Almost exactly one month ago the Wall Street Journal ran a piece by William Easterly. The point of the article was that there is a link between poverty, and economic and political freedom or (to be precise) the lack of wealth and income leads to a lack of economic and political freedom. (“Singing About Fighting Poverty, Slightly Off-Key,” Wall Street Journal, 10/02/14, A13.)
This, of course, is nothing more than Daniel Webster’s dictum that “power naturally and necessarily follows property.” If you don’t have control over (ownership of) the means of production, your income depends on those who do; you have no economic freedom. If you do not have economic freedom, you are going to use whatever political power you think you have to secure that income — whether it means increases in government welfare or raising private sector wages and benefits. As Seneca the Elder said, “Slavery holds many men fast, but many more hold fast to slavery.”
Thus we agree with Easterly that there is a link between poverty, and economic and political freedom. Nor are the various celebrities and politicians agitating for an end to poverty incorrect in maintaining that poverty must be eliminated.
Economic and political freedom alone, however, will not end poverty. On the other hand, simply mandating an end to poverty by redistributing existing wealth from the haves to the have-nots may be essential in the short term as an expedient, but redistribution is not, and could never be a solution.
It’s a question of power. Yes, redistribute what is needed in the short term to maintain people in some semblance of human dignity, but only an aggressive program of expanded capital ownership, financed by monetizing future increases in production, will solve the problem of poverty. Freedom will necessarily follow as people no longer need to depend on the beneficence of others or the self-interested “generosity” of politicians in coercing others to do their will to buy votes.
Instead of finding new and innovative ways to deprive existing owners of their capital, or redistributing income from the productive to the non-productive, then, governments should concentrate on removing institutional barriers that inhibit or prevent people from gaining democratic access to the means of acquiring and possessing capital. They would thereby empower people to take care of themselves and their dependents through their own efforts via ownership of both labor and capital.