Saturday, February 27, 2016

Should we not be trying to make everyone richer?

The Communist Party of China is proud that there are more dollar billionaires in Beijing than in New York but India is so proud of its poor that the Economic Survey recommends increasing handouts, to be paid for by increasing taxes on the middle class, so that everybody is poor. We read scary reports, such as that by the charity Oxfam, which says that the richest 62 people have as much wealth as the poorest 3.6 billion and the top 1% own more wealth than the rest 99%. In 2011 the Occupy Wall Street movement was born out of anger at this inequality. Bernie Sanders, who is campaigning to be the Democratic candidate in this year's presidential election in the US, wants to increase top rate of federal income tax to 54% but a professor, who has written a book 'Superbosses', says that the wealthy create more wealth for shareholders and employees than for themselves. We are told that world commodity prices are falling because of a slowdown in China, hurting economies of Brazil, Australia and Saudi Arabia. But China is still growing at around 7% which is one of the fastest in the world but that is slower than over 10%, and it is increasing poverty in the rest of the world. US consumer spending is in excess of $11 trillion a quarter, more than 5 times our annual GDP. Imagine what would happen if it were to slow. So what makes people wealthy? Billionaires are more likely to have attended elite schools and universities. Studies show that wealthy parents raise wealthy kids, even if they are adopted. However, the Right to Education Act has been a disaster because the Congress stopped all exams in schools, because children of illiterate parents will not be able to compete with classmates. Now 18 states have decided to bring back exams and detain students who fail. A study in the UK found that middle class parents use their knowledge and networking to help their children to earn more than more talented children from poorer families. It is wrong that an accident of birth should tarnish a child for life, say some. Others feel that it should be a duty of all parents to help their children to achieve the highest they can. Are we not proud that people of Indian origin are the richest ethnic group in the US? But maybe we are looking at the wrong end. The adverse effects of poverty are like a disease. If mothers are malnourished during pregnancy then those children are more prone to metabolic diseases and early deaths. Children from poor families have brains which are 6% smaller. Even as we are told that pollution is killing people in Delhi, studies show that people living in cities are wealthier and live longer than those living in rural areas. Why then is poverty glorified by the self-styled liberal, socialist intelligentsia in India? They must be gaining something.






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