To help the poor, preserve capitalism

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The Colorado Freedom Report--www.FreeColorado.com

To help the poor, preserve capitalism

by Linn and Ari Armstrong

The following article was originally published in a slightly modified version by Grand Junction Free Press on September 17, 2007.

The USDA notes that a two-person household can receive as much as $284 in food stamps for a month, or $4.58 per person per day. Nevertheless, your younger author and his wife ate for $159.04 in August, or $2.57 per person per day.

The point was to show that it is possible to economize when buying food. The so-called Food Stamp Challenge of several weeks ago, in which public figures spent $3.57 per day for food for a week to promote more tax spending, was bogus. That earlier challenge relied on the "average" food-stamp allotment, which goes to recipients who also have their own resources to purchase food. Your younger author and his wife beat the actual food-stamp budget by $125. For details about the diet (including a reply to Robert Laitres's fact-challenged letter of August 22), see FreeColorado.com.

Tax-and-spenders tout the same solution for every problem (real or imagined). If some people are poor, goes this thinking, others should be forced to hand over more of their money. How much is enough? These egalitarians will keep promoting higher taxes so long as anyone has more of anything than anyone else. The ultimate consequence is equality in impoverishment.

If you actually care about the poor, you will support capitalism, the system that protects individual rights, including the right to control one's own income.

As the great economist Ludwig von Mises wrote in Human Action (1949): "The history of capitalism as it has operated in the last two hundred years in the realm of Western civilization is the record of a steady rise in the wage earners' standard of living. ... The ensuing rise in the masses' standard of living is miraculous when compared with the conditions of ages gone by." Philosopher Andrew Bernstein details this development, and further answers capitalism's critics, in The Capitalist Manifesto.

Unfortunately, the life-sustaining fruits of capitalism have been diminished by political interference and favoritism in the economy. Our system is increasingly a mixed economy, not capitalism. Yet we have prospered to the extent that we have maintained elements of capitalism.

The result of capitalism is the steady improvement in the production of goods and services. In our society, few people are poor, obesity is the larger health problem among the poor, and usually people quickly rise out of poverty.

Far more important than giving the poor a hand out is protecting the economic liberty that allows people to grow wealthy. Capitalism has done immeasurably more to help the poor than all the socialist schemes of world history combined.

Nevertheless, the justification for capitalism is not that it helps the poor. Rather, capitalism is just because it protects the rights and liberty of each individual to control his own life, resources, and property, as consistent with the equal rights of others. As a consequence, capitalism promotes mass prosperity.

As Mises points out, liberty means equality under the law and inequality of resources. In a 1955 letter, Mises wrote, "Inequality of wealth and income is an essential feature of the market economy. ... It shifts control of the material factors of production into the hands of those who know how to employ them to the best advantage of the consumers. It makes competition work. It is progressive in the best sense of the term and benefits all strata of the population."

In other words, capitalism makes the rich richer and the poor richer. Political economic controls hamper the production of wealth and ultimately make nearly everyone worse off.

For example, America's bloated welfare state discourages work and saving, rewards irresponsible behavior -- over a third of all babies are now born out of wedlock -- and threatens to bankrupt the nation in the coming decades. This in the name of helping the poor.

Yet it is true that, even in the most prosperous society, sometimes some people will, through no fault of their own, find themselves in rough times. Unexpected deaths, divorces, and other tragedies can result in temporary hardship. While savings accounts and insurance policies can mitigate the financial burdens of such hardships, they're not always enough.

The role of voluntary charity is to fill in those gaps. Unlike the forcible transfer of wealth, voluntary charity is consistent with individual rights and capitalism. And, while forced wealth transfers tend to encourage irresponsibility and dependence, voluntary charity is more likely to help people land on their own feet. After all, if you get to decide how to spend your charitable dollars, you're more likely to make sure that those dollars are spent wisely.

We're all for responsibly helping out people in need. But we think that people should freely decide to donate their funds as a matter of conscience, not because they're threatened with jail.

But far more important than charity is the preservation of capitalism -- of economic liberty -- that enables people to earn a comfortable living and save for the future.

The Colorado Freedom Report--www.FreeColorado.com