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The Solution to Poverty

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Ever since Franklin Roosevelt’s New Deal, liberals have maintained that the way to alleviate poverty is to have government wage war on poverty.

What does that mean? It means two things.

First, it means having the government use its power to take money from “the rich” and redistribute it to the poor (after deducting the costs of government to perform this service). The idea is that by equalizing wealth in this way, the poor will be uplifted into the ranks of the middle class.

Second, it means having the government protect the poor with economic regulations, such as minimum-wage laws and maximum-price laws.

No matter how well-intentioned they might be, however, the means that liberals have chosen to help the poor do not accomplish their purported end. Rather than helping the poor, the welfare state and the managed economy hurt the poor. And when such means are carried out fully and completely, the result is mass poverty for most everyone, with the possible exception of public officials.

Consider North Korea, for example. This month, the New York Times published an article entitled, “North Korea Must Become Prosperous, Leader Says.” The article talked about the deep and widespread poverty that has long afflicted North Korea and about North Korea leader Kim Jong-un’s desire to build a “prosperous country.”

Let’s say that North Korea follows what American liberals say is the solution to relieving poverty in a society. Let’s say that North Korea decides to wage war on poverty by taking money from the rich and giving it to the poor and by imposing tight controls over the economy to protect the poor.

Would those measures relieve poverty in North Korea? Of course not! How do we know this? Because we know that there is no private sector and no rich people from whom to take the money. If there isn’t a private sector to tax, then there is no money that can be redistributed to the poor. Moreover, North Korea already has virtually 100 percent control over economic activity within the country.

In fact, we should ask ourselves: Is it simply a coincidence that North Korea is mired in poverty and, at the same time, has no private sector and has extensive economic controls over the society?

The answer is: It is not a coincidence. In fact, the reason there is no private sector is because long ago the North Koreans took the economic principles enunciated by American liberals to their logical conclusion. They didn’t just impose taxes on the rich, they took everything from the rich and from everyone else. They nationalized everything in their quest to “equalize wealth” within society. They also imposed total government control over the economy.

That is precisely what brought about their poverty. That is the cause of their poverty today. The fact that the government waged war on poverty was what produced and guaranteed the poverty.

That’s what American liberals just cannot see. They have a blind spot on this.

Is there a genuine solution to North Korea’s poverty? Is there a way for Kim Jong-un to build a “prosperous country”?

Absolutely! But the solution is counter-intuitive, and it is precisely the opposite of what American liberals suggest. The solution to building a prosperous nation is to prohibit the government from waging war on poverty. No old-age assistance. No government-provided healthcare. No welfare. No public (i.e., government) schooling. No subsidies. No government-owned enterprises. No income taxes. No tariffs or import restrictions. No immigration controls. No minimum-wage laws, price controls, or other economic regulations. No permits or licenses. No big standing army. No departments of labor, agriculture, energy, homeland security, health, education, and others. No welfare. No sanctions. No embargoes.

Leave people free to engage in any economic enterprise they want. Leave people free to enter into mutually beneficial transactions with anyone in the world. Leave people free to travel anywhere they want. Leave people free to accumulate unlimited amounts of wealth and to decide for themselves what to do with it.

That’s the way to relieve poverty in every nation on earth. That’s the way to make a nation wealthy and prosperous. That’s the way to raise people’s standard of living. That’s the only way to truly help the poor.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.