Economics

Why Do the Poor Stay Poor?

Prosperity is impossible without property rights.

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Of the 6 billion people on Earth, 2 billion try to survive on a few dollars a day. They don't build businesses, or if they do, they don't expand them. Unlike people in the United States, Europe, and Asian countries like Japan, South Korea, Hong Kong, etc., they don't lift themselves out of poverty. Why not? What's the difference between them and us? Hernando de Soto taught me that the biggest difference may be property rights.

I first met de Soto maybe 15 years ago. It was at one of those lunches where people sit around wondering how to end poverty. I go to these things because it bugs me that much of the world hasn't yet figured out what gave us Americans the power to prosper.

I go, but I'm skeptical. There sits de Soto, president of the Institute for Liberty and Democracy in Peru, and he starts pulling pictures out showing slum dwellings built on top of each other. I wondered what they meant.

As de Soto explained: "These pictures show that roughly 4 billion people in the world actually build their homes and own their businesses outside the legal system. … Because of the lack of rule of law (and) the definition of who owns what, and because they don't have addresses, they can't get credit (for investment loans)."

They don't have addresses?

"To get an address, somebody's got to recognize that that's where you live. That means … you've a got mailing address. … When you make a deal with someone, you can be identified. But until property is defined by law, people can't … specialize and create wealth. The day they get title (is) the day that the businesses in their homes, the sewing machines, the cotton gins, the car repair shop finally gets recognized. They can start expanding."

That's the road to prosperity. But first they need to be recognized by someone in local authority who says, "This is yours." They need the rule of law. But many places in the developing world barely have law. So enterprising people take a risk. They work a deal with the guy on the first floor, and they build their house on the second floor.

"Probably the guy on the first floor, who had the guts to squat and make a deal with somebody from government who decided to look the other way, has got an invisible property right. It's not very different from when you Americans started going west, (but) Americans at that time were absolutely conscious of what the rule of law was about," de Soto said.

Americans marked off property, courts recognized that property, and the people got deeds that meant everyone knew their property was theirs. They could then buy and sell and borrow against it as they saw fit.

This idea of a deed protecting property seems simple, but it's powerful. Commerce between total strangers wouldn't happen otherwise. It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law.

Is de Soto saying that if the developing world had the rule of law they could become as rich as we are?

"Oh, yes. Of course. But let me tell you, bringing in the rule of law is no easy thing."

De Soto started his work in Peru, as an economic adviser to the president, trying to establish property rights there. He was successful enough that leaders of 23 countries, including Russia, Libya, Egypt, Honduras, and the Philippines, now pay him to teach them about property rights. Those leaders at least get that they're doing something wrong.

"They get it easier than a North American," he said, "because the people who brought the rule of law and property rights to the United States (lived) in the 18th and 19th centuries. They were your great-great-great-great-granddaddies."

De Soto says we've forgotten what made us prosperous. "But (leaders in the developing world) see that they're pot-poor relative to your wealth." They are beginning to grasp the importance of private property.

Let's hope we haven't forgotten what they are beginning to learn.

John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.

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290 responses to “Why Do the Poor Stay Poor?

  1. Let the flamewar between the anti-Stossel nitwits and Reasonoids being!

    1. … AKA Stache fellating

      1. who wants a mustache ride!?

        1. I’d ride that bad boy all day long!

    2. Zen buddhists are into just “being.”

      Also, Reason-oid would mean that they appear reasonable, but aren’t truly.

  2. That’s strange. There was nothing in there about the Man keeping them down.

  3. The obvious solution is more stimulus.

    1. & global affirmative action.

  4. Page 2 was completely unnecessary. Thanks for that.

    1. Click on the “print” link at the top, not the link to Page 2.

      And browse Reason with images off.

    2. Stay classy, Reason.

  5. It was at one of those lunches where people sit around wondering how to end poverty.

    I used to go on shopping binges where I tried to figure how to end world hunger. (Or maybe that’s something I saw on Sex and the City.)

  6. I think there is something to it, but this idea that everyone can understand and accept the rule of law…well, if they did, wouldn’t everybody on earth be rich?

    Just look at we jaunty few that say the best deal is, you are free to act as you like and in return I am free to act as I like. We are free to make a deal between ourselves, the only criteria being that we both find it mutually agreeable.

    Seems pretty simple and easy, and yet even on this site see how many equate that with filleting, basting, and barbequing babies. Hmmmmm, tender, juicy, mouth watering babies…

    1. Only SugarFree would equate that with fellating babies.

    2. Now you’ve got me hungry dan.

  7. Again with the one-line second page. Enough, already.

    Also, the title probably should have been “Why Do Poor Countries Stay Poor?” As it is, it sounds like he’s discussing micro-economic issues.

    1. Yes, I thought the same thing (about the title).

  8. But first they need to be recognized by someone in local authority who says, “This is yours.” They need the rule of law. But many places in the developing world barely have law.

    Nonsense. I read De Soto’s book and immediately saw the fault with his reasoning. The problem is not some “lack of law,” as most 3rd World countries have courts and laws. The problem is the high cost of obtaining a deed. In many Latin American countries, the public notary system followed comes from the Spanish model of licensing. Public Notaries are attorneys that buy the license which can be as expensive as a NYC taxi license, bringing the cost of making any document “official” extremely high, like as high as titling a house in the U.S.

    Maybe Americans can afford to spend thousands of dollars to have their homes titled, but poor people in those Latin countries cannot. The problem, therefore, is not the rule of law, it’s (ta-da!) LICENSING LAWS (i.e. too much government).

    1. “most 3rd World countries have courts and laws”

      Perhpas, but unpredictable, corrupt ones are hardly better than none at all.

    2. That was the point that De Soto made in his book. He clearly outlined that the problem was directly related by the cost of obtaining deeds of ownership. The people that lived in these makeshift dwellings and worked in these unrecognized businesses and their neighbors clearly understand private property. The problem outlined by De Soto was that the governments of poor countries only recognize property that has been titled or permitted through incredibly expensive processes. He did not simply argue that effective courts were all that you needed.

      It’s like your criticism is exactly what De Soto said for 40% of his book.

      1. should be “related to the cost of obtaining deeds of ownership” instead of “related BY the cost of obtaining deeds of ownership.”

    3. No, you *thought* you saw the flaw. he wasn’t talking about corrupt, ineffectual courts and laws….which is, after all, what you will find 100% of the time in “third world countries that bother to have laws and courts. Hell, in most first world countries as well. Look at the US, for example….

    4. Courts and laws do not necessarily equate to the rule of law.

      1. Re: Brandybuck,

        Courts and laws do not necessarily equate to the rule of law.

        That’s the whole point. The question becomes: Do the courts and other institutions protect contracts and property because that is what people expect them to do, or people respect contracts and property because that is what the courts expect them to do? De Soto does not really answer this in his otherwise enlightening book.

      2. That is because in every nation, courts and the laws they uphold, are immune to price signals from the consumers of legal services. Consumers can’t go down the street to use another legal system’s court because the state’s monopoly of law is kept in place with violence.

        Monopolies are always bad, especially monopoly of law (aka, a state).

    5. The citizen of a country have to make things happen….and they have to be smart enough to know how!

  9. This article seems to be referring property rights solely as they pertain to real estate.

    1. “This article seems to be referring property rights solely as they pertain to real estate.”
      Governments don’t bother stealing bicycles; they’re too cheap.

      1. Ever heard of asset forfeiture?

    2. If you read De Soto’s book, he discusses the importance of private ownership when it comes to running businesses too. It is impossible to get a loan to expand a business that isn’t legally recognized. Unless you’re going to get it from somebody you know closely, that is.

      1. Or from Carmine….

  10. Why Do the Poor Stay Poor?

    Because they are ignorant, lazy, and utterly dependent turds who find no stigma attached to their slothful ways. They are fully grown adults who, like children, expect someone else to solve their personal problems and provide their lives with some semblance of respectability.

    Sorry, I can only speak for poor Californians. I happen to live in Imperial County, California where we lead the nation in unemployment (30%) and personal irresponsibility. For the love of God, someone please nuke us before the cancer spreads…

    1. At first I found the above comment offensive (okay, maybe not offensive but ignorant), but the more I think about it the more I’m inclined to agree that it’s generally true.

      I grew up on Chicago’s south side and while my parents weren’t poor, they didn’t start out with much. I had a buddy across the street, however, who I’m guessing was well below the poverty line. I lost touch with him when we moved out to the ‘burbs, but I heard he got hooked up with gangs, spent some time in jail, etc. Through the miracle of Facebook I recently reconnected with him and discovered that, despite being unemployed for the past couple years (he’s a union plumber and, well, lots of them aren’t working right now) and having three kids, he’s doing pretty well for himself. Here’s a guy who, unlike me, didn’t have a whole lot of family or community support but he still managed to get his shit together because he was determined to do so. I guarantee you his kids will be far better off, and have far better opportunities, then he did when he was a kid.

      I think we’re in danger of having a permanent social underclass, but that’s because the government has built institutions (welfare, public housing, the prison-industrial complex, etc.) that make it exceedingly difficult to escape. But those communities aside, the history of our country seems to be one of poor people moving here and within a generation or two making things infinitely better for themselves. Sure, there may be a few poor who are simply victims of bad luck, but for the most part the poor don’t stay poor unless they accept their fate or are victims of backwards government policies.

      1. “I think we’re in danger of having a permanent social underclass, but that’s because the government has built institutions (welfare, public housing, the prison-industrial complex, etc.) that make it exceedingly difficult to escape.”

        Thomas Sowell agrees with this:

        Up from the Projects

        http://www.nationalreview.com/…..mas-sowell

    2. My problem with this is the regular patterns we find in poverty. If poverty is simply the result of individual choices then why every year is the poverty rate of blacks 3x that of whites?

      1. See the part in my comment above re: welfare, public housing, the prison-industrial complex, etc.

        1. But the poverty rate among blacks was much higher before the massive increases in those areas.

          1. Well, before that there was that whole two hundred years of slavery thing…

          2. i think you can blame Frank Lucas and cheap heroin for a little bit o that.

          3. Actually that’s not entirely true, MNG…

            Poverty rates among blacks were declining in the earlier parts of the 20th Century through the advent of those welfare programs. And as Walter Williams likes to point out, the family structure and communities were a hell of a lot more secure at that time as well. But then, the welfare system rewards broken homes, and there is a giant industry full of community organizations who’s livelihoods are actually dependent on perpetuating, rather than eliminating, poverty.

      2. Upbringing…

        1. Not helpful, because it just changes the question: why are blacks 3x more likely to have that upbringing?

          1. Because their parents did and their parents did going back to the culture of the immigrants. White Americans came from Europe where the ideas of the enlightenment, individual responsibility and property rights were already defined.

            Blacks came from tribal Africa, and to compound the culture of clan based tribal conflict, they were subjected to slavery for a few generations. When slavery ended, Jim Crow laws didn’t help and as mentioned, today they have institutions that prevent them from being forced to “grow up” culturally.

            I think generally they’re getting better, famous ghetto rappers are some of the most entrepreneurial and capitalistic people we have in america (although they don’t get philosophical about it often) but there’s still a long way to go for blacks in general.

            1. We as rappers must decide what’s most important
              And I can’t help the poor if I’m one of them
              So I got rich and gave back
              To me that’s the win, win
              The next time you see the homie and his rims spin
              Just know my mind is workin’ just like them.

      3. Bigotry of low expectations.

        1. my favorite is “being white”. duh, how about you, your children, your grand children, your great grand children, being stuck in poverty because you were afraid of some idiot calling you names?

      4. Re: MNG,

        If poverty is simply the result of individual choices then why every year is the poverty rate of blacks 3x that of whites?

        Define poverty.

        1. I’m using the official measure.

          1. Re: MNG,

            I’m using the official measure.

            You mean you are relying on an arbitrary baseline? Good luck with that.

            1. How would you define poverty OM?

              If it helps you not to be confounded by all the vagueness and arbitrariness of the English alphabet, you may respond in binary.

              1. Re: Tony,

                How would you define poverty OM?

                Sure: as the condition a man suffers where no matter how much he does, his neighbor always has the prettier wife.

      5. Did somebody say there wasn’t any racism in this country?

        I suspect that half the reason the silent majority continues to support the drug war? …is because they don’t understand how we’re gonna keep all those black people in prison otherwise.

        But just because racism is a contributing factor to the problem, that doesn’t mean property rights aren’t still the solution–no matter what color you are.

        Racism is just one way of circumscribing people’s choices–government is another way to do the same thing. Either way, it’s the circumscribing of people’s choices that causes the prosperity problems.

        1. “But just because racism is a contributing factor to the problem, that doesn’t mean property rights aren’t still the solution–no matter what color you are.”

          So are you arguing that blacks have three times less property rights than whites in the US?

          1. Have you ever had the pleasure of being the first black man to attempt to purchase property in an all-white suburban neighborhood?

            1. have you? i want to hear all about it. so does Nancy Pelosi, the Media, the NAACP,etc. from what i have seen they can’t wait to sink their teeth into a story about racism.

          2. “So are you arguing that blacks have three times less property rights than whites in the US?”

            That’s a chicken and egg argument, isn’t it? If you’re asking me whether the problem with the penniless is that they don’t have any money, my answer’s gonna be, “Duh!”.

            Why change the subject?

            You said: “If poverty is simply the result of individual choices then why every year is the poverty rate of blacks 3x that of whites?”

            And the answer is that racism is one way to circumvent the quality and absolute number of people’s available choices. The gangbangers that lived around me in Los Angeles didn’t have the same prospects I had–because of racism among other things. Given the opportunities they had? Their best shot at making enough to get a nice car probably wasn’t about studying hard in school…

            The solution to that problem is giving them more opportunities and more choices–not less. You made it sound like somebody not being willing to give up their freedom to choose was somehow the problem.

            Poverty may not only be the result of individual choices, but giving people more opportunities and more choices to make–that’s not the problem. That’s the solution. Poverty isn’t the result of individual choices; prosperity is the result of individual choices.

            1. “Poverty isn’t the result of individual choices; prosperity is the result of individual choices.”

              Maybe that’s the misfire here?

              Just because prosperity is the result of individual choices, that doesn’t mean poverty is the result of individual choices.

              And restricting people’s individual choices is a sure fire way to make sure a lot of people aren’t prosperous–especially those who are poor in part as a result of society’s racism.

              1. Poverty isn’t the result of individual choices

                That’s what I’M sayyiin!!

                1. Okay, so, again, maybe poverty isn’t only the result of individual choices.

      6. “My problem with this is the regular patterns we find in poverty. If poverty is simply the result of individual choices then why every year is the poverty rate of blacks 3x that of whites?”

        I mean, seriously, once we’ve noticed statistics like that, how can we continue to argue that federal legislation is the answer?

      7. How does this line of reasoning apply to areas where there tend to be poor whites, such as Appalachia?

        1. Nobody cares about them.

          They’re demonized. Hated.

          …almost officially hated.

        2. Institutional hatred.

      8. If poverty is simply the result of individual choices then why every year is the poverty rate of blacks 3x that of whites?

        You speak as if all choices were a random coin-flip: heads, good; tails, bad. Only that would make the weighting of it a head-scratcher.

        There is a wide of array of choices, and some are far, far worse than others. Not finishing high school, no matter how crappy it is, is a very bad choice. Having children before your 20s is a very bad choice for your future success. Participating in juvenile crime doesn’t bode well either.

        Having a culture that attaches no stigma to these behaviors makes them more commonplace. After a few generations, you get people that have no direction, no purpose, and they are told they don’t need to have one, because they are just victims of circumstance, or structural bias.

        1. BINGO!!

        2. +10
          1 finish high school.
          2 no children out of wedlock.
          3 get a job. preferably more than one.
          4 pay for things with cash AMAP.
          5 no drugs/thugs/hanging out.
          6*don’t stop looking for work once get a job*.

    3. Sorry for painting with a broad brush and ignoring relevant/historical reasons for poverty. However, living in the largest welfare State has given me a clear perspective of what it actually means to be poor in Imperial County, California. Overwhelmingly it means that 1. You come from a culture of dependence and 2. You feel entitled to lavish social services that provide enough subsidies for you to live a middle class lifestyle, without having to elicit any effort from yourself.

      Section 8 Housing Subsidies
      Energy Subsidies
      Phone Subsidies
      Education Reimbursement
      Food Subsidies
      Welfare
      WIC
      Medicaid
      etc… ad nauseam.

      We have created a dependent class in California who feel no urgency to change their bad behaviors, because someone else is ALWAYS picking up the tab. As others have pointed out, we have destigmatized and institutionalized poverty in California. In doing so we have created a situation where poverty, and it’s definition, have grown exponentially along with the social programs that purport to end the problem… while it’s painfully obvious that the social programs themselves have been paramount in creating the problem.

      1. Wasnt there an article here a few weeks ago about renaming food stamps to Cal Fresh? Maria Shriver was fretting that some people who qualify for it arent on the program. Is is only in California that the government bemoans the fact that some people are actually not dependent on them for food?

        1. That was actually part of the Cloward-Piven strategy: put as many people on the government teat as were qualified for the various programs. The idea was that when the programs would inevitably be overwhelmed, the people who had become dependent on the programs would revolt. It was essentially a means to overload and crash the system.

          The construction of such a strategy demonstrates that these programs will only survive over the long run in a society that is rooted culturally in self-sufficiency, so as not to put more demand on the programs then can be handled; but ironically, a nation with such a culture would find these programs largely unnecessary.

          1. In other words, Maria Shriver = Useful Idiot.

            1. Yup–and she can’t even get by on her looks anymore to make up for it.

  11. “Marat, we’re poor.
    And the poor stay poor.”

  12. “What’s the difference between them and us? John Stossel explans that the biggest difference is property rights.”

    No, it’s a global IQ thing.

    1. As I understand it, WikiLeaks is finally releasing the secret mechanism used 62 years ago to separate the high IQ Koreans from the low IQ Koreans and house them on separate sides of the 38th parallel.

    2. What is the globe’s IQ?

      1. Doesn’t it seem like the world is getting dumber with every passing year? Well, maybe it is!

        In IQ and the Wealth of Nations, Lynn and Vanhanen[1] report large differences, amounting to more than two standard deviations, in the mean IQ of the populations of different countries around the world, and find that these mean population IQ scores correlate more strongly with economic development as measured by gross domestic product (GDP) per capita and long term economic growth than any other single factor.

        It has been widely observed that the birthrate of countries tends to fall as they become more wealthy. Most countries in Western Europe now have birthrates below the replacement rate; in the absence of immigration, their populations can be expected to fall in the future.

        Putting these two pieces of information together, one might expect that since low IQ countries tend to be less wealthy, they should also be expected to have higher birthrates than countries with high IQ. If population IQ and wealth remain constant, the average IQ of the world should then fall over time, since a larger portion of population growth will occur in low IQ countries.

        http://www.fourmilab.ch/documents/IQ/1950-2050/

        1. From The PBS News Hour

          Mozambique Looks to Battle Illnesses to Boost Kids’ IQs, Economy
          In the final report of his series on health issues in Mozambique, Ray Suarez reports on the country’s high levels of childhood mortality and the connections between kids’ illnesses and intelligence levels.

          http://www.pbs.org/newshour/bb…..11-24.html

          1. In other words, Stossel is full of shit.

            1. wow! PBS to save the day!

        2. If this is recent, then there’s a mathematical correlation between the world’s temperature rising and its IQ falling.

          You’re right, you’ve just gotta put pieces together.

      2. On average? 100.

        1. Actually, the globe’s IQ is zero.

    3. What the fuck is it with these Pioneer Fund neo-eugenicists flooding the comment threads recently?

  13. As the old song goes:

    “Smile while you’re makin’ it, Laugh while you’re takin’ it, Even though you’re fakin’ it, Nobody’s gonna know.”

  14. The basic premise of De Soto’s argument is that people around the world have a great deal of collateral just sitting there, without the possibility of unleashing its potential because of a lack of protection to contracts and lack of titles or deeds.

    I agree that many countries around the world have governments that disdain contracts wholesale, thus driving people into either underground economies of handshakes and knee-capping, or allowing formal commerce only between politically well-connected individuals.

    However, I don’t agree with him that what’s required is to ask governments to come to their senses and allow people to title their property. Much more is required than that: It requires a cultural paradigm shift that seems insurmountable, which is the respect for someone else’s private property. If you can see just how prevalent SOCIALISM (ideological or practical) is in 3rd World countries, you can visualize the size of the cultural problem.

    1. If you can see just how prevalent SOCIALISM (ideological or practical) is in 3rd World countries…

      Seeing how prevalent it is here (the ‘practical’ version – no one is a “socialist” here, even if they advocate government bailouts of entire industries) is depressing enough.

    2. Er, isn’t ma big point of De Soto and most other institutional economists exactly that (that rule of law is crucial and often culturally determined)? It’s just they think culture can be changed by legal institutions (for an example here the near extinction of blatant racism after enactment of CR laws).

      1. Re: MNG,

        You just posited a chicken and egg conundrum there.

        Blatant racism did not change because of civil rights legislation. Civil rights legislation is a culmination of a cultural shift towards abolishing institutional (i.e. government-imposed) racism.

        There are more than enough laws in the books in Mexico to purportedly protect contracts, deeds and titles. There’s also plenty of rent-seekers, extortionists (what you would call “police”, perhaps with a sick sense of humor), union bosses, politicians and other leeches to render those laws just ink on paper.

        Interestingly enough, there’s also socialists a’plenty in Mexico, many more per capita than in the US. Makes me wonder if that’s a cultural thing…

        1. I don’t think that to be true. Think of all the racist folks who taught their children not to display racist words, attitudes, etc., because they did not want them to get in trouble at school.

          Racism in public opnion polls was incredibly high when the CRA passed, especially in the South. Now in the same poll questions it pretty much has ceased to exist.

          This is just basic economics. CR laws put a tax on racism making it more expensive.

          1. Re: MNG,

            I don’t think that to be true. Think of all the racist folks who taught their children not to display racist words, attitudes, etc., because they did not want them to get in trouble at school.

            Which is evidence of . . . what?

            Racism in public o[pin]ion polls was incredibly high when the CRA passed, especially in the South.

            [citation needed]

            Also, who the fuck cares? What’s a “racist” opinion? Says who?

            This is just basic economics. CR laws put a tax on racism making it more expensive.

            If you really believe that, you know jack shit about economics, basic or otherwise. What CR laws did was to repeal already existing segregation laws that TAXED non-racist attitudes from suppliers and vendors (especially profitable ones). You conveniently ignore this part to make your “point.”

    3. “However, I don’t agree with him that what’s required is to ask governments to come to their senses and allow people to title their property. Much more is required than that: It requires a cultural paradigm shift that seems insurmountable, which is the respect for someone else’s private property.”

      The point that De Soto makes is that in many parts of the third world, the people have a good understanding of property. THey understand where their property ends and another begins, especially between neighbors. The problem is that even in these cases where almost everyone involved day to day recognizes these properties, the government itself does not.

      Yes, there are cases where the culture of the people itself needs to change, but that is another problem that exists for some areas. Personally, getting the government to recognize property rights is a good first step from my perspective. You seem to be diverting the issue that De Soto was raising when you criticize him.

      1. Re: tkwelge,

        The point that De Soto makes is that in many parts of the third world, the people have a good understanding of property.

        Understood, and I don’t think he ever contradicts this. However, I believe a great part of the problem is that people do not respect OTHER people’s property in the same way they protect their own. My problem is with his conclusion that if those countries could just have institutional changes, all would be well. I don’t think it is that easy – again, I question whether courts and institutions protect contracts and property because people expect them to do so, or is it really the other way around?

        I think the success of the US and other developed countries in achieving higher wealth creation rests on a culture of respecting property rights, not just looking over yours. Whether this is because people in those cultures learn this from family or institutions or because they have tall fences or because they shoot trespassers and don’t bother to ask questions… I don’t know.

        Personally, getting the government to recognize property rights is a good first step from my perspective.

        Again, I don’t think it is that clear cut – or maybe it is my innate distrust of government. I agree with his assessment, that there’s a great deal of collateral locked in without realizing its potential, but I am not that sure that the reason people are poor is because they cannot get loans – a lot of great companies were started with the pooling of capital from friends, family and fools (the three F’s of start-ups), including successful Latin American and Asian companies.

        1. But why are you going to pool resources and money together to build a salon, for example, only to have a richer, government recognized (and connected) company bulldoze it and take over the property, because you don’t technically “own” it?

          I know that you agree with the sentiment, and I’m sure that De Soto would agree that there is a lot more to be done than simply recognizing property in a cheaper fashion, but it is clearly the lack of acknowledgment of property rights that keeps much of the third world mired in poverty. People have to know that they can build a house or a business without somebody else coming by and seizing it.

          De Soto does not advocate an expansion of government, in the sense of expanding the governments role in property disputes. He advocates legal recognition with less permits and licenses (or none) at a much lower cost. De Soto advocates LOOSENING government control over productivity. He even describes, at great length, the formation of the claim courts and claim clubs of the expansion into the American west. These were neighbors grouping together to recognize eachother’s properties, and, if necessary, using violence to enforce their private property rights. If somebody jumped on your claim, you had the right to shoot them in the face in the middle of downtown during rush hour, and you would be protected from punishment. This system took little government involvement to operate.

        2. “- a lot of great companies were started with the pooling of capital from friends, family and fools (the three F’s of start-ups), including successful Latin American and Asian companies.”

          THink of the expansion that would occur if people weren’t completely dependent on having rich friends and family to bankroll their ideas.

  15. It requires a cultural paradigm shift that seems insurmountable, which is the respect for someone else’s private property.

    This exactly. If you look at the prevalence of rape in Africa its cause is identical.

  16. It requires a cultural paradigm shift that seems insurmountable, which is the respect for someone else’s private property.

    True dat. Laws disconnected from culture are mere pixels on the page.

    Historically, respect for other people’s property seems to arise from, first, the fact that the biggest property owners had the willingness and capability to maim or kill you if you fucked with their shit, and, second, the recognition by these powerful property owners that the best protection for their shit against their peers was a social/cultural respect for property rights at all levels.

    1. Don’t forget, too, the willingness to die for what may be a lost cause.
      Without French intervention, Jefferson and Franklin dangle. Jeff Davis and Bobbie Lee were fortunate in their choice of enemies (as was Ghandi).
      Plenty of German patriots didn’t want to risk going up against the power of the security police. How many of us would speak out if we lived in North Korea or Burma?

    2. Don’t forget, too, the willingness to die for what may be a lost cause.
      Without French intervention, Jefferson and Franklin dangle. Jeff Davis and Bobbie Lee were fortunate in their choice of enemies (as was Ghandi).
      Plenty of German patriots didn’t want to risk going up against the power of the security police. How many of us would speak out if we lived in North Korea or Burma?

      1. You don’t need to say that again.

  17. Poverty is relative. When our caveman ancestors were sitting around the campfire chewing on mastodon legs, they didn’t know they were poor. They didn’t have Madison Avenue telling them about the stuff they didn’t have and didn’t know they needed. They had Mastodon meat and nasty cavewomen poontang and they were happy.

    1. Ahhh – the good old days!

    2. No, they weren’t.

      They got fire–first by finding and keeping it, later by making it. They worked at having Fire. Then better shelter. Comfortable beds. The created herding so they wouldn’t have to spend all their time chasing mastodon.

      They worked to make their lives better.

      They didn’t settle. They knew that, with some hard work, nasty cavewoman poontang could be replaced with a brazilian and some anal bleaching.

      Madison Avenue is a small price to pay.

      1. And then they created nuclear weapons, then the computers took over, and they all longed to go back to the days of mastodons and unkempt bush:)

      2. They worked to make their lives better.

        You’re assuming the *all* did this; constantly. More likely it was occasionally some individual who stumbled on a new way of doing something. Much like we do today with regard to major discoveries only the timelines are sped up a bit.

  18. There’s a difference between being broke and being poor.

    Being broke is a temporary condition, out of which many phenomenally wealthy individuals have worked themselves. I personally know a multi-millionaire who, 30 years ago, was unemployed and had $700 to his name.

    Being poor is a state of mind – an attitude or life philosophy – which is nearly impossible to lift yourself out of.

    1. an attitude or life philosophy

      Bingo!

      If you believe that you have little or no control over your life, then why bother trying to make it better? You can’t win if you concede defeat before you start.

      1. The evil part is the fact that there are politicians that are actively trying to convince poor people that it’s hopeless.

        1. The sad part is the fact that there people that believe it.

      2. External and internal loci of control.

        I remember learning in a psychology class that the middle class and wealthy tend to have an internal locus of control. In other words, they control what happens to them, less than the world around them.

        Poor people tend to have an external locus of control. The world around them controls them, and they are pretty much a victim of circumstance.

        1. The world around them controls them, and they are pretty much a victim of circumstance.

          They let the world around them control them.

          Everything is a choice.

    2. 30 years ago, having 700 bucks in your pocket was hardly “broke.”

      1. “30 years ago, having 700 bucks in your pocket was hardly “broke.””
        If your rent was $300/mo, you were broke.

        1. My dad used to wake us up at 10:00 at night, 1/2 an hour before we went to bed, feed us a dry lump of poison, slice us in two with a breadknife, and dance halleluia on our graves.

          But you tell that to kids today, they don’t believe you…

          1. We used to live in a shoebox in the middle of the road.

            Cardboard ?

            Yes.

            Luxury !

            1. we had to pay to work at the coal mine!

    3. I have an anecdote too! All the wealthy people I know have a few things in common: supportive family, good education, and they all work less hard than your average fry cook making minimum wage.

      You can’t really say that wages have flatlined or decreased because of a huge rash of laziness, except for the top 5%, who all have been working 100 times harder than they did in the past.

      Some of the explanation for poverty is individual choices or “attitude.” Some of it is also surely structural. If we’re going to make policy based on our moral judgments of people’s attitudes, it would be best if we understood what that proportion actually was.

      1. they all work less hard than your average fry cook

        So, you don’t actually know any “wealthy” people. Shocker.

        Get back upstairs and clean up your room!

        1. I make a six figure salary, yet I have time to fart around on this blog. Most fry cooks don’t. Go figure.

          1. I make a six figure salary, yet I, too have time to fart around on this blog. Most fry cooks don’t cause they’re in a line of work less remunerative, but they also aren’t on the phone to Europe at 3:00am and to Asia at 9:00pm, so, you know…working “hard” is not the same as “high paying”.

            Go figure.

          2. We can’t all work for the government, Peter.

          3. I blame my parents for the short part.

            But the fat part comes from sitting in front of a monitor 8 hours a day; wasting hours and hours sitting in airports and on airplane; and burning even more hours at formal business dinners. That and making enough money to really enjoy eating well.

            Life was actually easier in many ways — and I slept better — when I was a younger man doing 10 hours of physical labor every day.

            So I get really, really pissed off when dickheads like Tony imply that knowledge work is easy work.

            1. Who do you blame for the bastard part?

              1. I think by definition that goes in the “parent” bucket.

                1. funy, i keep parents in buket too.

          4. I have been a fry cook, and was when I discovered this blog. Now I work a corporate desk job on the track to that 6 figure salary.
            I Physically worked harder as a fry cook and a waiter. But now factor in how hard I worked to get the education and contacts to land this job. That was a lot harder than flipping burgers and delivering martinis.
            It is not about how hard you work but about what choices you make.
            100% about motivation.

          5. Could you do the fry cook’s job? Probably not as efficiently, but you could get the hang of it after a few hours training.

            Could the fry cook do your job? I doubt it unless you are an overpaid retard.

            That’s the difference: supply and demand. There are many more people that could do the fry cook’s job and less who can do yours.

        2. smarter, not harder…

      2. No matter what policies you make you cannot legislate ambition, motivation to succeed, interest in high earning professions, and ability to perform.

        1. No, but you can at least not reward their opposites…

        2. By hatchet, axe, and saw, them stupid liberals are going to try to make everyone’s willpower equal.

          The only equality is death.

      3. Working hard is only part of the proper attitude. Having the right view of money is important as well: saving enough that you don’t have to rely on borrowing for emergencies, understanding the power of compound interest to serve you or harm you, having enough self-control to deny yourself things you can’t afford.

        It’s also important to understand that more valuable output is more important than working hard. Digging a ditch by hand is hard work, but if you get paid by the mile instead of by the hour, you’re better off renting some heavy machinery. And in general, educated or skilled labor will always be more valuable than unskilled labor.

        Self-direction is also key. People who can sense opportunity and organize businesses can not only create jobs for themselves, but other people. Followers are utterly dependent on entrepreneurs to be able to apply their skills usefully, which weakens their bargaining position substantially.

      4. My son, you are an idiot.

      5. Work less hard? WTF?

        My cousin is a multi-millionaire, and one of the hardest working people I know. He sold his business for $XX million and retired. Got bored the next month and started up a new businesses. He is now 85, and still going into work each day. Oh, his wife still works too.

      6. Some of the explanation for poverty is individual choices or “attitude.” Some of it is also surely structural.

        I suspect I’m going to regret this, but I have to ask: what do you mean by “structural”?

        1. Economic and tax policy that rewards already being wealthy much more than hard work, for example.

          1. Progressive tax policies rewarding the rich? Like making them pay more in every sense? Or are you speaking of sales tax? Or are you merely making this up?

            1. Capital gains tax (or lack thereof)? If you make money by lending someone else the use of your muscles or your mind, you get taxed. If you make money by lending someone else your existing money, you don’t. Great deal, assuming you have enough money that you don’t have to lend out anything else. As an extra bonus you can just lend your money directly to the government, which pays interest on a perpetual debt and thus ensures perpetual regressive transfer payments from “new money” taxpayers who work for a living to “old money” who don’t.

              1. How does taxing capital gains at higher rates benefit the hard working poor in any way?

                1. How does taxing capital gains at higher rates benefit the hard working poor in any way?

                  That money could pay for programs that help them.

                  1. If only the ‘right people’ were in charge, right Tony?

                    1. Better than having the wrong people in charge.

                  2. Or it could be left alone and pay for programs (“businesses”) that let them help themselves.

          2. Ah yes, the existence of rich people is proof that they don’t pay enough taxes.

            That attitude is common among people who don’t know the difference between money, income and wealth.

            1. Actually I have no problem with looking at the macro picture, seeing most of the country’s wealth concentrated in the hands of a few, and saying that in itself is a problem. But you’re not surprised by that. My question is what makes you think that distribution is the result of a fair market-based system that rewards hard work and intelligence?

              1. Given the quality of leadership in Washington, DC, you may have a point.

              2. I know that you don’t have a problem saying that inequality is inherently a problem regardless of any other factor.

              3. It’s called specialization.

                As professions and knowledge become more specialized, those who have the skills get paid more. It would worry me more if the rich weren’t getting richer.

                There are definitely moronic rich people / CEOs / etc. Many people get rewarded for how well they kiss ass and not how well they perform.

                However, I have seen many instances in one generation where rich children (250k+ plus households) have every perk and blessing and end up poor. Mostly due to laziness. They mooched off mommy and daddy and don’t know what hard work is.

          3. I don’t think that progressive taxation does this; it does the opposite, taxing more steeply the more successful you are.

            But how would you structure things to reward hard work? Punishing the wealthy even more may be emotionally satisfying, but it doesn’t do one damn bit of good for poor people.

            1. Generally, the kind of “hard work” being thought of in this context is manual labor. It would seem obvious that the greater the supply of manual laborers, the less pay they will get.

              At the risk of being labled as a nativist, that is one argument being made against illegal immigration from the south, in which Mexico is exporting their surplus laborers to the US.

              How does that not drive-down the value of the kind of “hard work” under discussion here?

              1. Whether those workers come to the US or stay locked in Mexico, they still EXIST. Keeping Mexican labor out of the US may mean higher paychecks for some American workers (as well as higher prices for all), but that doesn’t change the fact that there is a mass of people in Mexico willing to work who are unable to tap into the US demand for labor. Those Americans that would benefit from tighter border patrols would be benefiting from ARTIFICIAL wage rates created by an artificially low supply of laborers. That is what is unnatural. The fact that Mexicans look for better paying jobs up north is natural and to be expected.

                There is no such thing as “surplus” labor. Those laborers come to work in the USA, because the jobs pay more, not because there are no jobs in Mexico. There are technically infinite jobs available, but they don’t all pay well enough to attract people to take the job. Unemployment is not caused by a lack of jobs, it is caused by a lack of will to work for a low enough salary.

            2. Punishing the wealthy even more may be emotionally satisfying

              Have you ever met a progressive liberal who cared about anything beyond satisfying their emotions?

              1. Yeah why can’t they be more rational and less emotional, like me.

          4. work smarter, not harder, knucklehead

      7. *yawn*

        That the best you got, Tony?

      8. So I’ve been thinking a lot about Hayek lately… And the limits of knowledge. From that pondering, I recently pulled this quote from The Use of Knowledge in Society:

        “Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active co?peration.”

        But the following section speaks to Tony:

        “It is a curious fact that this sort of knowledge should today be generally regarded with a kind of contempt and that anyone who by such knowledge gains an advantage over somebody better equipped with theoretical or technical knowledge is thought to have acted almost disreputably. To gain an advantage from better knowledge of facilities of communication or transport is sometimes regarded as almost dishonest, although it is quite as important that society make use of the best opportunities in this respect as in using the latest scientific discoveries. This prejudice has in a considerable measure affected the attitude toward commerce in general compared with that toward production. Even economists who regard themselves as definitely immune to the crude materialist fallacies of the past constantly commit the same mistake where activities directed toward the acquisition of such practical knowledge are concerned?apparently because in their scheme of things all such knowledge is supposed to be “given.” The common idea now seems to be that all such knowledge should as a matter of course be readily at the command of everybody, and the reproach of irrationality leveled against the existing economic order is frequently based on the fact that it is not so available. This view disregards the fact that the method by which such knowledge can be made as widely available as possible is precisely the problem to which we have to find an answer.”

        I know it’s a long quote written in Hayek-ese, but the point is that everyone has some specific knowledge about the economy that no one else has. And a big part of being successful is knowing how to use that specific knowledge to benefit in various exchanges.

        Sometimes we’re talking about arbitrage – for example, I used knowledge of economics that I spent my own time and energy acquiring to profit off of the purchase and subsequent sale of silver. My knowledge resulted in profit…

        But a hell of a lot of the time we’re just talking about basic employment. And that’s where people get confused about wages for the top earners. Hard work should not be – and fortunately in non-wage controlled markets isn’t – defined solely as physical labor. Having knowledge and intellectual skills that no one else has is quite honestly VASTLY more important. With the right intellect, much of the basic labor that goes into production can be accomplished by machines. But the organization and direction of those machines, and of all productive resources is something that can only be done by a handful of people who have spent their time acquiring the knowledge needed to do those jobs.

        Anyway – it’s just funny that earning a living (or even… a “profit”!) by leveraging acquired knowledge isn’t considered “work”.

        1. practically every individual has some advantage over all others because he possesses unique information

          That’s one thing every individual has, but it’s hardly sufficient to compete with the advantages some people have more than others. How is the uniqueness of one’s information advantageous at all compared to say being born from millionaire parents?

          anyone who by such knowledge gains an advantage over somebody better equipped with theoretical or technical knowledge is thought to have acted almost disreputably

          Maybe not in 1945 when this was written, but today this is an exaggeration. Nobody thinks ingenuity should be discouraged, but a lot more goes into the distribution of wealth than ingenuity or a lack thereof.

          1. Yes, some people are born with advantages that other people don’t have. Some people are born in the middle of a tribal community in the middle of the desert while others are born in modern cities, but suggesting that the latter should subsidize the former would encourage people to live inefficient lifestyles in areas lacking sufficient capital while punishing those who live in efficient geographies and practice a productive lifestyle.

            Life is by its very nature unfair. That is simply the state of the natural world. Yes, everyone does have an individual advantage as Hayek described, but it is due to natural hardships that equality is a false idol. Is is unfair that Paris Hilton is rich? Maybe, but her parents voluntarily gave her her money and prestige. Part of the reason that they worked hard to get where they are is the fact that they wanted to give their child a better life. You would deny them that, because you believe that you could make better decisions with their money.

            1. Life is unfair and nothing will change that. That doesn’t mean we have to keep it as unfair as possible for no reason. And I think government can make better decisions with Paris Hilton’s money than Paris Hilton.

              1. I’m assuming that the government can also make better decisions with your money, too, right? With all of our money?

                Wait. But you’ll say, “No way. I’m smarter than her, so I should be able to spend my money the way I want.” Right?

                1. Whoever said the government should take all of our money? That would be dumb. Almost as dumb as it taking none of our money.

                  1. I guess I phrased that incorrectly. I meant “everyone’s money”.

                    But my question still stands: Are you smart enough to spend your money? Or is the government smarter than you when it comes to spending your own money?

              2. Of course you do. Cause you’re a fucking idiot who perfectly demonstrates Hayek’s point when he said:

                “?To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.”

                You are an epic failure.

          2. 1. An individual’s ability to leverage his own skills and knowledge is, I would argue, a far more advantageous tool, across the board, than a million dollar trust fund.

            You really need to look into the history of wealth in the US… One thing you would quickly learn is that almost none of the companies that were on the Fortune 500 lists of a century ago are even still in existence. Many a trustfund baby has squandered his parents money… And many a poor & middle class person built amazingly successful enterprises from nothing.

            The difference in attitude really does matter. If your position on money is that it’s something to be quickly squandered and consumed, you will lose it – no matter how much of it you’ve started with.

            2. Wealth isn’t “distributed”, Tony.

            At least not without the aid of some monolithic government and lots of guns.

            And of course, you’ve missed the point… You are a PERFECT example of what Hayek was talking about, you fool… That’s why I quoted him from that essay in the first place!

            Just upthread on this very article, you claimed that people who earn high incomes don’t do any work.

            That’s just your own ignorance. You fail to comprehend that what high income earners are doing for the most part (and I’m talking about professionals who make between $250k to a few million a year in wages – income earners, not trustfund babies) is using skills and knowledge that few other people possess to command high wages – and the majority of them work far longer hours than just about anyone else you’ll ever meet.

            That might require you to go out and actually interact with professional business people from time to time though. We all know how icky you’d find that.

            1. PS> A trust fund PLUS a savvy attitude and leveraged knowledge = Win.

            2. I hang out with plenty of people who’ve made a lot of money who are idiots who married well or something. There is a nontrivial proportion of the contributing factors to success that is luck alone. I’m not begrudging success, I’m just saying that a moral calculation based on the premise that wealth=virtue is just flawed. And virtue=low taxes is pretty weak too. Who cares how hardworking you are, after all? What makes sense for a sustainable society matters more to me.

              1. Their was an article on reason not to long ago that dealt with the relation between wealth and virtue. The libertarian argument is not that wealth=virtue, but that wealth=meeting the desires of others.

                I don’t believe that you simply want a “sustainable” society. Plenty of terrible societies are technically sustainable. I’m sure that you actually have an idea in your head about a specific kind of society when you argue policy. It’s all in how you define “sustainability” too.

              2. If you married well, then you’re probably not an income earner, Tony.

                I tried to be pretty damn clear about “talking about professionals who make between $250k to a few million a year in wages – income earners, not trustfund babies”, wasn’t I?

                Regardless, what tkwelge said.

                It’s not that wealth = virtue, it’s that in general wealth is generated by providing something other people want. In a big way, the genius of free markets is that it takes what in other circumstances would be really negative traits like “greed” and turns them towards productive uses.

                We don’t – and we shouldn’t – assume that greed will just go away somehow, but that we can either live in a society where the greedy become politicians, grabbing everything they can by force, or where they can become traders and find ways to supply market needs if they want to satisfy their own.

                I often wonder why anyone talks to you at all, Tony, because after a few years of hanging around Hit & Run, you still haven’t managed to be able to understand the libertarian viewpoint even in the slightest.

        2. Besides, why should I listen to the economic advice of an illegal immigrant?

          1. Don’t care. Knowledge is knowledge and borders are imaginary lines in the sand.

      9. All the wealthy people I know have a few things in common: supportive family, good education, and they all work less hard than your average fry cook making minimum wage.

        Perhaps today. It would be interesting to know how far back you’d have to go to the ancestor that was initially able to get out of poverty. Some might be a single generation, some centuries.

    4. Another big difference between poor people and wealthy people is that poor people see money as something to be spent, while wealthy people see it as something to be saved or invested.

      Nobody gets rich by spending their entire paycheck.

      1. But you sure can get drunk and wear nice shoes.

      2. Wealthy people don’t spend money? Someone forgot to tell the yacht club…

        1. Spending their entire paycheck =/= spending money

        2. Poor people tend to be broke on payday, regardless of the size of their paycheck.

          Wealthy people tend to have something leftover on payday, again regardless of the size of their paycheck.

          It’s a state of mind.

          1. It couldn’t have anything to do with the amount you rake in? Like, having enough leftover after your basic needs are taken care of to save?

            1. Say you’ve got two people with the exact same income. One lives paycheck to paycheck, while the other has money in the bank and investments. How can that be? One guy is poor, the other is not, yet they have the same income.
              Answer? Behavior. One of them spends all their money, the other does not. One has all the premium channels on their cable, the other does not. One eats at restaurants while the other cooks at home. One orders lunch while the other brown-bags it. One gets plastered every night while the other reads books. One shops at the mall and the other at thrift shops. Same income, different behavior, different results.

              1. I get it, but no matter how prudent you are there is still a minimum amount of money required just to live.

                1. The amount of money required to sustain your existence is, in many parts of America, exceedingly low. You ain’t living a grand life, but you can get by a whole lot cheaper than most people think you can.

                2. I get it, but no matter how prudent you are there is still a minimum amount of money required just to live.

                  Thank you Captain Obvious. I never knew that. I am forever in your debt.

                3. TRue, but the amount of money required, “just to live” is pretty small as evidenced by the incredibly low relative paychecks of people living in the past. The paychecks of people living in the 1700’s amounted to just a few hundred dollars per year, if you were lucky, and plenty of those people lived, had kids, and grew to a somewhat advanced age. I would argue that even a fry cook makes several times what is necessary “just to live.”

                  1. Well presumably the minimum standard of what constitutes a mere living has gone up with time.

                    1. Isn’t that convenient for those who wish to argue for redistribution?

  19. Does this mean Stossel is a repeat this week?

  20. They don’t have addresses?

  21. Why Do the Poor Stay Poor?

    Racizm?

  22. The poor stay poor because, for the most part, they are less intelligent and can’t compete in a free market with smarter, more disciplined people. It’s no secret that people vary in inate intelligence, and simple math will tell you that 50% are going to be below the median intelligence. In an economy that increasingly requires forethought, discipline and abstract thinking to succeed, many people simply won’t. Property rights are important, but they are not sufficient.

  23. All the wealthy people I know have a few things in common: supportive family, good education,

    By and large, sure.

    and they all work less hard than your average fry cook making minimum wage.

    With one (1) exception, the wealthy people I know (and I’m thinking of people who I think have a net worth north of $5MM) worked damn hard to get to that point, and mostly keep working at a pretty good clip even after.

    The one exception is a guy who inherited a very large stack of oil money (at a guess, mid eight figures). What’s interesting to observe is that even inheritances (up to a pretty stratospheric level) tend to dissipate unless the heir applies himself to maintaining and growing it.

    Another guy I know who was born into a wealthy oil and gas family probably works 60 hours a week, much of it on the road.

    1. What’s interesting to observe is that even inheritances (up to a pretty stratospheric level) tend to dissipate unless the heir applies himself to maintaining and growing it.

      Or go into politics. (e.g., Kennedys, Rockerfellers)

    2. During my work at a major bank, I worked with the CFO and Treasurer on a daily basis, as well as the CFO/co-prez of another major bank they purchased. They all easily worked 80 hours a week, and 100-120 during the financial crisis. You could tell they loved their jobs but their biggest regret was that they didn’t spend enough time with their family. Two of the three were young (early 40s or so) and all had eight- or nine-figure net worths. They got there because they worked hard, and two of them lost their jobs because they weren’t good enough.

      The same goes for the people I know who’ve grown their own successful businesses. And then there’s empirical evidence, where for around the first time in US history top earners work significantly more than low earners.

    3. But that’s not “real” work.

      Real work is what our statist betters say it is.

  24. HEY! It takes alot of work to be a rich top-hat-and-monocle-wearing libertarian! You know how many poor people I had to steal my wealth from this week? Alot!

  25. The reason people are poor is largely because the have low IQ. This also correlates with lack of property rights.
    Countries with lower average IQ have unstable governments and fewer property rights.

    http://en.wikipedia.org/wiki/IQ_and_the_Wealth_of_Nations

    http://human-stupidity.com/stu…..-race-book

  26. “and they all work less hard than your average fry cook making minimum wage.”
    Tony’s still got a point, but per normal, it’s not the one he intended.
    It’s largely true that more prosperous people do not work as hard (as in expenditure of calories) as do those making less; the market pays more for ‘thinking’ than for ‘doing’.
    It’s easy to work very hard for nothing; dig holes and fill them back up.
    So, yes, if you want to be prosperous, you want to think your way out of low paying work, and that takes dedication. Which can be very hard.

    1. To you and others who say one’s poverty or wealth is a function of one’s intelligence: how does that factor into a moral distributive equation? Do people choose how smart they are? I don’t think so. In fact most, if not all, of the factors you guys are using as excuses for keeping the wealth distribution where it is (or making it worse on the poor) could be deterministic.

      1. Thus making economic outcomes a result of a darwinian process. Is that the best we can do?

        1. It’s much better than making wealth distributions ANTI-darwinian. One sure way to run everything into the ground is to reward failure and penalize success. Pretty soon everything will be failure.

          I think that was one of the key points of Atlas Shrugged.

          1. So if I wrote a long, awful, stupid novel in which socialism proved a panacea, would that be true too?

      2. In fact most, if not all, of the factors you guys are using as excuses for keeping the wealth distribution where it is (or making it worse on the poor) could be deterministic.

        You speak of the “wealth distribution” as though it were something that could be set simply by turning a few dials. I don’t offer an “excuse” for keeping things as they are; I acknowledge that we don’t have some all-powerful god-king that set the distribution of wealth with an airy wave of his hand.

        1. So wealth has been flowing upwards for decades because of magic?

          1. Tony|12.9.10 @ 3:47PM|#
            “So wealth has been flowing upwards for decades because of magic?”
            So Tony’s been whacking himself with brain-dead non-sequiturs for decades?

          2. Re: Tony,

            So wealth has been flowing upwards for decades because of magic?

            World – meet yet another nitwit that confuses wealth with money.

            “Wealth” does not flow upwards or downwards, Tony. Wealth is simply created and exchanged. What flows is Capital and no, they are NOT tha same, nor does capital flow “upwards” or “downwards.”

            1. You know what I mean dipshit.

              1. I don’t think you know what you mean.

      3. Re: Tony,

        To you and others who say one’s poverty or wealth is a function of one’s intelligence: how does that factor into a moral distributive equation?[sic]

        Are you asking how to better justify theft? I can’t help you there.

        In fact most, if not all, of the factors you guys are using as excuses for keeping the wealth distribution where it is (or making it worse on the poor) could be deterministic.

        Wealth creation is not deterministic, any more than any other result of human choices. Your beef is with the principle that people’s property belongs to them and not you, that’s all – no excuses are given or given.

      4. Tony|12.9.10 @ 3:12PM|#
        “To you and others who say one’s poverty or wealth is a function of one’s intelligence:…”
        I posted nothing of the sort, asshole. Learn to read; there’s a community college near you.

      5. “To you and others who say one’s poverty or wealth is a function of one’s intelligence: how does that factor into a moral distributive equation?” It doesn’t. Two separate items. I will note, however, that most of the reasonably “well-off” people I know also make fairly significant charitable contributions of their time, talent and money, probably out of some sense of moral compassion.

        “…excuses for keeping the wealth distribution where it is…” “Excuses”? None are needed. For “keeping it where it is”?? And I assume you know what it “should be”?? All hail Tony, Master of the Universe!!

        It’s a fucking free country. It’s about the closest thing to a “free economy” on earth. If you don’t like it that smart people have an advantage, then let’s just give everyone a blue ribbon and call it a day.

        1. Thank you for the platitudes, but once you realize that a functioning civilization requires a tax policy, and any tax policy by definition redistributes wealth in some way, it would seem to be prudent to figure out a just system, would it not?

          You’re making a moral argument for why people should be able to hang on to most or all of what they happen to acquire. I’m saying there are more complete moral foundations for such policy.

          1. You start off with this:
            Thank you for the platitudes

            And end with this:
            it would seem to be prudent to figure out a just system, would it not?

            A “just” system according to whom? By what metric? For some on the left, the system won’t be “just” until everyone’s been stripped of their property rights, because “all property is theft!” For others, they believe income shouldn’t exceed or fall below some arbitrary band.

            So what exactly are you referring to here? What would be your ideal tax rate? And who, specifically (no platitudes now!), should recieve that largesse?

            1. Philosophers have wrangled with what is just for millenia. You would base your preferred tax policy on your notion of justice, same as me. I think mine is better.

              1. You would base your preferred tax policy on your notion of justice, same as me. I think mine is better.

                Uh, thanks, but you still haven’t laid out exactly what your definition of this is, and to whom it specifically applies. All I see in that response is a lot of mental masturbation on your part.

                You couldn’t even be bothered to list somthing as basic as the Smurf village; are you really that allergic to laying out your idea of what a “just” tax policy is, balancing it against real-world examples, and showing your work on how the math wouldn’t ultimately bring it crashing down? Or is it just easier to spout a bunch of platitudes?

                1. No I’m not gonna show math because I’m lazy. Mental masturbation is, to me, daydreaming about ideal worlds. I think we all have a pretty good idea about the public policy options out there, I just favor a more progressive system, meaning basically that more wealth is spread more widely. And I don’t think the moral justifications for your beliefs are superior to mine.

                  1. No I’m not gonna show math because I’m lazy.

                    So why the fuck should anyone take what you have to say seriously, especially when you then go on to contradict yourself in the very same passage:

                    Mental masturbation is, to me, daydreaming about ideal worlds.

                    And yet, you can’t be bothered to actually spell out what specific, real-world programs would successfully bring about a “just” economic system. You chastised Tex for spouting platitudes and have spent the entirety of this little exchange doing the exact same thing.

                    And I don’t think the moral justifications for your beliefs are superior to mine

                    Considering you haven’t actually explained what those moral justifications are, and what specifically makes them so, you’re not really in any position to be claiming that yours are superior to mine.

                    Christ, you’ve got to be one of the most passive-aggressive personalities on the planet.

                    1. Maybe. You’re right I haven’t been very specific other than to say “more progressive.” That’s because I want you to understand that we don’t really disagree about anything fundamental, we just have different policy preferences. I want universal healthcare in addition to the protections we already have. I want a bigger check on corporations. I want a sustainable energy policy. Is that so wrong?

          2. Re: Tony,

            Thank you for the platitudes, but once you realize that a functioning civilization requires a tax policy, and any tax policy by definition redistributes wealth in some way, it would seem to be prudent to figure out a just system, would it not?

            And if you click your heels together, and that instantaneously takes you home, shouldn’t it be fair if that happened after saying “there’s no place like home”?

            Yet I am the one with the “platitudes”:

            “Civilization requires taxation”
            “Taxation must be just”

            You’re making a moral argument for why people should be able to hang on to most or all of what they happen to acquire.

            Yes, I am making that argument: It’s called “NOT STEALING.”

            I’m saying there are more complete moral foundations for such policy.

            “More complete” as in “justifying theft”?

            1. When did theft come into this? How do we always end up talking about theft?

              1. Because you’re a dipshit who still can’t figure out that taking money from one person so you can use it for whatever you want – BY FORCE – is called “theft”.

                It doesn’t matter if you do the theft on behalf of yourself or you wear a fancy hat or have a badge. It’s still THEFT.

                That’s a very, very simple concept that you still don’t seem to grasp.

                1. But it’s just wrong. Every society taxes. Is every citizen of every society a victim of theft? Even if I said yeah it’s theft, I’d just say that it’s a form of theft that’s good, and that gets us nowhere. Again, stupid semantic bullshit that you’re wrong about anyway.

                  1. “Every society does it” is your argument?

                    Once upon a time, every society employed the use of slave labor, Tony. Was it somehow not slavery, because it was legal? Cause everybody else did it?

                    God damn you’re an idiot.

                  2. “Every society does it” is your argument?

                    Once upon a time, every society employed the use of slave labor, Tony. Was it somehow not slavery, because it was legal? Cause everybody else did it?

                    God damn you’re an idiot.

          3. You can’t justify theft, so a “just system” is right out before you even start.

            This is why (regardless of how flat or progressive your tax policy is) the real goal should be to find the minimum size for government: reduce spending and you can reduce taxes.

            This is the way to increase justice.

            1. Less government = more justice. That certainly is an interesting theory. What was Plato so worked up about?

              1. Well, less widespread theft of production = more justice.

                PLato lived off the output of his slaves. People who had no choice but to make him wealthy all day. Not just people who couldn’t find a better job.

      6. So, I should give up my earnings to another guy because he does not have the same mental abilities as I?

        1. No, no of course not. You should do it to be fair.

          1. If I claim to be stupid by repeatedly yelling about the externalities holding me down, will my friends and I be able to get a slice of Matrix’s totally fair and redistributive justice?

        2. You already are giving up wealth to the stupid.

      7. The word “distribution” in the context of wealth has two completely different definitions. If you use it without first specifying which definition you mean, one wonders whether it’s a coincidence that your ideology is supported by conflating the two.

      8. What in the flying fuck is a “moral distributive equation”?

        Whiny, obsessive-compulsive ‘tards who practice wealth envy and then attempt to use it as a moral justification for tax policy. It does nothing constructive in the long run.

        But keep telling yourself otherwise, Tony. If it makes you feel better, that’s all that counts, right?

      9. No, people do not choose how smart they are. However, they do chose who they give their money to, well, unless you get your way.

  27. When I was an undergrad, I did volunteer work because it was better than taking general ed courses. In four years I saw exactly two exception to this rule: people wind up in their dire straits because of poor decisions.

    And it’s not decisions out of ignorance. They were all equipped with the information required to avoid the bad decisions. They had friends who were struggling with kids out of wedlock, but they still didn’t use protection. They had first hand experience what hard drugs do to a person, but they still started sticking in the needle. They see what lack of education does to a person, but they still didn’t bother to take advantage of the free schooling available a couple blocks away.

    Why? Dunno. Fear? Lack of caring? From my POV if I grew up in some of the conditions they did I’d be doing whatever I could to get out of there. People are wired differently, though.

    But even with our help, most of these folks didn’t move very far.

    And if you try to state this in most places, you get called racist (at best), even though I could be easily talking about poor white folks in some Pittsburgh mining town.

    The two exceptions? They got themselves straightened out and on their way. With a little help from me, yes, so hopefully there some good karma there for me.

  28. To you and others who say one’s poverty or wealth is a function of one’s intelligence: how does that factor into a moral distributive equation?

    My moral distributive equation is that it is immoral to take property from somebody by force (or threat of force) or fraud, and moral to keep property that you have acquired in voluntary transations.

    What’s yours?

    1. Same as you. So what do we do about tax policy?

      1. Make it substantially more voluntary? Just a guess, mind you.

      2. Sales tax? What tax are you referring to?

        1. Any tax that results in a distribution of wealth. So, any tax.

          1. redistribution*

            1. What do we do?

              Nothing, on tax policy.

              Spending, now, there’s the rub. Cut that shit down, and there’s no NEED to raise taxes.

          2. So, you really are not talking about tax policy then, as I suspected. Taxing is about the government taking in money.

            You are of course talking about handing-out free money, which is quite apart from a “tax” policy.

            So, what is your scheme to steal from me?

            1. I’m going to build a lot of expensive stealth planes, with Boeing getting a lot of your money. Is that giving away free money or is it a prudent national investment?

              1. Good point, Tony! Cause so many people over here at H&R are always calling for increases in military-industrial complex spending.

                Or…. Oh wait… No… No we’re not.

                That said – At least Boeing is providing a tangible good in return, and at least theoretically defense spending benefits every taxpayer equally.

                1. At least theoretically so would universal healthcare and so do a lot of programs. I’m not the moron saying government redistribution of wealth is always evil.

                  1. No, you’re the moron claiming “wealth redistribution” is always moral.

                    As you said, we know what you mean, dipshit.

  29. I love it when Tony makes his contributions to the great tower of useless knowledge!

    Re: Tony,

    All the wealthy people I know have a few things in common: supportive family, good education, and they all work less hard than your average fry cook making minimum wage.

    Wow, and question begging to boot! What’s less hard? Why is working harder any better, for that matter? Is a mill operator whose machine produces 100 tons of steel an hour work harder than a fry cook that makes 50 hamburguers an hour, or less hard?

    You can’t really say that wages have flatlined or decreased because of a huge rash of laziness, except for the top 5%, who all have been working 100 times harder than they did in the past.

    This is indecipherable.

    Some of the explanation for poverty is individual choices or “attitude.” Some of it is also surely structural. If we’re going to make policy based on our moral judgments of people’s attitudes, it would be best if we understood what that proportion actually was.

    Why would anybody make policy based on judging attitudes? Only fools would do that. Policy is made by people based on ACTIONS, not attitudes.

    1. I love it when Tony makes his contributions to the great tower of useless knowledge!

      Not all of us can drone endlessly on about semantic bullshit.

      1. You’ve certainly performed splendidly in being brief, when practicing your own semantic bullshit.

  30. Seriously, Tony, what’s your “moral distributive equation”? It can’t be on based on voluntariness, because you decry the results of that system as being immoral.

    So what is it?

    What do we do about the tax system? First, we cut spending to the absolute minimum, so taxes can be low.

    You have a lot more options to design a tax system that only needs to extract 5% of the productivity of a nation, than when you need to extract many multiples of that.

    1. How do you have more options with an arbitrary and radically regressive cap on rates?

      Voluntariness is moot, the idea of involuntary taxation being fundamental to societies since they’ve existed, and not for no reason.

      My equation involves more progressivity than yours, that’s all. No more or less arbitrary than anything you would come up with, just better.

      1. Tony|12.9.10 @ 7:44PM|#
        “How do you have more options with an arbitrary and radically regressive cap on rates?”
        Hard telling. Want to try the question in English?

  31. And Now The Man Who Batters Conventional Women…John Stossel!

  32. And Now The Man Who Batters Conventional Women…John Stossel!

  33. Can citizens bash Bieber?

  34. A good year for liberty compared to what?

  35. I usually agree with conservatives until they win an election then they turn into theocrats.

  36. Where’s Tucker’s bow-tie?

  37. What do you mean? The mission is to stay there forever. Duh

  38. I drink alone but I don’t liveblog alone. I’m dependant on alcohol plus the witty banter of L n’ fist to make it through a liveblog. the Meth out

    1. Not L or fist, but sorry I didn’t get here in time to help out. Catch you at the FRIDAY FUNNIES!!!! HAHAHAHAHAHAHAHA!!!

    2. Goddammit, I refuse to hook up to the power grid until they get the kinks worked out.

      Anyway, my electricity is back on now and this looks like a new episode. Next time keep it up Methy a little longer. No matter what happens, I will find you!

      1. Next Time I will Stay Alive…you will find me

  39. Fiscal – bro – you kept it going solo for….minutes.

    *props*

    PS Tony – thanks for bringing the extra-stupid today and making my scan of this blog take twice as long and be half as informative. You do bring the stoopid.

    PPS Ima start drinking myself – peace

    1. Jump in next time.

  40. I just knew Stossel was a tea bagger.

  41. I just knew Stossel hated the tea baggers.

  42. Crap, the Stossel Libertarian Year in Review leads me to think maybe this was John’s last new show of the year. The slacker.

  43. if taxes are theft then leaving a restaurant without paying after eating isn’t

    1. Completely meaningless

  44. Article:
    Is de Soto saying that if the developing world had the rule of law they could become as rich as we are?
    “Oh, yes. Of course. But let me tell you, bringing in the rule of law is no easy thing.”

    That’s a circular argument in that most of the world doesn’t have the mental abilities needed to implement and live by “the rule of law”, and that’s why they’re poor.

    http://www.iratde.org/issues/1….._et_al.pdf
    “A large amount of studies published in the last two decades has shown that cognitive ability
    levels of societies are relevant for the development of positively valued aspects of peoples
    and countries.”

    Why the pretense that this is irrelevant or incorrect?

  45. Wow, that was some epic pwnage of Tony. He’s an incredibly poor substitute for joe, who at least managed a good pretense that he understood the concepts he was constantly arguing against.

    Tony doesn’t even comprehend the “taxation as theft by threat of violence” concept. I’d give him a “C-” at best for effort and an “F” for actual comprehension.

    In fact, that’s a pretty good indication of why he thinks that the fruits of the labor and skullsweat of the rich should be taken from them and given to (“dumber”/”poorer”) others – because he knows that he’ll always be in the receiving category.

    1. I understand that you think taxation is theft by threat of violence. I don’t subscribe to that nonsense, but I understand it. It’s not a revealed truth you know, it’s fringe bullshit that only you guys believe.

      1. No, taxation with the object of catering to a subjective sense of social justice in terms of redistribution of wealth – that, by it’s very definition, is ‘theft’.

      2. Don’t even give them that Tony, it’s blatantly false. Anybody can move to any damn country they want, what they can’t do is stay in a place and take up services without paying. These idiots would find it perfectly acceptable if a restaurant owner forcibly stopped ad diner-dasher

  46. This is all part of an understanding of what has worked in this country and others. There is a website that advocates things like this… http://www.freemarketsfreepeople.net

  47. Just curious, what would be the effect of pegging the euro to the petrodollar to stilize the Euro. But then removing this several years in the future after the recession has ended.

  48. What’s amazing is how Stossel tries to sum this up as a need for individual rights, when the lack of the “rule of law” and property rights is a form of insufficient government. He is crying out for government to do the things only it, and not private business, can do to help people prosper.

  49. Poor stay poor because they lack money

  50. I am pretty sure your opening argument involving countries like Japan, South Korea, and Hong kong is flawed… you just named three of the most developed areas in all of Asia (more developed then some European countries). Perhaps citing India or Indonesia in general would have been a better idea. I stopped after reading this, because I believe if you cant make your opening argument work, then your article is probably a waste of time

  51. How about mbt kisumu sandals this one: there are X driving deaths a year- what % of driving deaths (or serious injuries) involve alcohol, or other intoxicating substances? kisumu 2 People are pretty darn good drivers when they are not impaired.

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