Governments should value economic equality before prosperity

If a country is prosperous it can contemplate more redistribution of wealth than if it is not prosperous. Oil rich sheikdoms can distribute money to residents. If a country is not wealthy, it is more important to become wealthy than to ensure that poverty is equally distributed. A sure way for government to bring about economic equality is to make sure that everyone is poor. If it were true that equality should be valued more than prosperity, then governments should seek universal poverty. That's obviously not true, so the resolution fails.The Zero-Sum-Game FallacyPro begins with grievous mistake, that an economy is a zero sum game. The notion is well-debunked, including a book-length exposition. [13. http://www.amazon.com...]A simple example shows the error. Assume a small island nation with a constant money supply and only two farmers, A and B. A and B produce equal amounts of food. Suppose farmer B decides to stop producing. There would be food shortages and the price of food would increase significantly. The people on the island would spend more and have less food, so poverty would increase. Suppose instead, that the two farmers obtain, for the first time, some tractors that increase productivity. The islanders would then have more food at less cost, and prosperity would increase. Poverty and prosperity are functions of efficiency, and may rise and fall even if the money supply is held constant. If everyone decided to stop working in favor of receiving government checks, the result would be inevitable poverty.Pro originally argued that the Satisfaction with Life index correlated with equal distribution of income as measured by the Gini index. In the last round, I showed that was false. It's good to be rich, for sure. Norway derives wealth from North Sea oil which it has wisely invested, Qatar from vast oil supplies, Luxembourg from a unique position in international banking. Singapore derives it's wealth through free markets. None derived wealth from redistribution. Pro uses small countries as examples, because the overall economies can be dominated by a few special conditions. The NetherlandsI explained why small economies are not good examples, but Pro insist that The Netherlands proves redistribution brings prosperity. Policies of redistribution brought the Netherlands to near bankruptcy in the early 1980s. they restored prosperity by changing to free market policies, and were prosperous again by the mid 1990s. "During 1970-1982, the fiscal situation deteriorated dramatically … Public expenditures rose sharply, mainly as a result of an increase in transfers to households. … Important in these rising transfers was the rapid increase in the number of social security recipients: the number of unemployment, disability, sick leave, and welfare recipients more than doubled … Problems in the labor market were exacerbated by increases in the minimum wage, the introduction of minimum wages for young people, … and the elimination of the difference between the minimum benefit and the minimum wage." [14. The Netherlands: transforming a market economy http://tinyurl.com... p. 4] "The striking turnaround in the Netherlands economic performance over the past decade [to the mid 90s] … the policy reforms that included a firm monetary anchor, tight control over public expenditure, and reduced intervention in the economy. … major cuts in minimum wages for adults and even deeper cuts for youths … reducing the duration of unemployment benefits, … privatizing other benefits, and cutting the personal tax burden." [14, p. 1]Having regained prosperity they returned to redistribution, an their economy is now sinking again."... the most pressing challenge for the near future is to prevent the cyclical increase in unemployment from becoming structural. ... the upturn is still supported by exceptional fiscal and monetary stimulus. ... as a result the deficit widened significantly and fiscal sustainability deteriorated. As economic growth strengthens, the government coming in after the June 2010 elections will be confronted with the task of consolidating public finances without putting the recovery at risk. The most crucial longer-term challenges are to secure fiscal sustainability and raise potential growth." [15. Economic survey of the Netherlands 2010. [15. http://www.oecd.org...]The pattern in the Netherlands is similar to the U.S. and Sweden: prosperity brings redistribution, and that ultimately ends prosperity.Pro claims that prosperity came to China because of increasing foreign investment. So, does investment increase or decrease the concentration of wealth? One possibility is to promise investors that their investment will be seized and equitable redistributed to the workers. That's not likely to work. Another possibility is to impose a very high minimum wage, so that profits will be low. Or perhaps taxes could be made high so the profits could be taken by government for distribution. No, investment is only attracted by the understanding that capital will be preserved, profits will be made, and profits will not be seized and redistributed. Investment is concentration of wealth, not redistribution.Prosperity is increasing in China, and it is not just foreign investors. A middle class is rapidly developing, with an accompanying demand for automobiles and higher end goods. china is expected to soon be the world's largest market for luxury goods. There is no way to explain the prosperity in terms of valuing economic equality. It was abandoning the communist ideal that made the country prosperous. Why doesn't China impose a $100 minimum wage to solve the concerns over Apple's cheap labor? it's obvious.Abandoning democratic socialism in India has similarly increased their prosperity.The minimum wagePro's minimum wage theory is refuted by the by the data. A high minimum wage causes unemployment as unprofitable operations are shut down, jobs are automated, or low-skilled workers are replaced by fewer high skilled workers. The Congressional Research Office found 99 academic studies of the effects of the minimum wage. Studies spanned fifty years worldwide. In all but three cases, unemployment increased when the minimum wage was raised. [16. http://web.archive.org... ] In the few cases where unemployment did not increase, the free market wages were already above the minimum wage, so there was no effect.The Ruling EliteMy argument is:1. Government values are expressed as policies.2. valuing economic equality implies policies of redistribution.3. Redistribution requires many decisions of who to take wealth from and who to give it to, and how much is to be transferred by what means.4. Redistribution decisions are made by those who have ruling authority.5. Therefore a ruling elite is required.A ruling elite might choose not to reward itself, but that rarely happens. One might imagine a theocracy of rulers who do not accumulate wealth, but I know of no examples. In the United States, government workers receive 45% more compensation than private sector counterparts. [17. http://online.wsj.com...] Progressive states like California have a more privileged elite than conservative states.My point is that valuing economic equality does not mean that economic equality results. The ruling elites in the Soviet Union and Mao's China no doubt valued economic equality, and there is every reason to believe the North Korean leaders also value economic equality. They correctly recognize that redistribution cannot be accomplished without a ruling elite empowered to redistribute. It's a part of the package.Prosperity derives from free marketsPro cannot explain why Hong Kong or Singapore are more successful than North Korea or China. It's their free economies.