartment, even perhaps a sex partner and welfare for all medical and social needs. This gives people comfort and reduces anxiety.
The other side of this is that there is no choice, or very little, other than to leave the clan, if this is permitted. It was not permitted in Russia, for example. One was shot if one tried. So the lack of choice and the drudgery of the same stupid job or partner with little hope of change depresses people and leads to suicide in high numbers in these societies, without exception.
Another kind of simplicity is for the government. There is no freedom of speech, expression, thought or other. So control is complete and the government can do pretty much what it pleases with the people and the resources of the nation.
For example, in Russia today, the government can profit from the oil and gas wealth without having the complication of having to share it with the oil magnates of old, the others who contribute to it and with anyone else. This is simple, too, for those in power.
Benign dictators. The advantage here is that a “benign dictator” could really move the nation ahead if he were smart and clever enough to make all the right decisions for the benefit of the people. This is the argument for a king, by the way.
Only someone at the top, with all the power, can make the best decisions for all, as the argument goes. In theory, this is true. All the silliness of human beings can be controlled and minimized by the wise leader.
In practice, this never seems to work out, though enlightened leaders have occasionally arisen for a time, as documented in the bible and elsewhere. In recent times, this has not been the case almost exclusively. However, this remains the hope and dream of every socialist and communist theorist.
3. A spiritual benefit of submission of the ego self. The socialist conception is that the human will is bad, at least in large part, and must be subordinated and subservient to something greater called society or nation.
This echoes the spiritual principle that one must go beyond the little ego self. So, in a way, socialism forces this truth and lesson on its people.
Indeed, they become better servants in many ways. However, becoming a servant by force is not always best. However, it is another important argument heard from the left wing of the Democrat party.
These people believe sincerely that mankind has polluted the planet, caused global warming, killed many animal species and threaten to destroy the planet with nuclear weapons.
This we agree upon. However, the leftists or socialists go the next step. They say that an iron fist is needed to reign in the human folly of the “bourgeose capitalists” who are the culprits in their mind.
Sadly, however, the rulers of the communist nations have inflicted far more harm than the capitalist or libertarian societies throughout history, so this argument is actually false.
Problems with communism, Marxist and socialism.
1. A society based on coercion. This is always difficult and requires a large army, extreme measures like execution to keep the people in line and a secret police to find out who is not going along. Russia is also famous for its “mental institutions” where brainwashing and torture were and are used to keep the renegades and rebels in check and hopefully “reform them”.
2. A dismal society. This is a general word meaning a combination of boring, few opportunities for advancement, lack of choices and much more. This is the best way to characterize socialist nations.
They are much less exciting, many fewer opportunities and simply boring compared to America, for example. This is the reason so many are drawn to America.
3. A dismal economy. In general, socialist nations do much worse economically for many reasons. One is less incentive for people to excel. After all, they are not permitted to keep what they earn.
Also, so-called “command-and-control” economies are notably inefficient. This is because the one person at the top of the committee of controllers cannot predict the needs of the people, much as they try.
They are also necessarily out of touch with the reality of the factory floor, the latest innovations in engeineering and science, new ways to make things, new ways to replace old technologies and much, much more.
This is one of the biggest failures of the socialist nations. Some of them, like China and Russia, depend on the know-how of outsiders. Others, like Japan, are good copiers. European nations are more innovative. However, America remains the most libertarian and the most innovative in economic matters.
Lately, however, corruption in the Federal Reserve has led to so many excesses that threaten that innovation with more regulation. By agreeing to bail out bad banks and mortgage lenders, the Fed has given the green light for corrupt and dangerous financial and other practices. This is why America is in such bad trouble today and the only reason.
4. Militarism. While this may seem like a quality of America, it is not. America only defended herself, and believe it or not, continues largely on this path.
Libertarian nations want to create wealth, basically. This means working hard to produce goods, not war machines. Wars are costly and everyone knows this.
Socialist nations know they cannot produce as much wealth so they turn to conquest to obtain their raw materials, people as slaves and plundering money and materials. Militarism and socialism always go hand in hand in history, no matter what anyone claims to the contrary.
5. A tendency for self-destruction. A poor economy, a dismal life for the people and militarism combine to cause these societies to self-destruct eventually. This, too, is the lesson of history that is amply proven from biblical times forward to today.
North Korea, Russia, China, Syria, and other dictatorships are on the brink of self-destruction all the time because they must repress their people to survive and this is hard to do for a long time.
6. A tendency to oppose spiritual principles makes these societies break up. People naturally want to keep what they make, and to be free. This is human nature, that is all. Some of these are called “human rights” and socialist nations are far more prone to violate these than libertarian societies.
Women want to vote and be able to earn money and own property just like men, and why shouldn’t they? But the Islamic theocratic societies are basically socialist and communist in many ways and again, they go against this basic human desire and others, too.
People want to make their own choices, build their own factories and farms and so forth. Even children resist being told what to do all day and adults even more so.
WHAT IS THE SOLUTION, THEN, TO THE PROBLEM OF THE RICH AND THE POOR?
Most likely, to some degree the rich and the poor will always exist. Some will seem to “have it all” while others will be financially less well off, mentally poor, physically weak or ill and so forth. Some will have social skills, speaking skills, learning skills and so much more than others.
Trying to equalize everyone by law is futile and the sooner we discover this the better. Instead, the goal should be to let everyone play to their strengths and then share, from the heart, voluntarily, their particular gifts and skills. This is how we should work together and in the greatest harmony.
Will some earn more than others? Of course. People like to watch basketball, so players are paid millions while school teachers and secretaries may do far more important work and be paid a fraction of what the basketball player makes.
As for the poor, private charity is far better, as described above. This is also called private welfare. I suspect, however, that a government safety net will likely continue because there is not enough understanding that governmental welfare is very inefficient compared to private welfare, and it tends to become more corrupt as well. It is not the answer.
It is a poor substitute for human charity and human kindness. And it discourages private charity, which is horrible, as anything that discourages goodness and charity and encourages selfishness is not in line with spiritual principles. It also discourages hard work and taking full responsibility for one’s life. So it is not the ideal solution.