Many proponents of socialism and State control will claim that the growing gap between the rich and the poor needs to be corrected. They say that because the gap is growing, that justifies the need for the state to come in and redistribute the wealth. Even if free markets and liberty caused differences in income, I want to expose how, in a free market society, the gap between the rich and the poor matters less and less.
I am 25 years old. I currently pay the bills serving at a restaurant chain for near minimum wage. Even though I am very close to the bottom of the barrel in terms of socio-economic status, I am on top of the world when measured against the entire history of man. Pause for a moment and think of the technological marvels that competition and trade allow the everyday person to have:
- You have a thermostat that can control the temperature separate from the forces of nature.
- Even the poor have a refrigerator; a miracle of engineering in your kitchen that cools food and prevents the growth of harmful bacteria.
- Most people have access to a car; a horseless carriage that can transport people and goods across the continent in less than a week. Most people before the 19th century would be lucky enough to have a single horse.
- Maybe you have a musical Instrument or two? Before the 20th century the poor had very little access to quality, musical instruments. If I saved just 10% of my income a month, I could get a quality electric piano in about 60 days.
- The Internet. Not enough can be said about this marvel. The internet is, in my opinion, the single greatest nail in the coffin of traditional information flow. Using a computer and an ISP, I can search the world for free information that was previously quite costly. I can watch thousands of hours of video on almost any subject via youtube. I can have long lasting, long distance friendships using skype, FaceTime, etc. Whether I am a billionaire in a mansion, or a server in Atlanta, Georgia, we can both search the same content on Google.
The point that I am trying to illustrate is that, as the markets free up, people gain a larger incentive to pursue technological innovations. These innovations allow the poor within a given area access to the same content that rich people have. By contrast, state solutions involve transfers from one resource holder to another, which does not increase the total amount of wealth within the system.
Indeed, in many ways I am richer now, as a 21st century American living below the poverty line than I would have been as a wealthy socialite at the turn of the 20th century. Andrew Carnegie with all his wealth didn’t have the smartphone; a device which allows even the poor to access the depths of human knowledge and entertainment found on the internet. Franklin Roosevelt, with the entire U.S. intelligence community at his disposal, could not simply order goods from his living room on Amazon.com. This is a point that entrepreneurs Peter Diamandis and Steven Kotler make in their book, Abundance: The Future Is Better Than You Think. In it they explain how
“today, even the poorest Americans have access to a telephone, television, and a flush toilet—three luxuries that even the wealthiest couldn’t imagine at the turn of the last century. In fact, as will soon be clear, using almost any metric currently available, quality of life has improved more in the past century than ever before.”
In a state-controlled market, the politically well-connected get richer through taxation. This wealth comes at the expense of the poor who are taxed at the gas pump, paycheck, and around every other corner. As markets and people become free, the easier it becomes for the poor to have access to the same technologies of the rich. If IP laws were abandoned we would see an immediate boom in artistic and technological innovation as millions of previously threatened innovators would become free to transform their own property into a unique take on other peoples ideas.
In a free market, unemployment cannot become a serious problem, because there would be no artificial barriers to entry. Put another way, the freer humans are to pursue their interests, the less being classified as “poor” matters at all.