Exposing the Gini in the lamp

“Therefore, the New Growth Path proposed by the minister for economic development, Ebrahim Patel, is founded on a fundamental flaw: thinking that income inequality is a problem the government ought to address. Never mind how he proposes doing so. Salary caps and wage controls might be stupid in and of themselves, but even the reason for proposing them is wrong.”

That’s a quote from our never-met-never-spoken to-before buddy Ivo Vegter, writing as usual over at The Daily Maverick.  It’s a great article on the folly of misleading development indicators, with particular reference to the Gini Coefficient, a measure of income inequality.

In an article strewn with great quips and acurate points, the bit quoted above is probably his best insight.  We can (and probably need to) make the case very effectively for why this or that policy proposal will fall flat, but really we need to be arguing about the very core issue here which is:

why on earth does the government think it can ‘make’ poor people more prosperous by doing anything other than getting out of their way, respecting private property, and committing to the bare basics of justice and governance?

It strikes me that probably the most patronising and discriminatory people on earth are social liberals and central planners.  These people, although they’d of course never say so, basically view the poor as inferior folk who, bless their souls, just need a leg up and then maybe a permanent prop up to be normal functioning members of society.

At least us free market types recognise that the poor can still be very capable people, and, as Ivo says, just need the means to prosper.  It seems to be lost on state interventionists, who are trying to ‘make things better’ for people, that the very essence of human action is that each day every individual, rich, poor, or in the gutter, will make choices that attempt to move them higher on their so-called subjective value scales.  It doesn’t matter what these individual value scales look like or what ends are being sought (provided they adhere to basic respect for life, liberty, and property), the point is that without any government every person is ALREADY making their lives subjectively better every day.

That does not mean we will always be better off day after day, only that from any given point we will act in accordance with the axiom of improving our subjective well-being.  To this end then people need a set of choices and means to act upon, and the wider these choices the better chance action will lead one higher up one’s subjective value scale.

In basic terms, stifle choice and you stifle the basic ability of humans to act in their best interest.  Minimum wages stifle choice, red tape stifles choice, legal tender laws stifle choice, hawking regulations stifle choice, banning certain cigarettes stifles choice, taxation stifles choice, price controls stifle choice, industrial subsidies stifle choice, trade protectionism stifles choice, making education compulsory stifles choice, regulating private schools stifles choice, licensing laws stifle choice, and on and on and on.

So yes, we can regulate and tax and seize and expropriate wealth from the rich as has been done in many communist societies in the past, and yes, this will probably reduce our Gini coefficient.  That we all become equally poor seems hardly the point.  The social scientists will have their result… EGALITE!!!

Funny how the people in history most passionate about seeing social income equality end up chopping off heads, killing, censoring, torturing, and making life generally miserable for the public… but not equally miserable of course.