The less informed advocates of wealth redistribution will actually claim that the free market harms lower income people. Some of them actually believe that the economy is a zero sum game and that a wealthy man became wealthy at the expense of someone else less well off.

However, other advocates of wealth redistribution who realize (or have been forced to realize) that these assertions are patently false will make other claims about the free market. There are several major ones (going into all of them would push this post beyond the scope of the blog format) which usually amount to something relating to the theory that the free market does not provide disadvantaged people with enough opportunities.

All of these claims are superceded by one very important fact: the greatest anti-poverty “program” ever put into practice has been the free market. Through opportunities created by jobs and through technology developed and mass produced in the free market, the standard of living has risen for billions.

I call wealth redistribution: artificial reduction of poverty. It is artificial because poverty may be “reduced” when you take from someone to give to another, but this process is artificial because as soon as the funds are cut off the poverty level goes right back to where it was before. Without mentioning the philosophical and economically disruptive side effects of wealth redistribution it is safe to say that this is a highly burdensome and inefficient method to attain the goal of reducing poverty.

There are really only two ways (that I know of) to permanently reduce the poverty level, and that is to create what I call durable opportunities or to increase the productivity of those engaged in such opportunities. Durable opportunities are opportunities that last for a considerable amount of time (i.e. jobs & careers). Wealth distribution fails to create durable opportunities and therefore it fails to permanently reduce the poverty level.

There is only one venue that I know of to create durable opportunities, that is the free market. Durable opportunities are created by entrepreneurs with capital. They go out and they start businesses which provide others with jobs. When less capital is available to do so, fewer opportunities are created and many go unrealized. What wealth redistribution does is it takes the capital that could have gone to entrepreneurship and creation of durable opportunities and diverts it to an extremely inefficient system of wealth redistribution.

The second way to permanently reduce poverty is to increase the productivity of the workforce, including the portion of the workforce that is in the lower income brackets. This is done through technology that is mass produced and distributed by the free market. Wealth redistribution redirects funds from these activities as well.