The Freeman 1972 - The Ludwig von Mises Institute

356 THE FREEMAN Junecommunity, the greater the needfor relief, but the less it is able toprovide.And this in turn is merely anotherway of pointing out that relief,or redistribution of income,voluntary or coerced, is never thetrue solution of poverty, but atbest a makeshift, which may maskthe disease and mitigate the pain,but provides no basic cure.Moreover, government relieftends to prolong and intensify thevery disease it seeks to cure. Suchrelief tends constantly to get outof hand. And even when it is keptwithin reasonable bounds it tendsto reduce the incentives to workand to save, both of those who receiveit and of those who areforced to pay it. It may be said, infact, that practically every measurethat governments take withthe ostensible object of "helpingthe poor" has the long-run effectof doing the opposite. Economistshave again and again been forcedto point out that nearly every popularremedy for poverty merelyaggravates the problem. I have an;.alyzed in this study such falseremedies as "land reform," theguaranteed income, the negativeincome tax, minimum-wage laws,laws to increase the power of thelabor unions, opposition to laborsavingmachinery, promotion of"spread-the-work" schemes, specialsubsidies, increased governmentspending, increased taxation,steeply graduated income taxes,punitive taxes on capital-gains, inheritances,and corporations,andoutri.ght socialism.But the possible number of falseremedies for poverty is infinite.Two central fallacies are commonto practically all of them. One isthat of looking only at the immediateeffect of any proposed reformon a selected group of intendedbeneficiaries and of .overlookingthe longer and secondaryeffect of the reform not only onthe intended beneficiaries but oneverybody. The other fallacy, akinto this, is to assume that productionconsists of a fixed amount ofgoods and services, produced by afixed amount and quality of capitalproviding a fixed number of"jobs." This fixed production, it isassumed, goes on more or less automatically,influenced negligiblyif at all by the incentives or lackof incentives of specific producers,workers, or consumers. "The problemof production has been solved,"we keep hearing, and all that isneeded is a fairer "distribution."What is disheartening about allthis is that the popular ideologyon all these matters shows no advance-.and if anything even aretrogression - compared withwhat it was more than a hundredyears ago. In the middle of thenineteenth century the English