Rich vs Poor - a False Dilemma

Conventional thinking about social, political and economic matters tends to narrow the options available to a set of policies advocated by two, possibly three political parties of scarcely dissimilar ideologies. Any genuinely radical approach concerning these topics is abandoned given that the fundamentals are deemed to be beyond question. Thus, alternatives to these entrenched matters – such as whether the state should have any positive role at all in anything – are seldom given the light of day, let alone the opportunity of being debated.

This phenomenon, presenting a distinct challenge to anyone with radical views, is known as the “false dilemma”: the illusion that the only choice is between a very constricted range of possible options, preserving the status quo in favour of the state and its cronies while at the same time bestowing the illusion of control on a gullible electorate.

One effect of this ossification is to obliterate a very basic, but critical truth: that all humans are able to flourish while co-existing peacefully. For instance, those pundits and politicians claiming to be either “conservative” (or otherwise leaning to “the right”) may believe that business should be “helped” in order to boost “economic growth”; at the same time, they may say that cuts should be made to welfare and to public services in order reduce the government “deficit” while slimming down the cash cow that the benefits system has become to the allegedly lazy and unproductive. Those identifying with “the left”, on the other hand, may believe that a strong welfare state, heavy taxes on the wealthy and increased government spending are needed to end the scourge of poverty.

Each of these points of view contains a kernel of truth. It is true, for instance, that business needs to flourish if there is to be any economic progress at all, while the need of the state to reduce its profligate borrowing, taxing and wasting with all due haste is beyond question. On the other hand, it does not seem just that a society should apparently produce vast quantities of wealth for a few while leaving others to languish in stagnating poverty. Moreover, even though their own economic prescriptions are dire, the left is correct to point out that wealth creation is not a “top-down” (or, to use the more familiar phrase, “trickle down”) process; prosperity will not result from stocking the tables of the rich with plenty so that everyone else can catch the falling crumbs. But the constraint of these narrow views tends to channel all political choices into being between two broadly defined groups of people in society: those who are “rich” and those who are “poor”, with what is gained by one group necessarily being lost by the other.

This impression is exacerbated by the fact that the political parties whose rhetoric represents these different points of view never end up achieving their aims (assuming they ever intend to do so in the first place, of course). State subsidy, “bailouts” and the cartelisation of businesses will never create any genuine economic prosperity ahead of perpetuating malinvestment and waste (although they do manage to save the politically connected from the consequences of their actions while leaving everyone else to foot the bill). On the other side, increased government spending and a burgeoning welfare state only siphon funds from the productive sector to be equally consumed and wasted by the state. Moreover, by providing a cash cushion for poverty, unemployment and sickness, the welfare state ends up becoming a permanent, industrial scale enterprise. If neither side is able to achieve its stated aims, then they each provide plenty of ammunition for the opposition, leading to a negative feedback loop that ends up exacerbating this apparent basic gulf between “rich” and “poor”.

If we are ever to establish genuine, sustainable prosperity, we must seek for a repudiation of this false choice and a restoration of the understanding that everyone can prosper side by side.

At the heart of the problem is the equally false belief that the state itself has a necessary part to play, and, as such, must do something for somebody in order to create a better world. Each faction tends to deploy a curious mixture of economic and ethical arguments to select whom government should help on the one hand and to whom it should deny that help on the other.

Take, for example, the supporters of big business. They will say that it is right to use taxpayers’ money to, say, bail out the banks in order to avoid a complete financial meltdown. Conveniently their “chums” in the city will reap fat rewards from doing so. But they then deny this very same method – the diversion of taxpayers’ money – to welfare programmes aimed at helping the poor on the grounds that people should work for what they earn without leeching from the productive. In other words, so-called “benefits scroungers” should get off their backsides and find a job. Thus, they emphasise economic arguments in justifying corporate welfare while using ethical ones to deny personal welfare.

Their “lefty” opponents, on the other hand, will argue that throwing cash at the rich who made mistakes is unjust, and that they should be left to foot the bill themselves. Yet they then state that welfare spending is needed to eliminate poverty and fuel growth from the “bottom up”. So they too deny the flowing of taxpayer’s cash to certain groups based on ethical grounds, but then promote it’s payment to others based on economic grounds. Each side, will of course, pepper their ethical arguments with economic ones and vice versa – the “right”, for example, will, as we have said, argue that welfare spending needs to be cut in order to reduce government outlays, while the left will argue that alleviating poverty is a just and noble cause. But the main thrust of each side’s opinion cannot be denied.

If we unscramble all of this by looking at the ethical and economic arguments separately, we will find that there are no grounds whatsoever for any state involvement. If it is unjust to violently confiscate tax revenue from innocent citizens to fund the lifestyle of bamboozling bankers then it is equally unjust to do the same to fund the lifestyles of those who are poorer. The difference is one of degree rather than of kind. Nobody, whether he is a prince or a pauper, a saint or a sadist, or a capitalist or a labourer has the right to wrestle away the property of other people for his own benefit. From the economic side, bailing out bad business will simply perpetuate the moral hazards and malinvestments that need to be eliminated from the economy; at the same time, continuous funding of “the poor” through welfare spending will only exacerbate poverty as it reduces the incentive for people to lift themselves out of that position, while, at the same time, diminishing the role of benevolence and charity for the genuinely needy. And, in any case, the state would do a lot more for the poor if it stopped interfering in wealth creation in the first place; prosperity, not charity, is what truly eliminates poverty.

The real choice, therefore, is not between “rich” and “poor”, “left” or “right”, “employer” and “employee”, “Conservative” or “Labour”, “Republican” or “Democrat”, or whichever other faux division that the establishment throws at us. The real choice we have to face is, on the one hand, continuing with a political and economic system that will only result in a parasitic existence for whomever happens to secure political favour in the moment; or, on the other hand, we could choose a system in which nobody has the violently enforceable right to live at the expense of everyone else, and where everyone is free to trade and produce whatever he wants with his own private property – a system that will raise the standard of living for everyone, not just a select few.

Only by considering radical options, and by overcoming the belief that certain assumptions of our society are beyond debate, can we hope to build a world that is both truly just and economically prosperous.