TCS Daily


The Real Solution to Poverty

By Arnold Kling - May 3, 2007 12:00 AM

"In this report, our Task Force on Poverty calls for a national goal of cutting poverty in half in the next 10 years and proposes a strategy to reach the goal."
-- Center for American Progress Task Force on Poverty

Poverty may fall in half in the next ten years even if we do not enact any of the recommendations of this task force. In fact, a reasonable guess is that the recommendations themselves would, if anything, slow the rate of progress against poverty.

The point of this essay is to simply state the obvious. If you look at poverty from the broad perspective of international and historical comparisons, the solution to poverty is decentralized entrepreneurial activity under capitalism.

The capitalist solution to poverty is unsatisfying to many people, because it is not planned or intended. Policymakers and anti-poverty programs per se are not involved.

The phenomenon of unplanned results exceeding planned outcomes is quite widespread. As Nassim Taleb points out in his new book The Black Swan, and in this fascinating interview, human planning tends to work poorly when compared to trial and error. He argues, for example, that many medical discoveries are serendipitous, while systematic efforts such as those of the National Cancer Institute often yield disappointing results.

In Hayekian terms, we say that order emerges, and often this order has little to do with the intentions of planners. For example, in Iraq the Bush Administration intended to create a swift transition to democracy, and to set an example throughout the Arab world. However, democracy is a phenomenon that cannot be imposed by planners. Instead, it must emerge, and Iraq was not ready for such a transformation.

The Source of Wealth

In the United States, the poverty threshold for a family of four is just under $20,000 a year in income. However, consider what would happen if you were to force every family of four all over the world the world to live on $20,000 a year. The majority of families would say, "Thank you." Outside the United States, there are more people living under our poverty threshold than over it. Perhaps as many as one billion people are living on less than one-tenth of our poverty threshold, or less than $2000 a year for a family of four.

If $500 a year per person represents extreme poverty, then consider that in the year 1800 the average income per person in the world was half that. What we consider extreme poverty today would have been considered upper-middle-class two hundred years ago. If that seems implausible, consider that even in Africa longevity has more than doubled over the past hundred years. This reflects better nutrition and public health, even though African economies on the whole are doing very poorly. William Nordhaus, in The Health of Nations, argues persuasively that if improvements in longevity were included in GDP, then our estimates of growth over the last century would roughly double.

Overall, as David R. Henderson and Charles L. Hooper wrote three years go for TCS, virtually every American alive today is in the top one percent of income, if one takes a worldwide historical perspective. It would be better to live on $20,000 a year in America today than to be a relatively wealthy person living here one hundred years ago.

The ultimate source of our wealth is our moral and mental development. With moral development, we are able to trade peacefully with strangers, create habits and institutions that reward work more than theft or expropriation, and value education and learning. With mental development, we have accumulated knowledge that enables us to achieve high levels of productivity.

More than 100 percent

Our moral and mental development, and the high productivity that accompanies it, have taken place under a system of decentralized capitalism. I would claim that the capitalist system accounts for more than 100 percent of the reduction in poverty that has taken place over the past hundred years.

How can capitalism account for more than 100 percent of the reduction in poverty? Is that mathematically possible?

If we take into account the factors that have retarded poverty reduction, then we can argue that, by overcoming those factors, capitalism accounts for even more than 100 percent of poverty reduction. That is, if world poverty has fallen from 90 percent to 20 percent over the past 200 years, then capitalism would have reduced it by even more were it not for the retarding factors.

Ironically, the biggest factor retarding the capitalist solution to poverty may well be the crusade to end poverty using conscious planning. Certainly if one includes among the planned solutions to poverty the experiment with Communism (and I see no reason why it ought to be excluded), then the case against intentional anti-poverty efforts is rather compelling. Simply compare poverty in North Korea with that in South Korea, for example.

William Easterly, in The White Mans' Burden, draws a sharp distinction between searchers and planners and international development. Searchers, who operate in a decentralized, trial-and-error manner, help reduce poverty. Planners at development agencies such as the World Bank, who operate in a centralized, paternalistic manner, do not.

Measuring Outcomes

How can advocates like the Center for American Progress persist in proposing centralized, planned solutions for poverty? I think that the key to maintaining faith in these ideas is to focus only on intentions. If a program is intended to reduce poverty, then it is an anti-poverty program. Instead, I believe that anyone who sincerely wants to do something about poverty needs to focus on outcomes.

The first step in moving from a focus on intentions to a focus on outcomes is to face facts. Robert Rector of the Heritage Foundation points out that


Forty-three percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.


Eighty two percent of poor households have air conditioning. By contrast, 35 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.


Nearly three-quarters of poor households own a car; 30 percent own two or more cars.


Ninety-seven percent of poor households have a color television; over half own two or more color televisions; Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception; Seventy-three percent own microwave ovens, more than half have a stereo, and a more than a third have an automatic dishwasher.


Rector would not deny that there is real poverty in the United States. The point is, however, that the standard definition of poverty includes many families who are far from destitute. A common-sense definition of poverty would focus on the truly destitute. My guess is that this would include a lot of people with severe mental disabilities, for whom such policy proposals as housing vouchers and college tuition subsidies offer little benefit.

Sometimes, I wonder if the anti-poverty crusaders even care about the outcomes of the policies that they propose. For example, do food stamps reduce poverty? If so, then one would think that those concerned with poverty would count food stamps when they measure people's income. Instead, they rely for the most part on data on family incomes that exclude government assistance of any kind. That is, the crusaders make policy pronouncements as if poverty reduction depends entirely on government assistance, and yet they measure poverty as if government assistance has no effect whatsoever.

The intentions of the anti-poverty crusaders are good. However, the results of centrally-planned anti-poverty efforts are small, and perhaps negative (certainly very negative in the case of Communism). Decentralized capitalism, in which no one sets out to broadly reduce poverty, is the best anti-poverty program.

Arnold Kling is author of Learning Economics and Crisis of Abundance.


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237 Comments

Amazing Essay.
In this essay, we have both a succinct criteria for post-9/11 foreign policy AND a clear statement of what's wrong with most Dems and many Reps on domestic policy. Israel's "we breaky, you fixey" approach to Southern Lebanon seems ideal, despite the current problems the PM is having over his decision. If a country gets too out of hand, we probably have an obligation to bomb their government into chaos. But we don't have an obligation to establish any new order or promote democracy. And if the new order that arises is no better, we just bomb them into chaos again.

As for domestic policy, the fixation with central planning, uniformity, and "fairness" is why the Dems will continue to be the party of the stupid people. Not that Republicans are much better, but they used to listen. It is great that Taleb's book is sparking so much discussion in practical libertarian circles. The planners may be in charge, but on so many issues, they have no record of success. Maybe people will start to realize that!

Problems with Essay
The first is that Kling pays the obligatory tribute to the noble intentions of "anti-poverty crusaders". Having dealt with some in the past, I can tell you there are some who think poverty is eradicable. The pols that run on the same ideal are generally disingenuous. They prattle on about latters of success from private jets.

Finally, there's no accounting for decisions. Several years ago, I was involved in an audit involving Ma payments for maternity care. In examining the medical records to ensure that conditions for payment were met. One young girl (and she was a girl, 15 year old) miscarried. She promptly anounced to her social worker that she would refuse grief counseling, and attempt to become pregnant again withing a year, because she was sure she could handle high school and a baby. There is no economic policy that is going to overcome this kind of poor judgment. We will always have errors, some that have lifelong consequences.

solutions
Great article. But the state planners don't really have to care about their lack of positive outcomes(just look at foreing aid), they're more going by the old english expression, "it's the thought that counts". It absolves them of positive outcomes, except for themselves of course. Most of those do-gooders have the hubris that they can replace all the millions of decisions that people make everyday. But that's no surpise, after all what collectivists are really interested in is control of people.

The intentions of the anti-poverty crusaders are not good
If order is good, and efficient order even better, and efficient, prosperous order best, then the intentions of the anti-poverty crusaders are not good. That's because Dietmar is correct: These people only want control over other people to establish an order that is neither efficient nor prosperous. Indeed, the thing that most highly recommends their order to them is that they would be in charge.

Why not just do away with the anti-poverty crusaders and keep the poor? After all, we can't do away with the latter group because according to our greatest prophets, they'll always be with us.

Accountability
Anyone have any proof about the effectiveness of ANY government program?

$1M reduced poverty by $1 for example?

Majority of AP crusaders are selfish, but do not want control over our lives.
Most leftists have a very external focus: making others see them as caring and compassionate, rather than actually being caring and compassionate. To take a reference from the Bible:

(Matthew 6:2) Therefore when thou doest thine alms, do not sound a trumpet before thee, as the hypocrites do in the synagogues and in the streets, that they may have glory of men.

Liberals grunts are trumpet sounders. They wear their compassion as a badge of honor, and trumpet it for all the world to see so that others will honor them for their goodness.

The fact that their active breed of compassion fails every time it is tried is irrelevant. They did something, where advocates of capitalism and property rights just sit back and demand that others succeed on their own. The fact that they must control the lives of those they help, and rob from the successful to give to their targets is incidental to the fact that they are seen as compassionate for doing something.

Of course, the leaders of the left know their method fails every time it is tried. They harness the desire of the trumpet blowers to be seen as good, and use it to gain power over others. The leaders of the left are evil, the grunts just want to be seen by others as good.

Ideal order
I disagree because the AP crusaders envision an ideal order that no quantity or quality of government force can produce. Nevertheless, they'll destroy freedom and prosperity for everyone just to prove it, over and over and over again.

Sure, individually the AP crusaders carve out their own little self-glorifying dictatorships within the overall AP crusade, but the true aim of the entire AP crusade is to establish a prevailing ideal order that will not permit poverty. And this aim always requires enslaving and beggaring the rest of us, for what good would the AP crusade's prevailing ideal order be if all of us weren't captive to it?

Self-glorification can never proceed in a vacuum of humility, which is why these trumpet-blowers reject humility for great historical progressive projects.

Centralization and decentralization
From the blurb:

"The capitalist system accounts for more than 100 percent of the reduction in poverty that has taken place over the past hundred years. How can capitalism account for more than 100 percent of the reduction in poverty?"

There are now more people living in stark poverty-- with incomes less than two dollars a day-- than existed on earth a hundred years ago. That number would be three billion of us.

The problem with the current developmental paradigm is that it rewards the owners at the expense of the slaves. And the majority of us, neither owners nor slaves, are swept aside for just being "in the way".

This is the current corporate model, where all the world's businesses become progressively more decentralized, so that fewer and fewer firms are responsible for more and more of our economic activity. This gives rise to tremendous income levels at the top, and economies at the bottom that rely on fewer employees, being paid less.

The answer, as Arnold rightly points out, is to decentralize the capitalist endeavor. "[T]he solution to poverty is decentralized entrepreneurial activity under capitalism."

Community banks are the best approach, and are proven money makers. They maximize opportunity for millions of landless and jobless peasants who have nothing but aspirations. And aspirations plus fifty dollars will make many of them successful business operators.

So when do we say the policy has failed?
"Israel's "we breaky, you fixey" approach to Southern Lebanon seems ideal, despite the current problems the PM is having over his decision. If a country gets too out of hand, we probably have an obligation to bomb their government into chaos. But we don't have an obligation to establish any new order or promote democracy. And if the new order that arises is no better, we just bomb them into chaos again."

But Israel has been bombing southern Lebanon into chaos for the past 25 years--since their 1982 campaign. And it hasn't gotten them anything yet. In fact the current Israeli government is considered to be weak and unstable just because they found they could not bomb Lebanon into such tiny bits and pieces as to make resistance to them cease. So continued aggression is in fact making them weaker.

In fact they have only made things worse. Hezbollah came into existence is response to the Israeli threat. And they've only become stronger through becoming Lebanon's only viable resistance force. You can check the historical record on that.

In the end you have to imagine what you would do, if you were in the place of the inhabitants of southern Lebanon. Would you praise the people bombing you, and cheer them on? Or would you join the resistance?

Question
You say "If order is good, and efficient order even better, and efficient, prosperous order best..." etc.

Why would efficient, prosperous order be the best? It's very Swiss... but would this be the best for everyone?

It reminds one of the old saw about Heaven and Hell. In Heaven, the cooks are all French, the cops are all British, the mechanics are all German, the lovers are all Italian and everything is run by the Swiss.

In Hell, the cops are all German, the cooks are all British, the lovers are all Swiss, the mechanics are all French and everything is run by the Italians.

Not sure about this bit, Roy
"Community banks are the best approach, and are proven money makers. They maximize opportunity for millions of landless and jobless peasants who have nothing but aspirations. And aspirations plus fifty dollars will make many of them successful business operators."

The problem with community banks is that they are small and have small holdings. This renders them more vulnerable to losses and hence means greater risk to depositors. The high failure rate of small banks compared to large ones was well established in Britain in the early 19th C, and the British banking industry began concentrating well before those of most other nations. Fluctuations in commodity prices, for example, could and did ruin small local banks but which left larger institutions with greater reach largely untouched.

Second, their small size makes them less willing to accept risk, so capital for startups may be less available than from larger institutions.

reducing poverty
bingo! reducing poverty can only happen by the individual and his/her WILL TO SUCCEED. in an atmosphere of government handouts, which are good only on a temporary basis, a person's will becomes shriveled and they become dependent on government. i would say that this is the biggest difference between conservatism and liberalism. liberals believe in continuous handouts, conservatives believe in helping the person succeed on their own, thus liberating them from government and building up their will to succeed. liberation from government programs is a liberal's worst nightmare! i don't think it's just about reducing poverty to a liberal, it's about government control over people's lives and the power of the purse for those in control of government.

Grameen banks
"The problem with community banks is that they are small and have small holdings. This renders them more vulnerable to losses and hence means greater risk to depositors."

Your comment may be good for 19th century British banks but is not borne out by the record for Grameens. Since their inception thirty years ago, Grameen style banks have a lower default rate than any other kind of commercial bank. Yet they lend money to people with no assets, thus no collateral other than their good name.

So the concept that makes them a success is lending circles. A bank will bundle four or five loans together, so that a default on the part of a single member of the circle will imperil everyone else's loan status. Peer pressure makes them repay in full, and on time.

Nearly all borrowers, in every country where Grameen lenders are active, are women. The men seem to be a higher risk category.

The banks you are talking about here ("...their small size makes them less willing to accept risk, so capital for startups may be less available than from larger institutions") are some other kind of bank. Grameens lend nothing other than for capital startups, and most loans are under $500.

A rising tide lifts all boats
Same thing happens with wealth growth, a condition known as "prosperity". If you read the attached article closely, you'll see that this prosperity has made home-car-twofriedchickensineverymicrowave-owners of America's poor. Are these folks squatting in their own filth eating termites while swatting clouds of flies off their dying children? Nope, but that's the image of absolute poverty, not the obese welfare queens swatting clouds of illegitimate children off the porch to keep them away from piles of junk food.

Dig?

P.S. The bit about the welfare queens was offered in brash provocation of your PC sensibilities.

Self reliance
"reducing poverty can only happen by the individual and his/her WILL TO SUCCEED. in an atmosphere of government handouts, which are good only on a temporary basis, a person's will becomes shriveled and they become dependent on government."

Likewise, in an atmosphere where startup money is not available to potential entrepreneurs without capital, a person's will to succeed can become shriveled by lack of access to startup funds.

In my state (North Carolina) there are a great many unemployed and under-employed who can't make ends meet relying on the local job market. And their initiative is far from shriveled. They start barber and beauty shops, tax prep outlets, auto repairs and a hundred other small businesses where capital requirements are low.

"Government handouts" are here (and I suspect everywhere in the United States) far too skimpy to rely on for even a portion of their living expenses. We do see people obtaining small student loans through our community college system, which is advanced, and a valuable resource in even the worst poverty pockets of the state. I suppose these loans could be seen as a form of government handout. But whatever they hand out they demand back, with interest.

I strongly support our community college system, which is geared toward real-world job opportunities and operated at minimal expense. Plus, unlike the stick figure liberals you portray, I am an actual, real life liberal. Neither I nor anyone I know stands around whining for the welfare state. You only see such people on your sources for television news.

A common misconception
"Nope, but that's the image of absolute poverty, not the obese welfare queens swatting clouds of illegitimate children off the porch to keep them away from piles of junk food."

You've been away from this country for quite a while now, haven't you?

We don't have welfare queens any more. That kind of welfare has been dead since 1996. Now we have welfare-to-work, with strongly enforced eligibility cutoffs. Which, by the way, I endorse.

"Dig?"

Unfortunately, I do.

Ah, we're talking about two different things
If you're referring to grameens, that's fine. I was thinking in terms of credit unions and S&Ls.

Central planning versus distributed decision making...
With industry we find that a highly centralized, decision-making team at headquarters grows out of touch with the underlying reality at the income-producing operations in the field.

Plant managers start making their numbers in spite of the foolishness coming out of Mahogany Row. When the CEO catches on to this his play is to execute the posturing bureaucrats among his headquarters crew and send the good ones out to each run one of the businesses. He promotes the strongest people in the field and decentralizes decision making. Everything gets better immediately because the stupidity immediately goes away.

After a period of years, the independent manages of the various operating companies become corrupted by politics and petty competition for the few jobs at Corporate. People get very good at making excuses while less able to live up to their commitments.

When the CEO catches on to this his play is to promote the brightest and the best senior decision makers out there up to headquarters and to ruthlessly fire the rest. Management is centralized into the hands of a crisp team of people at corporate who really know their divisions. Everything immediately gets better again.

After a period of years, this cycle repeats.

I liked the joke, by the way ...
The trains really do run on time here ... to the minute. It's miraculous. But folks round here go for quality, not quantity. The Japanese are the same way, I hear, which is why you rarely see a fat Japanese person outside the sumo rink or Hawaii.

Cheers, rb.

Rags to riches
How many rags to riches stories are out there in the USA?
Thousands.
They started with NOTHING but the WILL to succeed.

And your comments provide excuses for failure.

"Likewise, in an atmosphere where startup money is not available to potential entrepreneurs without capital, a person's will to succeed can become shriveled by lack of access to startup funds."

There might be considerably MORE opportunities if government regulations and taxes didn't inhibit private enterprise.

Recall the woman who wanted to braid corn rows? The state demanded she obtain a cosomtology license?

MA is considering the licensing of dog groomers.

Long term planning...
Some twenty-five years ago we realized that with all our sophisticated long range planning, here in Corporate America, the Japanese manufacturing paradigm was kicking our butts without (our sort of) detailed long range plans or any production schedules at all.

The Japanese model establishes an objective, assembles the factors of production, and sets to work. As Dr. Kling points out "The phenomenon of unplanned results exceeding planned outcomes is quite widespread." Further "...human planning tends to work poorly when compared to trial and error."

With the Saturn V we just started working and we got there fast. With the Shuttle we planned too much and you can see where it got us.

With long range planning we establish what we want to accomplish out into the future and then we plan how to get there (backwards from the desired outcome) until we get to where we are today. Certain assumptions are cast in stone. We all get this nice warm feeling that everything is under control with a well-written, ten year plan in hand.

However, this intuitive process is only effective in the short term when the variables involved are well understood and the tasks to be executed (what to do next) are clear.

Built into the long range plan are milestones to measure our progress against. Of course, any seasoned manager will refuse to sign up to such milestones without plenty of cushion and "fudge factors" included to accommodate his "unknowns". This implies "planned redundancies" and lots of extra time.

Once the plan is signed off the players look at their milestone horizons and immediately delay their actual tasks. This is because they now have plenty of time and the designs always change as other teams move first and get surprised. Then everything must go back through a revision cycle.

The organization can never beat its plan because no one is trying to go any faster than the plan calls for and everyone is risk averse. This way everything always takes longer and costs more than originally planned. Therefore, the play is to look good and try to get promoted before the results are in. Or to make certain someone else takes the blame when the outcome is compared back with the original document.

Without that plan hanging over everyone's head, managers are able to boldly dive into their tasks immediately, learning more about their designs with each day's work. They solve problems before crises. They eliminate variables with high quality execution.

There is no reason to hold onto a known mistake (by someone else) to avoid blame. There is no motivation to bury one's own mistakes (hoping to get hit by a bus before the final review).

We know where we are going. We have all the materials, the resources required and the best people. We task the people, let them work and manage the process directly. When there is a stupid mistake we all laugh a lot and say "What happened to you?" Then we simply fix it.

We do not have a drawing of the finished piece because that would cause us to ignore the "serendipitous" opportunities we encounter each day. We design in three dimensions by looking at the work in process. The design evolves into something better than we would have planned for with all our hedging.

In the end, we have a superior product in a much shorter period of time. In some industries we might have our product on the market before the big players can convene their first planning sessions.

Most teams are competitive by simply avoiding stupidities. Long range plans are loaded with those.

Example: We have a long range plan to eliminate malaria. We assume (as a principle set in concrete) that DDT is to be avoided. We have a milestone to reduce deaths by a certain number after an agreed-to period of years. There is a lot of money involved. People see their entire careers secured by this long range plan.

No one is trying to simply go kill the mosquitoes immediately...because that is not in the plan. This particular plan is probably killing innocent children.

Bush's and Iraq
'For example, in Iraq the Bush Administration intended to create a swift transition to democracy, and to set an example throughout the Arab world. However, democracy is a phenomenon that cannot be imposed by planners. Instead, it must emerge, and Iraq was not ready for such a transformation.'


Very well said. I believe that it is exactly as you said. It is not about petroleum or WMDs never was. The question is why do so many neo conservatives believe that gov. planning will not work domestically but will work internationally.

And BTW why do so many democrats say that it was for petroleum?

Except for the fact it worked, three times.
Of course Japan, Germany and Korea had to be nearly completely destroyed.

To Roy re welfare anymore
My american friends tell me that since 1996, now black guys just get their women knocked up so the they get the single mothers welfare, then they support the parasitical men. Aabout 70% single motherhood amongst black people.

phney stats Roy
You said, "There are now more people living in stark poverty-- with incomes less than two dollars a day-- than existed on earth a hundred years ago. That number would be three billion of us." I guess you forgot that there's kinda a lot more people around now than 100 years ago. And it's nuts to think that people in any country, whether US, china, england are poorer than in 1907. In those days even some western countries were close to starvation levels, muchless third world ones. Ask some guy from india what it was like there in his grandpa's time. Now if you happen to be poorer than your own grandpa, or even father, then it could only indicate that you are some kinda loser. What else would esplain your poverty.

liberals attitude to poverty
Here's a good quote I found:

"The trouble with all this apparent social conscience is that what really drives it is not some
profound humanism but the desire of a highly privileged elite to feel better about themselves
and stave off the unconscious and sublimated self-loathing which was drip fed to them at
university. "

I would have added the propaganda fed to them thru the entire school system, and thru the MSM.

Discretion
Muslims are supposed to give to charity, but they should be discrete.

The big Hollywood libs have concerts and large public fund raisers to feed the poor and reduce poverty.
They get publicity and the producers make money and the saps in the audience "feel" compelled to donate.
Everyone "feels" good but the problem is not solved.

States in the way
Yes, and Los Angeles requires over 25 permits to open a Mom and Pop grocery store. The so called compassionate liberals place road blocks at every turn and then hold out the hand demanding a fir share.

To government bsuiness is a commodity to be milked for cash. They much prefer large business as it is easier to manage.

There are so many cases of business owners starting with nothing. Dominos Pizza? MicroSoft?

Roy seems to prefer a Norwegian approach where nobody has to much and nobody has to little. As a consequence the tax rate over 100K is about 100%. Hardly a incentive to risk money and start a business.

In fact, the people I know who started with nothing do much better than those businesses that borrowed and used seed money.

The welfare state of today is largely predicated upon envy and greed. While many need a hand the damage done to inner city families by the War on Poverty is a sin. Politicians use words like "fair share" and the "rich must pay more". In fact the top 50% pay 86% of taxes.



Milton
From Paradise Lost I think; "Better to rule in hell than to serve in heaven."

Cornrowers
"The art of African hair braiding goes back centuries, handed down from generation to generation, from mother to daughter. Enduring, somehow, without government oversight. Can you imagine?

After high school, China moved to Maryland and worked in a salon. There, hair braiders don't need the state's blessing to ply a comb. But in 2003, Farmer returned home to Arizona, the land of the free.

Make that land of the nearly free. In order to braid hair here, Farmer needed a license from the state Board of Cosmetology. Without it, she could have found herself in jail for weaving so much as a single cornrow.

So get a license, you say.

Well, to get a license, Farmer would have had to take 1,600 hours of classes at a state-approved cosmetology school. She would have had to pay tuition of $10,000 or more to learn everything from how to cut and curl hair to how to tint and bleach hair.

Everything, that is, but how to braid hair.

Which, as I've said, she's been doing since she was a kid.

So why the need for a license?

Cosmetology bureaucrats called it a health and safety issue. "

http://www.azcentral.com/arizonarepublic/local/articles/0719roberts0719.html

Let me clarify:
My intention was to describe the motives of two different groups within the AP crusaders. The trumpet blowers are motivated by self-glorification. The leaders are motivated by a desire for power.

You are entirely correct about the expressed goals of both of these groups. The only difference is that the trumpet blowers actually mean it, wheras the leaders are lying.

The problem with capitalism
Is not that it lifts poor people out of poverty, which it clearly does.

It is that it allows some people to become rich. That's what burns the britches off of most left wing comentators.
(That and the fact that they aren't the ones getting rich.)

roy's flaming anti-semitism, causes him to blame Jews for every problem in the world
...

Everywhere on this planet where you find poverty, you will not find capitalism
Usually it's some form of socialism, if not out and out communism.

Its not just rich
People who earn their wealth seem to be less inclined to demand power.

It is the socialist blue-bloods like Kennedy and Kerry and Soros who have the money but also want the political power to control everyone else.

I figured as much
"I was thinking in terms of credit unions and S&Ls."

Credit unions would be a good idea. It's local money doing work in the local community. But S&Ls? They weren't even a good idea when we had them here. Unless they're well regulated, they're an invitation for thieves.

So what's the difference between the two? Transparency and an oversight board that's above corruption. Here is one area where there is no substitute for outside regulation.

In fact, in general one needs a powerful degree of assurance before one is going to lend one's money to any bank or investment scheme. This is an excellent argument for having a strong and effective government that pokes its nose into everyone's business.

The game of mergers and acquisitions
Agreed, with all you've said. The miracle of serial business mergers has often enabled a company that was very good at doing one thing to become fair to indifferent at doing sixteen different things. When I was active I used to follow the dictum that one did only what he did best, and hired outside talent to do the rest. For me, it worked well.

You've also caused me to go back and find a typo in my earlier comment, "This is the current corporate model, where all the world's businesses become progressively more decentralized, so that fewer and fewer firms are responsible for more and more of our economic activity."

Naturally I meant "centralized". One can find virtue in certain vertical or horizontal expansions. But cancerous, undirected growth usually makes one end up with a mess on his hands.

Startup money certainly helps
Yes, we have a system that allows many who only possess a dream and some talent to get rich. But somewhere along the way, most of them had a backer.

It does seem to me that people with rich, successful parents tend to have a far easier time of it than do those without a source for money and connections.

And if you ascribe that to having a good upbringing, how about the college room mates of the rich and connected? They don't also have a leg up, compared to coal miners' sons and daughters?

I will readily grant you that the regulation of professions has an inhibitory effect on the entrepreneurial spirit. But that is not an argument against licensing. I like a system where I get my medications from a licensed pharmacist, and my kids go to school with a licensed teacher. My car gets fixed by a licensed mechanic.

Taxes, granted, are another burden. So I have an idea. You can move to the Caymans, or Bermuda, and do business there.

Planning
Like most things, planning is something you can have too much OR too little of.

I once went through a tunnel that transected a mile of solid rock. Half was dug from one side and half from the other. At the point where they met they were about four inches off. I admired their planning.

I think the problem you are referring to is that plans have to be corrected in light of reality. So in any program that is planned through closely from start to finish, everything past Step Three or so has to be thrown out anyway. A rigid central plan is an invitation to failure. The best way to define Step Two is to make a good correction after Step One.

Years ago I was in the USSR, and saw a grand example of what central planning could accomplish. Nearly every bus and truck in the entire country had a cracked windshield. So I asked our driver what the deal was.

It turned out that all their factories had quotas for production from the Central Committee. And the glass manufacturers had had a shortfall in production. So they shipped less glass to the windshield factory.

But the windshield factory's quota was designated in units produced. So they divided less glass into the same number of windshields and got units that were eggshell thin. And under normal highway speeds they all cracked from wind pressure.

Now I would like to ask you a question. I've asked this many times here, and always gotten dumb answers-- because most of the people posting here are dumb people. But you are not.

You say "We have a long range plan to eliminate malaria. We assume (as a principle set in concrete) that DDT is to be avoided. We have a milestone to reduce deaths by a certain number after an agreed-to period of years. There is a lot of money involved. People see their entire careers secured by this long range plan."

And you go on from there to make a logical inference. But isn't your initial assumption flawed?

Please indicate with any reliable source that in 2007 there is a responsible public health body anywhere on earth that doesn't back IRS methods for malaria control in most applications. There are areas, like Sri Lanka, where it has been tried and failed, and better methods are in use. But I believe there is not an important public health body on earth that disapproves of IRS in principle, because of its use of small amounts of DDT.

This notion is just a stalking horse for a return to the indiscriminate use of the product in agriculture. Its motivation is greed, not health.

Tell me if I'm wrong.

Easier time for what?
"It does seem to me that people with rich, successful parents tend to have a far easier time of it than do those without a source for money and connections."

Easier time to start a business or easier time in general?

It has been discussed before on TCS that many silver spoon kids do not take advantage of their circumstances. I guess that is a sign of character. Something the left seems to believe is not too important.

Licensed by whom?
A license is no guarantee of any quality or capability.

Markets are much better at weeding out the poor peformers.

How many bad MDs can move from state to state and still practice?

And certainly a licensed teacher in a public shcool is NO guarantee of a good education.

Not your best comment
You American friends are obviously not authorities on the subject. If women accepting welfare have only a limited amount of time before they become ineligible, what would be the strategy behind "now black guys just get their women knocked up so the they get the single mothers welfare, then they support the parasitical men"? It doesn't even make sense.

Very perceptive
Your comment: " You said, "There are now more people living in stark poverty-- with incomes less than two dollars a day-- than existed on earth a hundred years ago. That number would be three billion of us." I guess you forgot that there's kinda a lot more people around now than 100 years ago."

Now I see your problem, Mr D. You're just dumb as a stump. You've disagreed with me by saying exactly what I just said.

How about Brazil and India?
Both are capitalistic societies.

The advantages of privilege
"Easier time to start a business or easier time in general?"

The children of successful people find it easier to succeed in business, of course. The natural advantages they enjoy are primarily habits of mind learned from their parents, access to well placed individuals, and easier access to borrowed capital. A recognizable name is just like money in the bank.

Without the advantages of birth, many do succeed. And with such advantages there are still some who fail. But there are still great advantages to being well born.

Had he not been born among the Indiana Quayles, for instance, do you think for even a moment an outstanding ignoramus like Dan Quayle could have become Vice President. Not likely. He'd be selling golf clubs and caddying.

"It has been discussed before on TCS that many silver spoon kids do not take advantage of their circumstances. I guess that is a sign of character. Something the left seems to believe is not too important."

Character is paramount. And the character of success is learned mostly by association with successful people-- such as one's parents. Your comment would seem to support my point.

It is surprisingly hard to create good character in oneself when one grows up having no good role models in the family or, often, in the community at large. So people born into the ghetto rarely rise above it.

Mr Checkers did, though. He was born in the Pruitt-Igoe projects in Chicago, one of the worst ghettos in the country. Being from there is highly predictive of a lifelong pattern of failure. Yet this fellow (I forget his name) founded the Checkers chain of fast food restaurants-- one of our most successful new businesses of the last thirty years, and one of the few that was minority founded.

The Problem With Poor White Racist NeoCon's
They dream of being rich, but aren't; like Mark.
They lie about Corporate Welfare Capitalism "lifting people out of poverty" when it doesn't.
They hate themselves and live a life of self-perpetuating misery.
They hate their families and abuse their children with all the "chasing riches" stories they tell, with the stories of how "great" America is, when it's really fully dyfunctional and oppressive.
They're not smart to even admit they are liars and need help.

Get help all you fake Libertarians (according to Libertarian Party Platforms, almost none of you NeoCon White Racists are "Libertarian" by party standards).

Get in therapy, help your kids live a better life after you're dead and gone and they can throw off the sick **** you shoved down there throats!!

GET IN THERAPY!!

Licensing
This set of comments is actually pretty good.

"A license is no guarantee of any quality or capability."

Of course not. Government licenses do not confer excellence, but only minimal competence. And professional licensing boards often, as with the AMA, cover for the sins of their membership.

"Markets are much better at weeding out the poor peformers."

No they're not. Markets depend on good information. And most consumers are not well informed. We ask our friends, and they give us the name of a hairdresser, or heart surgeon, or landscaping contractor. But what do they know? They may have had a single good experience, or just heard the name from someone else's recommendation.

Want to look up a doctor's actual record of complaints, lawsuits and adverse actions? You can't. Those are not open to public scrutiny.

"How many bad MDs can move from state to state and still practice?"

All of them. Is that an argument for less regulation of the profession, or for more intelligent regulation?

"And certainly a licensed teacher in a public shcool is NO guarantee of a good education."

Absolutely. It only means she is probably more competent than an unlicensed teacher.

It's mostly about the oil.
"And BTW why do so many democrats say that it was for petroleum?"

Actually Democrats don't have a problem with that. They mostly agree with the Republicans that "our vital interests are at stake" in the Middle East. Certainly you understand that to be a code word for unrestricted access to oil.

If you read the actual writings of the neoconservatives and the authors of the war on Iraq, you'll find that they are quite explicit on the necessity of controlling the production of oil. And in fact that is the best place to find detailed descriptions of the rationale behind controlling the oil states.

We have been doing so since 1953. It's no secret at all.

Say all energy problems are solved and robots do all the work
Say all energy problems are solved and robots do all the work. Anyone can have any basic good or service. A classless society? You gots to be kidding. There will always be things that only the upper class can have. For example, waterfront property, origional works of art, certain sorts of respect. Humans will always find a reason to dump on other humans.

Competing through excellence...
The alternating centralization and decentralization of decision making within a large, far flung corporation works well. Everything improves each time you do this right.

When a large company finds that the rate of expansion within one of its mature, profitable businesses is slowing down, (but throwing lots of profits and cash) it is normal for the strategic planning group to look around for horizontal integrations to artificially increase its rate of growth in that same business.

Alternatively, the play might be to integrate into the businesses of suppliers or customers. Such vertical integration should be aimed at capturing any excessive margins that such trading partners have been enjoying. And seizing better control of raw material flows or finished goods sell through.

Sometimes, we see a company dabble in seemingly unrelated businesses. Such adventures typically don't work out.

More often it is something like IBM focusing on profitable consulting services and dumping their low margin hardware operations. Or GM making more money in finance than they earn building automobiles.

Nevertheless, many of the really compelling opportunities for rapid growth and high margins are with smaller businesses that the big players simply cannot manage to launch themselves, for structural reasons.

They let the thousands of smaller players create and shake out those ventures. They then swoop in to acquire successful operations at the point those entrepreneurs hit the financial wall that must be overcome to enter the larger market. Of course, venture capitalists seeking an exit "sort of make this happen" with the strong, young companies they've invested in.

Roy, it might seem (at any snapshot in time) that all industries are consolidating into fewer hands. However, this only happens when an industry matures and the unit margins fall away as its products become commodities.

Regarding any fresh opportunities to make money myriad nimble, small players with a great idea continually enter the arena. We know this must be true because that is where rapid GDP growth comes from and where new jobs are being created. Similarly, middle class working families get into the game of capitalism themselves. All over the world.

Sadly, the micro loan business in Southeast Asia and Africa does almost nothing for local operators who want to enter the global market. In any case, that market has been fully served for hundreds of years by the East Indian 5/6 bankers in all those countries. Nothing new there.

Full scale industrial banking is required.

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