Adam Smith Institute on The Causes of Poverty
by Vinay Gupta • March 24, 2008 • Hexayurt, The Global Picture • 1 Comment
61. “It is important for us to understand the causes of poverty.”
No. There are no causes of poverty. It is the rest state, that which happens when you don’t do anything. If you want to experience poverty, just do nothing and it will come. To ask what causes poverty is like asking what causes cold in the universe; it is the absence of energy. Similarly poverty is the absence of wealth. For most of humanity’s existence on this planet, poverty has been the norm, the natural condition. People hunted to survive or lived by subsistence farming, and they were poor. In some parts of the world this is still the case.
The unusual condition is wealth. This is what changes things. We should ask what are the causes of wealth and try to recreate and reproduce them. When you ask the wrong question, “What causes poverty,” you end up with wrong answers. People fall into the trap of thinking that the wealth of some causes the poverty in others, as if there were a fixed amount of wealth in the world and that rich people had seized too large a share of it.
http://www.adamsmith.org/blog/globalization/common-error-no.-61-200803151059/
I think Thomas Hodgskin, arguably Adam Smith’s greatest disciple, got it right. If, as the ASI suggests, wealth is the result effort, of doing something, then anything that disrupts the feedback relationship of effort and consumption will tend to create poverty. And as Hodgskin pointed out, in the world of privilege we actually live in–as opposed to a free market–the poverty of some results very much from the wealth of others (and vice versa).
I guess I’ve just got a bug up my ass about the ASI, but if they said the sun was coming up in the east tomorrow morning I’d be watching for it out the west window.