A substantial element of human suffering, and the world's ills, can be traced to a popular misunderstanding of statistics and biological processes. Specifically, people have noticed that market economies create poor people. Then, they make the mistake of assuming that, without market economies these poor people would be rich when, in reality, these poor people simply wouldn't exist.So, the problem most intellectuals think we face is do we want these people to be poor or rich. The problem we actually face is quite a different one, that being do we want them to exist, or do we want them to be dead. And, more significantly, do we want to let them choose for themselves and for their own children, or do we want to choose for them, as if they are pets or farm animals.It is impossible to create the opportunity for people to be wealthier without, at the same time, creating the opportunity for poorer people to not starve, and to actually be happy enough to have more children! When you introduce division of labor and trade, it becomes possible for a person whose only skill is sewing buttons, to enjoy the American dream enough to raise children like him.Obviously, there never would have been a proletariat population large enough to overthrow the Tsar, if their standard of living hadn't, in fact, been increasing. When cities sprung up during the Industrial Revolution, the population of farmers presumably did not go down, these were new people. The fantasy of the collectivist commune is, at its most basic, to push these people back out of existence.Every first-world country, such as Hong Kong, began as a third-world country, with sweatshops. To pass a law against sweatshops, is to pass a law against the subsistence of people who have not yet evolved first-world productivity skills. If you divert water from the rich to the poor, it distorts the relative proportions of productive versus unproductive people, the byproduct of which is starvation.So, in conclusion, economics is little more than a signaling mechanism, from poor people to rich people, whereby poor people can inform rich people which of their activities are enabling the greatest number of them to live. If you divert these votes of poor people, to vote for the activities of other poor people, they end up voting for competitors to scratch and bite over the same UN grain shipments.MP

A sound nineteenth-century view, which contains some important truth. Here is another important truth: productivity does not equal wealth. Many wealthy people got that way by stealing, not by being productive. Many wealthy and powerful institutions are founded on systematic theft. Conversely, many poor people are extremely productive. But the greatest productivity is by scientists and engineers who multiplied the wealth of humanity by 1,000 or more, and by and large gave away their inventions free.The vast majority of the world, rich and poor, has no notion of the advances that make modern life possible. They do not invent or improve. They fight and die over who gets what share of the output of machines they do not understand and could never build. While the people who do understand the machines have a variety of political opinions, I think their consensus view would be for a reasonably egalitarian division of goods. They balance the justice and economic stimulus of equality, versus the incentive effect of inequality, and settle on something intermediate. But almost all would agree that what inequality there is should be based on talent and effort, not tradition or ruthlessness or biological superiority.Most of these people may be wrong, I agree with you that educated, technical people as a group tend to underestimate the value of information and its crucial role in economics. Therefore, more inequality, and especially more apparently irrational inequality, should be tolerated, than the liberal consensus view. But that doesn't mean we need to tolerate all inequality and irrationality. I think there are examples that are clearly wrong, and should be corrected.

"Many wealthy and powerful institutions are founded on systematic theft."My favorite metaphor for this is how a blood vessel can't possibly be conscious of whether it is feeding a critical organ or a cancer tumor. Similarly, no individual voter or politician, should casually risk standing in judgement - by his own reason - of a particular economic activity or institution, as to whether it is productive or parasitic.I have many times considered that I have friends who will work as commodity brokers their entire lives, and never have a single client who is a long-term winner. But what law would I pass to cure this, and how could I possibly administrate it? If people cannot administrate themselves, then nobody can.In other words, it is by economic feedback, not by the reason of the wise, that the few profitable activites are constantly produced by random chance, discovered, and elevated. It would go even further than most, and say that 90% of what 90% of people do each day, is parasitic and worthless*Problem is, we can never, without setting the biological sorting process in motion, discover which people are "contributing" and which are paper pushers. I've heard similar arguments for a tax on currency speculators, and my counter-argument is that we should pass a law against using more than one sperm.So far as "their inventions," I would take the Hayekian argument that the invention itself is not theirs - not traceable to the "merit" of a particular inventor - but the reward to a larger society that produces millions of inventors in the hopes of getting lucky. Patents just accelerate the invention's early dissemination.In this view of the world, there is very little role for individual talent, which can never rival the trial and error of a million lunkheads over thousands of years, or of effort, which can be rivaled by clever machines. The real miracle is not the invention, but the transmission and imitation process which human beings run at fever pitch.Finally, as neat as egalitarian distribution sounds, it amounts to nothing less than pouring water onto the entire telecommunications network. There is no other method, than by depriving some people and rewarding others, to inform billions of strangers of the usefulness of their activities to one another.This very notion of "distribution" is fatally flawed, to the extent it assumes that wealth exists beyond the yardstick of an individual. "Distribution" gives everyone the same-sized, same-colored cars, and ignores the very process by which the unique tradeoffs and tastes of individuals are discovered and reconciled optimally.Wealth is not distributed, and anything which is distributed is not wealth. Wealth is created by discovering and exploiting the very geographic variation in the fabric of the universe. To do anything equally, is to ignore or forego opportunities to actually create wealth, because wealth is the discovery of inequality.To be perfectly clear, as I understand the laws of physics, this tradeoff does not exist, it is an illusion. We cannot simply by making richer people poorer, and poorer people richer - where our mechanism is steered by no other incentive or information - achieve greater total human prosperity in the long run.Every time we do this, some thermometer, at some location, might measure something as richer. But if we were able to apply God's thermometer, which suffers no geographic friction or bias, we would discover that every time we distort economic processes for the sake of equality, we miss a step in the diversion of entropy to human advancement.It all comes down to frame of reference, I guess. If what "we" wish is to measure whether people have ten fingers, and then allocate money in proportion to fingers, we will clearly go broke. To assume that at any point we can begin to allocate relative to measurements taken from some arbitrary location is incorrect.In the very end of it all, no smaller subset of the universe can possibly record the information necessary to understand, much less administrate, the rest of the universe. So even if we decide what "we" ought to do, there will always be infinite "we's," with asymmetric geographic advantages.So what is the optimal sphere of the building-block administrator, who is the we? The evolution of morals, throughout history, has suggested that it is the individual human brain, paired together with his several or "private" property, the region of the universe over which he is autonomous, and free to exchange.MP*I also theorized, in another post, about how much of that which humans measure as positive or good is an anthropological relic, whereby the human psyche acts a thermometer of conditions which were conducive to survival and reproduction in an entirely different setting, thousands of years ago.

Aaron, you've got me feeling like Horton Hears a Who. But I think it is important that when intellectual giants like you go stomping around, you be made aware of the ants you are stepping on! Any economic activity looks beneficial, if you only measure the benefits, and not the costs. If I kill a man and take his wallet, and I measure the benefit of his wallet to me, but not the cost of losing his life to him, it looks like a positive-sum event.When someone institutes rent control, it is easy to look at a current tenant, and say without rent control, his rent would be five dollars higher. What you overlook, is the loss of opportunity, to a person who may be poorer than him who needs housing, to outbid him for that unit by five dollars. It's also difficult to measure the suboptimality, when money is allocated to building less urgent things, when what people would prefer to bid on is housing.My girlfriend was an aerobics instructor and personal trainer. She charged around $45/hour, and $10-$15 of that went to taxes. Unlike a doctor, she took clients between 5 and 9 AM, and between 5 and 9 PM. She would have eagerly substituted lower-income clients midday, if she didn't have to demand that extra $15 from them just to give back to them! But nobody measures the loss of transactions which never take place.Suppose the natural state of an economic system is 1 rich guy, and 10 poor people. Suppose we are willing to sacrifice a loss of economic efficiency, to reallocate wealth, so that we can support 8 less-poor people, and 1 less-rich guy. What this doesn't measure, is the cost to 2 poor people who don't exist, who would be willing to pay the rich guy to do what he does, and be poor themselves, just so they can be alive.Some people, like black people and abortions, you really can leave the cost to them out of the calculation, when the benefit is going to someone who matters, someone who votes. But it is unfair to poor white people who vote, but who lack the sophistication to realize the opportunities they are being denied when they lose the right to bid, to trick them into thinking the resources being redistributed to them compensate for what you have stolen.MP

But the greatest productivity is by scientists and engineers who multiplied the wealth of humanity by 1,000 or more, and by and large gave away their inventions free.Just dregin' ....... besides that statement is a shot-in-the-arm .......