disturbing misconception

Destructive Economic Myth: With Capitalism the Rich Get Richer and the Poor Get Poorer – 7 Facts You Should Know

Craig HueyEconomics 2 Comments

For decades, the myth that capitalism causes the rich to become richer and the poor to become poorer has been preached and spread all over the world.

Socialists and progressives say this all the time … as if this myth were proven fact.

You know the saying: tell a lie often enough – and loud enough – and people will begin to believe it…

But a quick glance at the economies of the countries of the world shows that the freer the country economically, the less poor it is.

Here are 7 facts to back up this observation.

  1. Capitalism produces the wealthiest economies.
    Countries that have more economic freedom are richer – and its citizens live better – than the citizens in countries that have high taxation on the rich, and heavy regulations.

The 5 countries with the most economic freedom are:

  • Hong Kong
  • Singapore
  • New Zealand
  • Switzerland
  • Australia

Notice that the U.S. isn’t in the top 5 … in fact, the U.S. is #18.

The 5 countries with the least economic freedom are:

  • Yemen
  • North Korea
  • Venezuela
  • Cuba
  • Republic of Congo

In these countries, the rich are the socialist government leaders and their friends.

  1. Capitalism entices people to leave their own country.
    A simple way to gauge where people are better off is to see where people are moving. Are more people moving to the countries with the least economic freedom … or are more people moving to the countries with the most economic freedom?

People worldwide want the economic opportunity of the U.S. to lift them out of poverty.

  1. Capitalism thrives under freedom and small government.
    Countries with a small government, low taxes and free markets make both poor and rich people richer.

This is key: wealth increases for all.

The smaller the government and the lower the taxes and the freer the markets, the smaller will be the income gap between the rich and the poor.

The economic miracle caused by free enterprise is based on giving everyone equal opportunity … and the expansion of wealth lifts people out of poverty.

The “economic pie” isn’t a fixed size. Free enterprise and equal opportunity causes the pie to expand, transforming our society to a more affluent society.

  1. Capitalism is based on freedom and dignity – not envy.
    Envy causes some to despise capitalism and its consequences.

Socialism is based on not just economic illiteracy … it’s also based on envy – the desire to take by force from some, even if it hurts us all.

Ludwig von Mises referred to this as the Fourier Complex:

“Resentment is at work when one so hates somebody for his more favorable circumstances that one is prepared to bear heavy losses if only the hated one might also come to harm. Many of those who attack capitalism know very well that their situation under any other economic system will be less favorable. Nevertheless, with full knowledge of this fact, they advocate a reform, e.g., socialism, because they hope that the rich, whom they envy, will also suffer under it.”

  1. Capitalism helps everyone.
    Regarding free trade policy, when a country has no tariffs, here’s what happens:
  • Imports increase
  • Product variety increases
  • Competition for sales increases
  • Prices drop
  • Consumers can afford to buy things they couldn’t afford to buy when prices were higher and product choices were fewer

These principles apply to every sector of the economy – even health care.

  1. Capitalism creates a dynamic, growing economy.
    With low taxes and fewer regulations, it’s easier for entrepreneurs to start their own businesses and become successful.

More businesses lead to more jobs and more opportunities for people to begin supporting themselves rather than being dependent on someone else – or on government.

Socialism can’t create – instead, it destroys.

  1. Capitalism gives people economic freedom … plus the incentive to create, innovate, produce, trade and become prosperous.

The 5 most innovative countries are:

  • Switzerland
  • Sweden
  • Netherlands
  • S.
  • United Kingdom

All of these countries have relatively low taxes compared with the rest of the world – with the exception of Sweden. But Sweden has a very low amount of regulations – which makes up for its high taxes.

In economically free countries, the rich do become richer … but the poor also become richer.

If an economic system only shares what it has but doesn’t produce anything, that country is doomed.

Capitalism is an economic system in which anyone can bring forth innovation and create wealth … all the while retaining individual freedom and self-determination.

Socialism leads to the loss of freedom … it leads to poverty … it creates social chaos.

Its history is marked by failure, blood and hopelessness.

It does seem pretty clear, then, which society is preferable.


What do you think? Write me at craig@craighuey.com

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