What's Wrong With This Article?

[Hobbit]

The article linked at the end of this post contains two glaring errors. The content of the article lists how the richest 2% of people own half the world's assets. First off, government assets aren't counted, even though, for example, the U.S. federal government is the largest landowner in the country. The second is contained in the following sentence.

Personal wealth is distributed so unevenly across the world that the richest two per cent of adults own more than 50 per cent of the world’s assets while the poorest half hold only 1 per cent of wealth.

Read that sentence carefully. Again. Can you spot the problem? Read it one more time. Ok, now read the quote with the error highlighted.

Personal wealth is distributed so unevenly across the world that the richest two per cent of adults own more than 50 per cent of the world’s assets while the poorest half hold only 1 per cent of wealth.

Wealth is not distributed. Wealth is earned. Nowhere in the article do they mention the concept that some people actually earn the assets they have. The fact is that they estimate that, if distributed evenly, everyone in the world would have about $20,500 in assets. So first off, it would make everyone poor. Second off, look at what leads to wealth and poverty and ask yourself. If this happened, what would happen within a few years with no further intervention? Well, the previously poor would blow their share on booze, smokes, lottery tickets, vacations, and other useless things that would be gone in a week, then it's back to being poor. The middle class would pay down some debt and buy a few more lasting things like furniture and electronics. The rich would invest and capitalize, using their wealth to earn more wealth. Within 5 years, it would be right back where it was. People do not get rich or poor because things get 'distributed' incorrectly. People, at least in free countries, get rich or poor based on their skills and their behaviour.

http://www.ft.com/cms/s/41470ec0-845b-11db-87e0-0000779e2340.html

 

[90K]

Only an old school gangsta like Al Capone would know that! And only they took for the distributution. Good point you made on that fugazi article.

 

[ScreamingEagle]

In contrast, the authors say “many people in high-income countries have negative net worth and, somewhat paradoxically, are among the poorest people in the world in terms of household wealth.” "

Well in that case, since (according to liberals) our country is going broke and to hell in a hand-basket due to our massive national debt and our bad economy, then the USA better get into first place in the world's welfare line...we're not rich, we're poor and deserve a handout...

 

[BaronVonBigmeat]

Those numbers wouldn't surprise me if we're talking about the world as a whole.

The problem is, the left will latch on to them as though they are an indictment of free markets. They aren't, and they are making the classic mistake of assuming that "not socialist" = capitalist. Most third world countries have either official or de facto government restrictions that apply to ordinary citizens but not to the elite.

In Egypt for example, you might have to literally go through a 200 step process for getting official approval to open a business. Thus, established companies and foreign corporations can open a new store but ordinary people can't. They can afford to hire a full-time staff to do nothing but get licenses and approvals. They can afford to pay bribes to cut through the red tape, because they are already established. No wonder people work in sweatshops, the option of opening your own business just isn't there. If you have your own business, you operate it out of a shack behind your house and keep things hush-hush. And then there's the complete lack of property rights. People live in houses for example, but do not have a legal title. Thus, there is no official legal collateral for them to get a business loan.

For more detailed information, see the excellent book [ame=http://www.amazon.com/Mystery-Capital-Capitalism-Triumphs-Everywhere/dp/0465016154/sr=8-2/qid=1165551898/ref=pd_bbs_sr_2/103-3352358-4775063?ie=UTF8&s=books]The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else[/ame] by Hernando de Soto. I have not had a chance to do much more than skim through it a little bit, but basically he took some grad students and actually went through the process of filling out the official paperwork in several 3rd world countries, and also documented the general lack of official property rights which make it possible to raise capital for new businesses.