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The Solution to Poverty
by Jacob G. Hornberger
I have great news for you! According to today's Washington Post (March 22),
world leaders meeting at a U.N. conference in Monterrey, Mexico, have come up
with a new plan for ridding the world of poverty. The plan involves the U.S.
government's sending of foreign aid to the governments of Third World countries.
Now why didn't someone think of that before?
Here's how the plan will work: The American people will continue sending their
hard-earned money to the IRS. The U.S. government will then send the money to
government officials in poor countries (after deducting operating costs). The
foreign officials will ensure that the money reaches the poor. Voila! Poverty
ended forever. The other good news is that according to World Bank President
James D. Wolfensohn, the money will not be wasted or sent to corrupt government
officials, as has happened in the past.
But there is actually one -- and only one -- solution to poverty: stop
governments from waging war on poverty, for it is the governmental wars on
poverty that have ensured that people remain mired in poverty throughout
history.
The only way to raise standards of living is through the accumulation of private
capital, which makes people more productive. And the only way to bring capital
into existence is through savings.
For example, farm hands who use a tractor will produce more than those using a
hoe. So, if a farm owner saves a portion of his income to buy the tractor, the
farm hands become more productive. (If the farm owner has to send the money to
the IRS instead, productivity doesn't rise.) How can we ensure that the farm
owner will pay higher wages to his workers after the increased production?
Because if he doesn't, the farm next door (which also is increasing production)
will attract his workers by offering them more money. The farm hands can rely on
the virtues of competition, not the benevolence of the farm owner, for their
increases in pay. (That's why many businesses pay workers in excess of the
legally established minimum wage.)
To rid the world of poverty, then, would entail at a minimum the following
steps: the repeal of income taxation (including here in the United States),
minimum-wage laws, restrictions of business enterprise (that's why it's called
"free" enterprise), restrictions that prevent people from entering into mutually
beneficial trades with one another, and all government welfare, including for
the rich and middle class.
In other words, to solve the problem of poverty, leave people free to accumulate
unlimited amounts of wealth, freely engage in any business enterprise, and enter
into any peaceful exchange with anyone in the world. The solution to poverty
lies not in the failed welfare-state policies of the past but rather in the
unhampered market economy.
The Future of Freedom Foundation
11350 Random Hills Road
Suite 800
Fairfax VA 22030
Tel. (703) 934-6101
Fax (703) 352-8678
E-mail:
fff@fff.org
www.fff.org
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