The Rich Get Richer, the Poor Get...Richer

The majority of socialists I have met have no understanding of economics. This post by Mankiw illustrates the fact that relative income inequality owing to a freer-market economy does not create poverty, but in fact eliminates it. The poor in the US are significantly wealthier than the poor in Europe - at least on paper.

I would argue that the social welfare of better quality of life, better designed cities, richer culture, and cleaner environment of Europe is not reflected in the financial markets and GDP calculations, but the point remains that income inequality is not itself a bad thing if it owes to an unfettered, competitive market system.


Timothy said...

To use a nautical expression,"A rising tide lifts all boats."

Mark said...

Don't forget though that the one problem with being poor in the US is that, although they may be relatively better off than the poor in Europe, currently there is actually a higher statistical chance for the poor to move to a higher income quintile in Europe than in America. It is a little odd that America has become less socially mobile than Europe. Of course, the truly motivated can rise to great heights in America, but it still remains rather expensive to earn that large four-year American social club card known as the university diploma. And these are the best universities in the world!!! Who is exactly in charge of human affairs then?

Pace said...

You have a good point that the social welfare and education systems of Europe do allow greater social mobility within that society, however the more socialistic the country, the lower the heights one can actually acheive and the lower real social mobility they have.

Statistically, you are correct that people tend to stay where they started out as far as relative income levels in America, but I see this more as an issue that people remain within the culture and work ethic in which they were raised.

I do not have numbers on it, but from my own observation, children of lower income, hard working immigrant parents tend to rise quickly because they were raised with the pressure and ethic of working hard and achieving despite coming from a low income background. Many poorer, well established people who grow up in a negative culture of laziness, handouts, and victimalisation tend to give up eventually or turn to crime to get rich quick and in turn do not progress.

Personally, if I were not trying to get rich right now, I would prefer to live a comfortable and average life in Europe. Right now I am hoping for the best of both worlds: work hard and keep my money, then at least have a spot in Europe and spend a good part of the year there.

Timothy said...

so to sum up Joe's comment- he's going to get rich or die tryin'