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Governments should value economic equality before prosperity

Freedom is a better value than economic equality Governments enact policies to bring values to fruition. We know the policies that lead to prosperity. Prosperity comes from accumulation of wealth, a willingness to take risk to achieve rewards, and free market by which investment can be expressed. Government acts to value prosperity when it's policies support savings, investment, and free markets. Prosperity can also derive from good fortune, like happening to have significant oil reserves, but our debate is about governments expressing values as policies, not about being lucky. We also know how to achieve economic equality with certainty. It is to take money away from investment and redistribute it. Governments can and do achieve equality through poverty, but prohibiting accumulation of wealth and investment. However, suppressing free markets and redistributing wealth is not as easy as it seems. Redistribution of wealth always involves a ruling class that controls the redistribution. So in North Korea there are perhaps 40,000 people who live well and about 24 million who share the equality of poverty. At root, this debate is about whether a ruling elite should be established to redistribute wealth according to what the elite values. We should not. The redistribution premise is wrong What is the motivation for wanting to redistribute wealth? The starting point is that people have a right to do as they wish: to save and invest in risky ventures or not, to spend their time managing risks or not, and to use their earnings as they see fit. So what is the grounds for interfering with the economic lives of individuals. Saying it's for fairness begs the question. In Monty Python skit, a Robin Hood character redistributes lupines, robbing lupines from the rich and giving them to the poor. The joke is that the robin Hood character believes that equal distribution of lupines is important. The people receiving lupines are perplexed. The premise of redistributing wealth is that happiness is proportional to wealth. Every liberal and most non-liberals believe that, but studies do not confirm the premise. The part that is true is that if people lack basic necessities like food, clothing, and shelter then they are very unhappy. They get happier up to the point where their basic needs are met. Impoverished Zimbabwe under dictatorial rule is the saddest place on earth. But beyond the basics, added wealth produces very little increase in happiness. Many studies support this conclusion, Wikipedia summarizes "Historically, economists have said that well-being is a simple function of income. However, it has been found that once wealth reaches a subsistence level, its effectiveness as a generator of well-being is greatly diminished." [6. http://en.wikipedia.org... supported y their ref 8]. Science Daily reports "While most people believe that having more income would make them happier, Princeton University researchers have found that the link is greatly exaggerated and mostly an illusion." [7. http://tinyurl.com...] What is the most important in determining happiness? "Of perhaps utmost importance, nearly all the nations in the top 10 are adept at fostering entrepreneurship and opportunity. Legatum’s researchers concluded that a country’s ranking in this area is the clearest proxy of its overall ranking in the index." [8. http://tinyurl.com...] Economic policy should therefore not be aimed at redistributing wealth to achieve economic equality. It should be aimed to raise as many people as possible above the level of satisfying basic needs. that is done through permitting free markets to operate and in fostering entrepreneurship. Forcing economic equality diminishes wealth The Gini index is one measure of economic equality. It's applied to both incomes and to wealth. Let's look at income first. Con claims that equality of wealth correlates with prosperity. That's wrong because correlation does not prove causation. Dictatorial regimes concentrate wealth and control markets resulting in poverty. Free markets produce wealth by investing accumulated capital and produce prosperity. The proof lies in examining the economies of America, China, and India. According to Wikipedia [8. http://en.wikipedia.org...] the United States Gini Index for incomes was 45 in 1929. During the Depression, equality increased along with poverty, reaching 37.6 immediately after WWII. From 1947 to 1990, inequality increased slightly, rising to 42.6 in 1990. Poverty decreased. The booming 90s brought inequality to 46.2. Since 2000, inequality has been about the same, ending the decade at 46.8. In the U.S., unemployment and poverty declined during the 90s as inequality increased, and stayed about the same until the the onset of the current recession. [9. http://www.infoplease.com...] Overall, poverty rates have declined since the 1960s, while inequality increased. Unemployment mostly responds to short term recessions and booms. In other countries, the most interesting cases are China and India. They are the most interesting because the economies are large, and the policies with respect to inequality have changed significantly. India operated as a democratic socialist state until the past few decades, and while China remains authoritarian, they have abandoned communist economic ideals and permitted much more free market activity in the past. In both countries, inequality has risen significantly in the past few decades, and prosperity has risen dramatically. After WWII, famines plagued both India and China. Freeing markets produced a significant increase in living standards. People are much happier not facing famine than being equal in poverty. Small countries in Europe are generally not good examples because they are often dominated by special circumstances. Norway received major income from North Sea oil, producing increased prosperity. Sweden became prosperous with near-libertarian economic policies, and is now coasting in slow decline. Respected Swedish parliamentarian Johnny Munkhammar writes: "…Sweden is not socialist. According to the World Values Survey and other similar studies, Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion. Among the 160 countries studied in the Index of Economic Freedom, Sweden ranks 21st, and is one of the few countries that increased its economic freedoms during the financial crisis." [10. http://tinyurl.com...] Tiny Luxembourg has an unusual economic situation from specialization in international banking and exotic steel making. I see nothing about any efforts to redistribute wealth. [11. http://tinyurl.com...] The Gini Index for wealth is more interesting that the Index for income. What's interesting is the seemingly random relationship between concentration of wealth. [12. http://tinyurl.com...] Rich countries like Denmark (.808) and the USA (.801)have high concentrations of wealth, but so do some of the poorest countries like Namibia (.847) and Zimbabwe (.845). Some countries with low concentrations of wealth are well off. like Japan (.547) and others are relatively poor, like China (.550). What counts is how much wealth is invested. The Japanese have extraordinarily high personal savings rates, from which they derive investment. Third world dictators are accumulating wealth but not investing it. Policies should be directed at prosperity Redistribution of wealth does not raise people out of poverty, prosperity achieved through free markets does. Free markets can stand fairly heavy taxation, but they clearly succeed in spite of that, not because of it. Economic policy should aim to raise people out of poverty, through free markets. People are happier not being in poverty, and everyone is happier enjoying economic freedom.