Friday, July 18, 2008

How the Rich Can Help the Poor

Nelson Mandela is encouraging the rich to help the poor, and that is something I agree with -- though I am certain that I only agree with him by purposefully misunderstanding what he means. He of course means that the rich should give their money to the poor. I disagree. That's the worst thing the rich can do with their money. Rather, the rich should try to make themselves much richer through opening new businesses and expanding the ones they already own. By doing so, they will grow the economy and provide more jobs for more people. This is how the rich can and will best help the poor. The idea that the rich should give their money away belies Mandela's zero-sum thinking: wealth is only of a given amount, so if the rich have it, the poor do not. But the economy is a positive-sum game, meaning when you engage in economic activities, you are making yourself and the people you are dealing with better off. The way to help the poor is to allow the rich to remain rich through their economic activities. Governments can help this process by getting out of the way of economic activity. It's not the rich who make poor people poor, but governments who prevent economic activity from taking place.
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