I have great news for you! According to today’s Washington Post (March 22),
world leaders meeting at a U.N. conference in Monterrey, Mexico, have come
up with a new plan for ridding the world of poverty. The plan involves the
U.S. government’s sending of foreign aid to the governments of Third World
countries. Now why didn’t someone think of that before?
Here’s how the plan will work: The American people will continue sending
their hard-earned money to the IRS. The U.S. government will then send the
money to government officials in poor countries (after deducting operating
costs). The foreign officials will ensure that the money reaches the poor.
Voila! Poverty ended forever. The other good news is that according to World
Bank President James D. Wolfensohn, the money will not be wasted or sent to
corrupt government officials, as has happened in the past.
But there is actually one — and only one — solution to poverty: stop
governments from waging war on poverty, for it is the governmental wars on
poverty that have ensured that people remain mired in poverty throughout
history.
The only way to raise standards of living is through the accumulation of
private capital, which makes people more productive. And the only way to
bring capital into existence is through savings.
For example, farm hands who use a tractor will produce more than those using
a hoe. So, if a farm owner saves a portion of his income to buy the tractor,
the farm hands become more productive. (If the farm owner has to send the
money to the IRS instead, productivity doesn’t rise.) How can we ensure that
the farm owner will pay higher wages to his workers after the increased
production? Because if he doesn’t, the farm next door (which also is
increasing production) will attract his workers by offering them more money.
The farm hands can rely on the virtues of competition, not the benevolence
of the farm owner, for their increases in pay. (That’s why many businesses
pay workers in excess of the legally established minimum wage.)
To rid the world of poverty, then, would entail at a minimum the following
steps: the repeal of income taxation (including here in the United States),
minimum-wage laws, restrictions of business enterprise (that’s why it’s
called “free” enterprise), restrictions that prevent people from entering
into mutually beneficial trades with one another, and all government
welfare, including for the rich and middle class.
In other words, to solve the problem of poverty, leave people free to
accumulate unlimited amounts of wealth, freely engage in any business
enterprise, and enter into any peaceful exchange with anyone in the world.
The solution to poverty lies not in the failed welfare-state policies of the
past but rather in the unhampered market economy.
