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Source link: http://archive.mises.org/11086/how-to-conquer-poverty/

How to Conquer Poverty

November 24, 2009 by

One increases production by making investments in more efficient tools. The free-swinging enterpriser, using capitalist savings, is the true hero of the war on poverty. FULL ARTICLE by John Chamberlain


P.M.Lawrence November 24, 2009 at 7:18 am

“Capitalism, in league with technological ingenuity, is what delivered the West from the specter of Malthusian doom. Before the industrial revolution, soaring populations pressed inexorably on the means of subsistence. But when the Manchester factories in England began to soak up the idled poor from the countryside and make the importation of cheap wheat a possibility, Malthus was discredited as a prophet for his own Britain. As things turned out, the ingenuity that capitalism unleashed was reflected in the birth statistics: middle class people who did not need big families in order to provide themselves with field hands found ways of limiting their children. The combination of smaller families and a more skillful application of science to agriculture itself ended the problem of famine in the West.”

That’s wrong, as follows:-

- The factories did not “make the importation of cheap wheat a possibility”; the 1846 Repeal of the Corn Laws did (once it took effect). Also, until the waves of trade had moved out to cheap producing countries with more of a potential surplus, it merely made living easier in the earlier industrialised countries like Britain while making it harder in the exporting countries like France.

- None of that discredited Malthus, it simply made the dangers he described less urgent, less short term.

- Even after the cheap producing countries came on stream, ingenuity and technology had nothing to do with improving conditions in Britain. Even where they were used and gave gains to the countries using them, like mechanical reapers in the USA, that merely addressed a labour shortage there and allowed the USA to benefit – but it didn’t additionally help the importing countries. Without that, the corn would simply have come from traditional peasant production in Russia carried out in the old way, as indeed some corn did come – so the gain actually came from trade and new lands (much of Russia having only recently been freed from endemic raids and opened up for peasants).

- The birth statistics thing is a red herring; “middle class people… found ways of limiting their children” only by practising methods such as birth control that Malthus classified as “vice”. He knew about such things perfectly well, he just didn’t consider them humane solutions any more than he thought “misery” was.

- Science only boosted agriculture much later, after artificial fertilisers came along.

“In order to put people back to work and unleash the industrial revolution Britain had to amend the poor law in 1834″.

No, and no. There were other ways (not tried) to deal with the problem, and the industrial revolution had been well under way for around half a century by then.

“The real solution to the problem of poverty does not lie in any government relief system, or in any endeavor to redistribute wealth or income. It lies, says Mr. Hazlitt, in increased production.”

No, it does not – because that is not a sufficient condition. With an increasing population it is a necessary condition, but it is quite possible to have that increased production and also to have people marginalised so they do not have access to it; just look around you for evidence. What is needed is some way to give people that access without killing the goose that lays the golden eggs – but you do need both access and goose, not just goose alone.

fundamentalist November 24, 2009 at 8:25 am

PM, What do you mean by access?

I have a slightly different take on what ended the Malthusian cycles, and as some of you might guess, it begins with the Dutch Republic. The Dutch established true property rights in their little country, which encouraged farmers to try new farming techniques. The Dutch made huge advances in farming and increased productivity enormously. In addition, they built cargo ship that could transport more grain more cheaply. Not only did farmers earn more, but the cost of food declined and increased the standards of living of everyone. Also, productivity increases in manufacturing raised the wages of non-farm labor. So the price of food was falling while wages increased, even as the popultion of the Republic exploded. Jonathan Israel (“The Dutch Republic”) credits the Dutch with launching the industrial revolution that England benefitted from.

Barry Loberfeld November 24, 2009 at 8:42 am

“The message of Henry Hazlitt’s The Conquest of Poverty is that his subject could have been dealt with in the past tense if it weren’t for the pernicious doctrine that ‘the state knows best.’”

From here:

We don’t need state charities for the same reason we don’t need state churches, state families, or state anything else, i.e., we don’t need state socialism because we already have civil society. Government, organized armed force, exists only to provide governance — basically, defense against the violent criminal element (domestic and foreign, e.g., bin Laden). Condemning limited government for not performing the functions of the charity, the church, the family, the firm, the school, and the other organs of the body politic is like condemning the skeleton for not performing the functions of the brain, the heart, the stomach, the liver, the lungs, and the other organs of the body proper. Freedom is the framework that secures all other virtues.

stradun November 24, 2009 at 8:47 am

The only way to provide access for people to this increased production is by their participation in the free market (i.e. provide a good or service that others value and are willing to trade for).

In a free market, a person’s consumption should and does equal their production.

If by “access” you mean something (i.e. redistribution) other than this, that simply doesn’t work, and it will eventually kill your goose.

billwald November 24, 2009 at 11:14 am

Standard silly analysis. Why? Because every income distribution curve has a top end and a bottom end. The top 10% will always be considered rich and the bottom 10% will always be considered poor. “Rich” and “poor” has as much to do with social standing as disposable income.

Like it or not, in almost every modern society, social standing depends upon skin color. Even in the long term communist nations, skin color and ethnic background determine social standing. Even in Red China, the Han Chinese have superior social standing.

Consider, “In a free market, a person’s consumption should and does equal their production.” This sounds nice but has nothing to do with real life. Through out history, the rich people don’t consume 20% of their production, The real rich don’t know HOW to spend 20% of their annual increase.

This sort of analysis ignores the fact that people who spend less than 80% of their annual increase are in a totally different world, a totally different social class than those who spend 80% of their annual increase.

All this sort of analysis does is to perpetuate class warfare between the low end working class and the high end working class. It keeps us from thinking about the real rich. The person with $250K in WAGES is not rich!

THERE IS ONLY ONE WAY TO ELIMINATE POVERTY! Every year, execute the top 2% (or so) and the bottom 2% of the asset curve in public by firing squad. Every year there will be a rush to the median and the bell curve will get steeper every year. After a couple of generations there will be no rich and no poor. Only a half dozen people every year will need to be killed to remind the population of the bad old days.

stradun November 24, 2009 at 12:07 pm

This sounds nice but has nothing to do with real life. Through out history, the rich people don’t consume 20% of their production”

Consumption is not just caviar and call girls, it is a general term that includes savings and investment. Duh.

Your analysis calls for executing random people and you call my analysis silly?

Of course there is always the normal income distribution across population quartiles. The point is to lift up the median income, not equalize the top and bottom ends. Duh.

Fed Up November 24, 2009 at 3:34 pm

I’m sorry but if I would earn $250,000 net a year I would feel rich.

I currently earn $30,000 a year.

I would spend $30,000 a year and save $220,00 a year.

Inquisitor November 25, 2009 at 3:08 pm

Stradun, you’re either conversing with a nut or an idiot. Not sure which exactly.

Craig November 25, 2009 at 6:57 pm

Stradun, you’re either conversing with a nut, an idiot or someone with a good sense of humor. I’m going with the last — hope I’m right.

Education Tay February 15, 2010 at 1:36 pm

Conquer poverty? I have discussed this many times in class as a business and economics teacher in school and college level. Poverty is a relative term, one person’s poverty is another person’s comfortable life and someone else would feel rich. Yes, a more efficient distribution of income and wealth and the restriction of wealth could help finding the right equation, which I do not have.

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