“I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it.”
-Benjamin Franklin

If solving poverty were as simple as giving poor people entitlements, we would have eliminated poverty a long time ago.

Things aren’t so simple.

In fact, they’re too complicated for the government to expect to solve it.  Consider some of these essential questions about poverty:

1. If poverty is relative, won’t “poor people” always exist?  (In other words, if the average income of everyone in the United States was $1,000,000, wouldn’t that make $100,000-earners “poor”?)
2. What causes poverty?

Here are my answers:

1. Yes.  In Dantopia, poor people have a higher standard of living than you’d expect, even though they could still technically be called “poor.”
2. On the large scale, too many things to mention here.  But on the personal scale, problems like lack of financial education, lack of a strong family, bad financial habits (like spending more than you earn), and lack of personal responsibility are some reasons poverty exists.

Over in Dantopia’s neighbor, Liberalia, poverty is approached with a pretty simple premise:  give poor people money to help them in their poverty.  Liberalians are confused that their poverty problem persists despite their massive welfare state, and despite continuing to dole out cash to poor people.

But Dantopia asks a different question:

Is it more charitable to give poor people money, or to actually bring about an economy that lifts up ALL poor people to a higher standard of living?

As an individual, it’s a good idea to work and do both.  As a government, a free market that brings opportunity to everyone and more cash flowing all over is the name of the game.  Here are 10 ways Dantopia fights poverty without using more government.

1.  Attract wealthy citizens with low (or in some cases, zero) taxes.

In order to raise the quality of life for the poor, there has to be more money flowing in the economy.  One way to get this happening is to attract wealthy citizens.  Typically, these are small countries like the Bahamas.  Dantopia, although a large country, is actually a “tax haven.”

A tax haven is a country like Monaco – a location where rich people place personal belongings and companies in order to avoid the heavier taxes of larger countries.  As you might imagine, Monaco is filled with gazillionaires who pay local contractors to build them big houses, buy local food, and pay local maids and security firms to take care of the house when they’re gone.

Without massive entitlement spending (see #2), Dantopia doesn’t require a lot of tax income, so it’s free to leave rich people alone with their money.  With little need to tax, Dantopia also has little need to regulate financial accounts.

This is important, because regulation alone can often scare away money.  For example, some Swiss Banks have stopped accepting American citizens’ money because the IRS requests to know what’s in the accounts – not take any money out, just look at them.  Some Swiss Banks don’t like this and subsequently don’t allow Americans to open bank accounts.

With no Internal Revenue Service in Dantopia, rich people move in, plant their companies, hire Dantopian citizens, and use Dantopian banks.  Unemployment does fluctuate sometimes, but with little restrictions on opening businesses and no business taxes, people are free to invent their own jobs; often, these jobs involve selling products to the wealthy people who inhabit Dantopia.

Is there a disparity between the rich and the poor in Dantopia?  Yes.  Critics in Liberalia even use this to argue against the Dantopian Laissez-Faire system.  But what they don’t see is that the standard of living for the poor in Dantopia blows Liberalia out of the water.

2.  Spend little on entitlements.

Liberalia spends trillions of dollars on entitlements like Social Security, Medicare, and Medicaid every year, but Dantopia reserves only a small, highly restricted “social safety net” for the truly helpless.

Consequently, Liberalia are constantly hiking taxes on the rich – driving them to Dantopia, where they can hire more poor people and buy their houses – in order to fund their massive entitlement programs.  (Of course, Liberalia also uses a fiat currency system, which means they can print their own money sometimes; but this only makes the money that poor people in Liberalia have worth less through a process known as inflation.)

It seems counter-intuitive that spending less money on poor people would actually help the poor be better off.  But here are some consequences of having little for entitlements:

• Without Social Security, people are forced to invested in their own retirement accounts or receive retirement assistance from their employers.  This generally raises the net worth of people who would have otherwise spent their money on Ding-Dongs.  It also forces people to be nicer to their family, as they might have to rely on them one day, further strengthening the relationships within families.
• Without welfare, able-bodied people are forced to either beg or work for their money.  Beggars enjoy a high standard of living because everyone else is so rich and generous.
• Health insurance is private, so people have to choose their own health care.  Trying to save money, they often look for competitive prices.  This forces health care providers to keep prices down so that they have customers, which helps everyone from rich too poor.  Some people obtain health savings accounts through their employers.

Liberalians criticize the “cruel” government of Dantopia, but Dantopian talking heads are quick to point out that strong purchasing power of the Dantopian currency and low prices of goods have virtually wiped out poverty.

Without a burden of entitlements stringing down the budget, it is easy to balance the Dantopian budget every year, using extra money to buy up assets that counter-act the need to tax citizens and invest in military research.  Liberalia, meanwhile, is trying to figure out how it will re-pay the loans it took from Dantopia.

(Note:  Dantopia stopped buying Liberalian bonds when it was apparent Liberalian debt was virtually worthless).

3.  The strong family structure and fighting single motherhood.

Families are “little civilizations,” so Dantopia does just about all it can to encourage strong family bonds.

This includes the following:

• No government recognition and/or legal standing for same-sex unions
• Tax credits for families who live together
• No public schools mean more home-schooling where families develop strong bonds
• No centralized bank; loans are secured through private banks, and oftentimes family members combine their funds to secure loans

Dantopia recognizes that deadbeat parents can’t be totally avoided without directly intervening in every single case, and since that kind of intervention would bankrupt a country, it does not do so.

Liberalian culture often celebrates single motherhood, but Dantopians realize that single motherhood is a great scourge of civilization.

As Ann Coulter notes,

By 1996, 70 percent of inmates in state juvenile detention centers serving long-term sentences were raised by single mothers. Seventy percent of teenage births, dropouts, suicides, runaways, juvenile delinquents and child murderers involve children raised by single mothers. Girls raised without fathers are more sexually promiscuous and more likely to end up divorced.

A 1990 study by the left-wing Progressive Policy Institute showed that, after controlling for single motherhood, the difference in black and white crime disappeared.

Various studies come up with slightly different numbers, but all the figures are grim. A study cited in the far left-wing Village Voice found that children brought up in single-mother homes “are five times more likely to commit suicide, nine times more likely to drop out of high school, 10 times more likely to abuse chemical substances, 14 times more likely to commit rape (for the boys), 20 times more likely to end up in prison, and 32 times more likely to run away from home.”

So Dantopians work to nip the lack of family problem in the bud by keeping families strong to begin with.

4.  Purchasing power, Part I:  No centralized bank like the Federal Reserve means no printing of money or artificial inflation of credit.

Hate losing so much money in the stock market when bubbles pop?  Dantopia subscribes to the Austrian school of economics, which suggests that having a centralized bank is largely the cause of artificial market conditions such as easy credit that inflate such bubbles in the first place.

There is no Dantopian Federal Reserve, and the Dantopian government doesn’t print new money unless it’s to replace old money.  It also doesn’t regulate credit, which means that individual organizations and banks are responsible for the money they loan; this generally keeps loan requirements stable, with stable default rates that don’t cause sudden market crashes.

5.  Purchasing power, Part II:  The Dantopian Gold Standard.

Dantopia is on the gold standard, which means that every Dantopian dollar you see can be traded in for its equivalent in gold.  This not only means that Dantopian dollars remain stable, but it means other countries love to get their hands on them because they’re actually worth something – bringing in more international trade and, hence, more money and jobs.

In the United States, Richard Nixon lifted the gold standard in the early 1970’s.

Back then, was around $40/troy ounce.  Today, gold is around $1,100/troy ounce, which shows you how cheap the dollar has become against gold.

Dantopia does sometimes coin less valuable metals such as silver and copper, and can coin new gold and other metals, but generally the gold standard keeps the value of money stable – when companies lower prices, Dantopians enjoy greater purchasing power with the money they already have.

6.  Purchasing power, Part III:  With people responsible for what they buy, companies have to keep prices low in order to compete in the free market economy.

Look at the places where government meddles – gas/oil, health insurance, etc. – and you see that prices generally run high.  Look at places where the free market is generally allowed to function – food, electronics, etc. – and you see not only cheaper prices, but declining prices.

For example, consider that the original iPod cost $400.  Today, you can buy an iPod Nano – which has more space and features – for $149.

When the government picks up the bill, people are less inclined to factor “price” in as a variable to the stuff they buy – this is often the case in health care.  Subsequently, companies can get away with charging more.  But when people pay their own way, price is much more important to them because it’s their own money on the line, and companies generally have to keep their prices low to keep people buying their products and services.

Oh, and if the companies provide less value for the dollar than other companies, they lose customers, as well.  Some companies provide high-end products and services for rich people and charge a lot; but without something of equivalent or greater value to offer in return, these companies don’t survive.

7.  Free market innovation.

Technology in Dantopia is driven by ambition and the pursuit of free market profit.  Companies that are left alone to compete with each other have to continually push the envelope for their customers or risk losing business.

Consider the above example of the iPod.  With other gadgets becoming available on the market, the technology has improved while the prices have actually fallen.  While the price drops, the quality improves:

One way to compete with other companies is to drive innovation.  This means taking risks, exploring the unknown, and knocking down obstacles – this all keeps the economy vibrant and thriving.

As John Stossel notes,

It’s true that America’s partly profit-driven, partly bureaucratic system is expensive, and sometimes wasteful, but the pursuit of profit reduces waste and costs and gives the world the improvements in medicine that ease pain and save lives.

“[America] is the country of medical innovation. This is where people come when they need treatment,” Dr. Gratzer says.

…

Canada and England don’t pay the price because they freeload off American innovation. If America adopted their systems, we could worry less about paying for health care, but we’d get 2009-level care — forever. Government monopolies don’t innovate. Profit seekers do.

Wealth isn’t only money.  With better technology comes a better standard of living for Dantopia’s poor (and everyone else).  Even poor Dantopians can buy cheap electronics on dBay, the Dantopian version of eBay.  Liberalians are left wondering how it all came about.

8.  The protection of private property.

Fraud and theft are violations of your right to your own property in Dantopia, so one of the roles of Dantopian government is to step in when someone tries to cheat you.  This means that when poor people do earn wealth, they generally get to keep it (”generally” because the justice system is, admittedly, not perfect).

9.  Increased emphasis on financial education.

With no public schools, parents are free to choose how to educate their children.  They can homeschool them, teaching them financial lessons they’ve learned (like “always pay off your credit cards”) and helping them open up their own bank accounts, or they choose the schools that offer financial education programs.

Parents are paying money for their children’s education, so they want to see a return on their investment.  If schools can’t teach basic financial literacy to the kids they teach, some parents simply transfer them to a new school that can.

Consequently, the Dantopian people are much better at personal finance than Liberalians, who were busy hearing lectures that didn’t give them new skills.

10.  Dantopia realizes that government doesn’t create wealth by redistributing it.

In Liberalia, the government tries to fight poverty by taking money away from the rich and giving it to the poor.  The net gain and loss for the country’s economy?  Zero.  Not to mention the unintended consequences involved.

Also, the Dantopian government realizes that people who risk their own money are more likely to put more thought and research behind their investments and purchases, so it doesn’t try and manage the economy from Dantopia City.  Rather than put financial decisions on the desks of bureaucrats who don’t have as much information as individual investors, Dantopia allows people to move wealth on their own.  And it thrives.