Socialist policies only increase poverty rates

Why do the economies of some countries fail while others prosper? The answer is not that complicated. Simply stated, businesses create value by their nature whereas governments destroy value. Thus, countries prosper when businesses create more value than governments spend and they fail when government spends more value than businesses create.

Businesses add value to an economy (i.e., in essence they create money that has value) when the products they make are desirable and sell for more than they cost to make. This takes discipline.

Governments, on the other hand, decrease value because their costs are much greater than the value of almost any product or service they provide. They must depend upon taxes and borrowing to survive and they have little incentive to exercise discipline in their spending or productivity.

As the size and cost of government increases, more money of value is destroyed. Taxes must increase and increased taxation increases business costs and decreases the creation of money of value for a double whammy.

It is only when the cost of government is balanced against the adequate creation of money of value by businesses that a country can prosper and be compassionate. Most politicians (and media) seem to be unaware of this fact.

Socialist countries are the worst offenders of this principle. Most socialist governments spend much more money of value then their businesses create and usually they have to rely on exports of natural resources (like oil) and the exploitation of labor to try to fund their economy.

Venezuela is a worst example. Unfunded spending is so high in this country that their poverty rate has now increased enormously. If you like poverty, choose socialism.

Richard Graven

Bradenton

This story was originally published January 26, 2016 at 12:00 AM with the headline "Socialist policies only increase poverty rates ."