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A retort to “Why people are poor?”

By: The Last Contrarian 2014-08-11 11:08

I’d like to analyse the article ‘Why people are poor?’ as written by fellow News24 contributor and Amateur Political Analyst Majaji. I’d like to take his points in order and raise my own.

People are poor because of the wealthy people. I know now that you are saying Majaji is crazy. Let us look at few ideas.

I’m glad you called it a ‘few ideas’ rather than a few facts. Not many are so honest when outlining their hypotheses.

Wealthy people are on a mission to earn more money. I then look at legal ways on how a person can earn money. A person can earn a salary, a social grant, a donation or profit from a business.

From the start you found the exact thing why rich people are rich: they are on a mission to earn more money.

Natural resources play a major role in any business including the services industry. I have learnt that wealthy people own natural resources and thus we can not survive unless we have those natural resources. Hence we are sort of automated to spend our money buying this natural resources either in a raw state or processed state.

The imbalance of resources is exactly what facilitates trade. Without an imbalance, there would be no trade at all.

Saudi Arabia would have little use for their oil resources beyond their own domestic needs if the rest of the world didn’t need oil too. So Saudi Arabia makes trillions of dollars a year selling oil to nations that need it. Of course the Saudi princes and political elite want to make as much money per barrel of oil as possible, and of course the nations that buy their oil want spend as little money per barrel of oil as possible, so the price is fixed somewhere in the middle and is determined by demand.

The day nobody needs oil is the day Saudi Arabia’s mineral wealth will be of no value to them beyond sustaining their own consumption. Until then, it is a source of—as some would say—‘unfair’ wealth for them.

Whatever little money you have earned, you can't actually save because you need to buy food, clothes etc. Thus your money is automated to land in the hands of those wealthy people who own this means of survival or be luxury etc.

While this is true, consider the fact that to feed, clothe, and shelter yourself is hardly so expensive that you cannot start saving in some capacity. The problem is that too many people live well beyond their means, and this includes what they try to possess in human capitol. Here is a simple example that is rife, especially in the third world regions of the world, where poverty manifests most visibly:

If a person wants a wife who is herself not earning enough to sustain her resource requirements, then that person has added an extra burden on their finances—reducing their opportunity to save or invest in improving their own education and/or skillset. If that person and his wife further wanted one or multiple children—each requiring resources that had to be financed by their parents’ income—then our intrepid man would have further prevented himself from setting money aside for savings and/or his furthered education.

Now lets look at how new money is created. New money is created by debt. We borrow this money and it will follow the process laid above and eventually all the money will end up with the wealthy people.

This is largely incorrect. While we have had our most recent global recession exactly because lending out money and recuperating it with interest became the modus operandi of certain global banks in America, Europe, and elsewhere, this is not the principal way in which money is created, nor is money created in the printing press that prints more bills (that is how inflation is created).

Money, actually, is created from economic output, which is most accurately measured by the Gross Domestic Produce PER CAPITA (meaning, per person).

If you wondered why it is that America with a population of 317 million can have a higher economic output than China with a population of 1.366 billion, then it is simple, the average American is considerably more productive in a 24 hour timespan than the average Chinese, and enough so to compensate for the difference in working hands available in both countries.

Why is this? Well, because gross time spend doing manual labour is no longer the most efficient way for creating economic output (that ended almost as soon as the agricultural age began). So a cornfield full of Chinese corn-pickers is not as desirable as a proper harvester machine operated by a skeleton crew.

This demonstrates that modern economies need constant innovation to increase the amount of labour that can be performed with an increasingly lower headcount. Then there is the ongoing production of sophisticated commodities (iPhone and iPad are prime examples) to feed an ever greater demand from an increasingly more sophisticated consumer.

Thus countries that excel at science, engineering, and medicine are the most prosperous countries in the world: USA, Parts of Europe, Singapore, Japan, China…

Educated people are far more likely to produce the inventions and advanced commodities that the global market demands, thus education should be the foremost priority for any nation seeking wealth for itself and its citizenry, and where it lacks citizens with the requisite skills to compete on a global level, it tries very hard to lure those skills away from other countries in order to attain global competitiveness.

It is easy for a wealthy person to earn money from a poor person. How easy it is for poor people to earn money from the few wealthy people?

If the poor person has something the rich person wants (e.g., superior programming skills to take the rich person’s Software Company to a new level of global competitiveness) then the poor person will make money off the rich person.

If, however, the poor person has nothing to offer except the labour of his limbs, then the rich man has no shortage of people to choose from, and will always choose the person asking the least amount of recompense in return.

Next time you are thinking of praising wealthy people as successful and intelligent. You must remember that they are the reason people are poor.

I know a few extremely wealthy people, and I barely notice any intelligence emanating from them. Their successes seem to be rather mediocre as well, with some not even being able to triple their monthly income as I have done since moving to Singapore.

But to claim that rich people are actively keeping the poor poor is a half-truth at best.

It is not the rich man’s duty to create the opportunities for the poor man to exploit the rich man for money. The poor man must look at his capabilities and produce either a product or provide a service of worth to the rich man.

A simple example of this is to sit in the desert with a healthy supply of water. By chance, you may encounter the lost billionaire adventurer who got lost and is dying of thirst. At that point and time, you can ask whatever amount of money you want for a gallon of water and a trip to the nearest city. The billionaire will pay it, for his life is worth more than your inflated price for some water and escort to the nearest town.

It seems like there is no law that is prepared to restrict and prohibit someone not to be too wealthy to the point that it is causing others to be poor. Why not limit wealthy people at 1 billion each.

A rich man cannot force people to be poor unless he is stealing from them. Poor people, more often, refuse to partake in the economy to the degree necessary to alleviate their own poverty—choosing rather to elect politicians that promise them shortcuts to prosperity over the tried and tested methods that are likely the very ones employed by the rich man to attain his perceived lofty position in society.

Though I hoped not to reference my own situation, I feel it best if I speak from experience. I may not have enjoyed spending the countless hours in school, university, and at work to earn the successes I have (no doubt enviable to the poor), but I had to or I would not have had these results. For me, there was no other choice, for I was not born into wealth and had no government to fight for my economic prosperity. Either I worked to partake of the lifestyle others ‘flaunted’ in front of me, or I would forever be left wanting; I chose the former.

To be poor is an active effort, because it requires that one consciously abstain from the means and methods known to alleviate or completely dispel poverty: hard work, educating oneself, finding opportunities to turn a profit from ones produce or skills. You can try any of those three primary methods in any order you like, and the results will be the same: poverty will flee from your presence like fog before the rising sun!

Instead of Patrice Motsepe having 6.25 Billion at least we should have more people having millions.

There is, to date, no link between reducing the means of accruing wealth of the exceptional and raising the ability for the complement to do so. The two exist completely independent of each other.

If you prevented Bill Gate’s from making 75-Billion dollars, you would not have 75 more billionaires in the US, nor would you have 7500 millionaires. There is a reason people with billions have them, they literally can’t stop other people from giving their money to them to get something in return, be it a copy of the latest Window’s operating system, the latest model of the iPhone, or a Virgin Airlines flight ticket at discount price—the billionaires who make money by way of their entrepreneurship do so because they have the support of millions and millions of their customers, and we can’t demand that those customers spend their money on overpriced, inferior alternatives just to ‘spread the wealth,’ now can we?

Majaji is an Amateur Political Analyst

Quod erat dictum. Quoted for truth!

But in all seriousness, it sound like you have succumbed to the promise (lie, to be more exact) of communism, that it can ‘exorcise the demons of capitalism.’

This is false, and will always be false because Capitalism is the only system that supports the willing-buyer-willing-seller concept as well as sustains the theory of a free market.

Communism, rife with centuries of failure, regardless of who instated it, tries to do the impossible: regulate that which cannot be regulated, in other words, the means of production, the produce, the demand, and the resulting price based on supply and demand.

Communism is the club that the political savage is most quick in reaching for, because on paper it sounds so fair—especially to those whose disposition would marginally be improved by the bottom line that will be introduced by Communism. But Communism operates on the assumption that those with the capability of being more economically productive than their peers are, in fact, exploiters of their lesser-abled peers.

Thus Communism always destroys the incentive for those capable of producing more to actually do so. Save for a few exceptional cases where artistic qualities could bloom in the absence of the need to waste time earning a meagre living, Communism has produced nothing worth having except for those who have literally nothing to begin with.

To be a Communist is to love poverty, for that is all that can result from Communism. Unless there are Capitalist safe zones around or within the Communist state, it will, inevitably, implode under corruption and maladministration, and usually in that order.

The solution

So what then is the solution? Some may ask of me or anyone with a basic grasp of economics. It is simple, really. An imbalance of resources will always exist. There will always be someone or some country that has something that others have less of and want more of. This imbalance opens up opportunities for barter and business.

The only way the poor can attain the prosperity they seek is by being of worth to those who currently have a resource (money, most likely) that the poor need.

A rich man is far more inclined to give a raise to a loyal and capable worker than to replace him with a cheaper replacement who is less productive.

Hard work will ensure that the poor rake in raise after raise or promotion after promotion, at which point they will have greater financial resources to reinvest in themselves to expand their skillset and become even more productive, until such time that they have enough finances of their own to break away from their rich bosses and become the rich boss for someone who is about to start their journey out of poverty.

It is that simple, which is why politicians who gain from selling Communism and Socialism try so very hard to keep the poor from walking this proven path to prosperity.

And let’s face it, who would vote for a politician or political party that wins votes by promising prosperity to the poor of the poor could actually be the authors of their own prosperity by using the same methods many of today’s rich used to lift themselves out of poverty?

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