Scarcity and Poverty...

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Scarcity (finite resources, coupled with unlimited human demand) is a basic reality of our physical existence.

Many have noted that poverty ISN'T due as much to scarcity, as it is to non-productivity, and that is largely correct.

The poor, are poor, for the most part, because they make poor decisions. In fact, ironically enough, the SAME traits that violent people are prone to (recklessness, irresponsibility, the inability to plan ahead, poor impulse control) are the same traits that inevitably lead to poverty.

Scarcity is a related, but somewhat different issue (https://www.economicshelp.org/blog/586/markets/scarcity-in-economics/)

IF someone...ANYONE could show that, "the rich glom too much wealth, creating more poor people by their greed," they'd; (1) expose a fatal flaw in the market system and (2) show that, "Not only can Socialism's/Marxism's Central Planning work, it must work, as it's our only hope."

Of course, that is NOT the case.

While there IS a finite amount of currency in circulation at any one time, there is no such shortage of wealth.

Real wealth is NOT currency, although it's measured in dollars, etc., it's ideas.

Bill Gates doesn't have $90 BILLION in the bank, nor does Jeff Bezos have $150 BILLION stashed in a bank...they both have a combined, nearly quarter of a TRILLION in VALUE.

In a very real sense, wealthy innovators like them create more wealth, just as Henry Ford did with the assembly line and mass production.

Ford DIDN'T invent the car (that was Karl Benz). Ford invented something far more valuable - mass production. That's why Henry Ford made far more money in his life then Karl Benz did. He sold more cars through mass production.

Currency isn't the primary source of wealth, value is.

Value is found in ideas.

Scarcity...of resources and currency is very real and not at all artificial. It's a basic reality.

Real wealth is created by new ideas, which is why those who merely work, tend to subsist, while those who innovate thrive.

Those who do not work, whether through lack of skills, infirmity, or detesting drudgery are charity cases..."wards of the states." Public assistance is neither a "right," nor an "entitlement" (entitlements are paid for, like Social Security and Medicare paid into through the FICA Tax) it is charity. It's the status of "wards of the state" that make that population most vulnerable.

While innovators like Ford and Bezos hold very real leverage over all of society, the dependent poor, neither idividually, nor collectively , hold any leverage at all.

While there is no shortage of ideas, there IS a shortage of resources that must always be taken into account.
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A Very Welcome Challenge to What I Posted About Wealth and Poverty....

I recently received an email and the permission to reprint that message (anonymously).

The email comes from a former professor (the one who defended a Kos Kid in a comments section a few posts back)...what follows is his message in response to my previous post on What Poverty IS...and What it is NOT, and my response to him;

His email;

JC,

Why do you continue to constantly do this?

Demagogue to the gullible like this?

I sometimes wonder if you just like being provocative. What you’re doing here is potentially very dangerous.

To start with, I find much of your argument disingenuous, especially the portion about our “dynamic economy” – the old “expanding pie” versus the “fixed pie” model.

While it’s true that the economy is somewhat dynamic and the money supply is somewhat elastic, your argument here is very much overblown. Even you’d acknowledge that there really is only a fixed amount of “hard assets” available at any given time, right?

And since there is only a fixed amount of currency available at any given time, it's then very true that “the more person A takes in, the less available for persons B, C, D, E, F, etc.”

So, in that sense, we really ARE dealing with a “zero sum game,” aren’t we? At least in terms of the currency available at any given time that can be used for income, we are.

With that in mind, I think you’d have to agree that we do need a referee (and only government can fit this bill) to step in from time to time to make sure that there is a fair distribution of that currency, so that a few avaricious people don’t glom all the “hard assets” (especially INCOME) for themselves.

And to claim, as you seem to, that “the poor CHOOSE free time over more productive pursuits” is not merely naïvely simplistic, but grossly insensitive and offensive, as well and borders upon demonizing the less fortunate as parasites and pariahs.


(anonymous)

My Response:

Well, first of all, currency or the money supply DOES indeed fluctuate both significantly and quite often (many times within the same year, actually)...so, there’s THAT to indicate my position is not really “overblown, as you state.” (Here’s a chart of the fluctuations in the U.S. money supply between 1960 and 2007: http://en.wikipedia.org/wiki/File:Changes_in_US_money_supply_1960-2007.gif)

Moreover, currency and especially INCOME is NOT the sole, or even primary parameter of wealth. The truly wealthy or “super-rich” DO NOT rely upon income for the bulk of their wealth.

Investments grow the economy and in the process, create the vast majority of the new jobs and new opportunities for others. So, NO, we are NOT dealing with a “zero sum game” at all.

When the costs/risks get too high, investors simply stop investing and producers cut back on production and everyone suffers as the economy shrinks in response.

And yes, whether you find it “offensive” or not, specific behaviors and yes, CHOICES are what create BOTH wealth and poverty....and there are indeed myriad forms of wealth, one of which is free/“leisure time,” which producers sacrifice in order to produce, and non-producers maximize at their own peril.

How is telling the truth “dangerous”?

I do believe your argument in this case is inherently flawed by your apparent view that the market process (a/k/a “Capitalism”) is hopelessly and inherently unfair...I believe that the argument I’ve offered here shows that when the full scope and purview of what is called “wealth” is taken into consideration, the market process is NOT really “unfair” at all.

JMK

What Poverty IS...And What it IS NOT....

Poverty is not merely a lack of money or other “hard assets, that is a symptom of the malady called poverty.

What poverty is, in essence, is the lack of marketable skills and the entrepreneurial drive to develop such skills and to “sell yourself” to help others in order to enrich yourself.

Poverty is most often the result of poor planning, poor impulse control and a lack of focus, discipline and imagination...it, like wealth creation, is NEVER the result of “bad luck.”

To understand poverty, one must first understand wealth and what wealth is.

Wealth is NOT currency, or real property, assets, like stocks and bonds or even the sum total of those possessions, again, those are symptoms or “the trappings” of wealth, not wealth itself.

Wealth is, in essence, IMAGINATION – the creative expression that turns ideas into solutions to other people’s problems and in the process enriches the imaginer.

So, in turn, poverty is, in essence, a lack of imagination, perhaps even more primordially, a lack of the will to help others, even when that help might well enrich yourself.

Just as specific behaviors (self-discipline, time management, attention to detail focus and thrift) produce wealth, poverty is also created or caused by specific behaviors, most notably, poor impulse control, recklessness and irresponsibility and the general inability to delay gratification and plan for a better, easier tomorrow.

That old saying, “If you’re failing to plan, you’re planning to fail,” is very much true.

Measuring Wealth and Poverty

We can all see that poverty costs those afflicted in a myriad ways, what we often overlook is that wealth creation also costs the producer.

It costs that person in terms of time. Time with family and friends, time for leisure and enjoyment and often, it’s the most valuable time of all – that time when we are most vital and able to enjoy life to the fullest.

Income and personal assets (ie. stocks, bonds, pension funds, real property, etc.) are just two measures of wealth. Others, like free time, good health, a close and loving family are often overlooked as “intangible assets,” and yet they are often as valuable, or even more so than “hard assets, like cash and real property, to those who lack them, or sacrifice them in order to produce.

For instance, a “beach bum” or alcoholic/drug addict is generally far “richer” in terms of leisure time than the man who runs a business, or a physician or investment banker, although the latter are generally far “richer” in terms of “hard assets.”

Choices and Trade-Offs

In a very real sense, all of this, all of what we are and what we become, comes down to a series of choices and trade-offs.

The producer (the physician, investment banker and the businessman) trade giving up more of their leisure time for more hard assets, while the “beach bum” and the alcoholic/drug addict partier trade giving up developing their other skills in favor of more leisure time.

It can be argued that each individual in the above case made a conscious and deliberate choice to value one form of wealth over another – the producers valuing “hard assets” more, while the non-productive, more epicurean partiers appear to value leisure time far more and in a free society individuals are free to make such choices and deal with their individual consequences on their own terms.

Therefore the focus on “redistributing the wealth” fails precisely because it fails to look at the full and complete scope of what wealth is. With its narrow focus on redistributing hard assets, it unfairly does that WITHOUT concomitantly redistributing leisure time and the other “intangible” aspects of wealth.

A fair “redistribution” requires that the producers be given back something for their sacrifices in hard assets and the recipient non-producers be required to surrender some of their intangibles (ie. leisure time) in return.

Yes, it can be argued that what the producers produce cannot be replaced by those without their high level of advanced skills.

So what?

That merely dictates that a “fair redistribution” require that the non-productive be forced/coerced into developing their skills to the fullest to produce more, thus allowing the other producers to have more free time and the other “intangibles” included in the full panoply of “wealth.”

The “Zero Sum Game” Canard

Some will argue that “intangibles” can’t be measured and thus can’t realistically be “redistributed” either, but that is untrue.

If people don’t own their own labors, their own property, then they don’t own themselves or their time either and yes, it CAN be “redistributed” by the same activist that would “redistribute” property.

Much of the justification for “redistributing” hard assets is based on the canard of the “zero sum game.” In other words, “There is only so much wealth, in terms of stocks, bonds, cash and real property available at any given time and therefore, one man “earning/producing too much” assures that ten others will do without or have to accept a minimum of such hard assets as their reward.

In fact, that is NOT TRUE.

Wealth is created by ideas, by human imagination, and as such is unlimited. When one individual produces a tremendous amount of wealth, that production increases opportunities for other like-minded and entrepreneurial individuals. In short wealth creation generates MORE wealth creation, NOT a “shortage of wealth” for others.

What happens when “redistributive” efforts are put into effect is that producers produce less, in effect, reclaiming, on their own, more of the free/leisure time they gave up to produce more in the first place.

That has two disastrous unintended consequences; (1) it reduces the overall productivity of that economy, given that there’s nothing in place to force the non-productive and less productive to produce more and (2) that lessening in wealth creation results in significantly lowered tax revenues for government, in effect, hampering government’s ability to engage in more social assistance, in the form of various anti-poverty programs, etc.

But, given the fact that we don’t exist in a “zero sum game” economy, there’s no reason to redistribute wealth in the form of hard assets, given that such wealth creation generates higher government revenues, while also creating ever MORE opportunities for ever more wealth creation!

This, in essence, is the primary fatal flaw in contemporary American Liberalism.

The problem “we the people” face is that government and the “political class” generally refuses to acknowledge this basic truth, as they are more motivated by seeking power and control over others than in actually “doing good.”