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Source link: http://archive.mises.org/3977/charity-there-is-no-correlation-between-wealth-and-productivity/

Charity: there is no correlation between wealth and productivity

August 18, 2005 by

Internet ‘could widen wealth gap’:

Websites providing information on different neighbourhoods could widen the gap between rich and poor areas, a charity has warned.
[...]
The JRF said that, although it was good for househunters to know more about areas, there was a danger that wealthy people would only choose to live in areas with other wealthy people.

Social scientists have long theorised that having a mix of rich and poor in a neighbourhood ultimately raises the living standards of the poorest people in the area.

Heaven forbid I wish to live near people with similar cultural and economic backgrounds as myself. What the title really should have said was, “productivity could widen wealth gap” — as I am sure there is plenty of empirical literature illustrating why more productive individuals are wealthier than their counterparts.

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{ 9 comments }

Jordan August 18, 2005 at 5:33 pm

The JRF said that, although it was good for househunters to know more about areas, there was a danger that wealthy people would only choose to live in areas with other wealthy people.

Social scientists have long theorised that having a mix of rich and poor in a neighbourhood ultimately raises the living standards of the poorest people in the area.

Exactly! And it comes at the expense of the rich…
which is why they don’t want to live with the poor.

averros August 18, 2005 at 6:43 pm
    Social scientists have long theorised

The original pretty much says it all. There’s a world of difference between reality and theorising.

Allen Dalton August 18, 2005 at 7:41 pm

Averros-

A theory is an explanation of how the world works…There are good theories (those that explain well) and those that are bad (those that explain poorly – or not at all). So don’t criticize [I]theory[I*].

Further, I’ always wary of sentences that begin …[Blank] have always theorized…without citing even one such theorist or study.

averros August 18, 2005 at 9:22 pm

Allen, the common usage of “theorizing” is simonimous to “speculating”, “proposing theories”.

What I wanted to stress is that those proposed theories (which in “harder” sciences are called hypotheses) are not shown to be empirically sound.

The fact that a lot of people were theorizing about some phenomenon does not, in itself, mean that the phenomenon is real or that any conclusions from supposed existence of the phenomenon should be given any credibility.

A side remark: the entire edifice of Austrian economics rests on the careful avoidance of inferences from things which are not empirically observable except under very specific conditions (such as subjective utilities and preferences), and that is precisely why it manages to yield mostly limiting-type results instead of pethora of predictive (but logically invalid, if applied to the real world) results of utilitarian models.

Artisan August 19, 2005 at 6:33 am

It has been demonstrated enough on this site that society today tends to live ABOVE its means… (zero savings, high personal credits, etc…) this should probably sufficently mix up the neighborhood.

In fact there’s a rumor saying Germans who go to live on Mallorca (Spanish Balleares), while they try to escape “poverty” at home, may end up in a rich neighborhood and everybody around them is in fact either broke, or a crook!

Of course, there will always be a “doctor” to publish a theory about that too.

Yancey Ward August 19, 2005 at 9:17 am

I was going to make an original comment, but I really can’t add anything to what Jordan wrote above.

billwald August 19, 2005 at 1:36 pm

This theory theory of neighbors has been tested by “red lining” prior to ’64. In Seattle all black people were pragmatically required to live in the Central District because no real estate agent would show them a house in other areas except for limited areas around govt welfare housing. The CD had a full range of people from winos to bankers and lawyers. The banker’s kids went to school and to church with the janitor’s kids. There were many small black owned businesses in the CD. They had the same sort of integrated economic community as the white parts of the city but at a lower economic level.

The poor black kids had upper class roll models just as white kids did and it was a decent community. After ’64 the successful black families left the CD and left Seattle. The trashing of a great city began.

billwald August 22, 2005 at 2:05 pm

Second, the nature of poverty has changed. The civilized nations are rich enough so that the poor have all the same sorts of goods that the rich have in sufficient quantity but poorer quality and have to stand in line to get them.

Third, the civilized nations seems to be self segregating with respect to intelligence, ambition, and ability so that we are producing a leader class and a peon class.

Phillip Conti August 22, 2005 at 3:35 pm

This just in, a nuclear bomb was dropped on downtown LA, and it disproportionately affects women and minorities!

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