Why high income gaps remain among the planet’s population

Consejero Académico en Libertad y Progreso

INFOBAE – Individuals differ in looks and knowledge. Also in needs and skills to satisfy them. The question is to agree to develop the individual skills that best address their shortages.

There are two alternative ways to resolve personal needs and skills disparities:

The first impulse is to seize the missing by force. Or deception, taught the fable of the raven and the fox. Through force or deception, some impose their will on others. They are actions with poor, uncertain, unsustainable results. It confirms the poverty of the majority of the peoples. Impositions destroy, they never create value.

The second, the way to overcome the cracks and conflicts of interest in a sustainable, predictable, progressive and creative way, is to agree and exchange personal surpluses and deficiencies. Free exchanges from impositions, unnecessary obstacles. That each party benefits because it gives something that it values ​​less than what it receives in return. And both win simultaneously. Voluntary exchanges, transactions, create value, explained notable economists.All production consists of exchanges of goods that are carried out by transferring rights over them

The miracle from which both parties benefit. They create value by satisfying, attending, different individual shortages. That vary in time. As they discover new skills, new needs arise and they agree to overcome deficits of some individuals with surpluses of others. A phenomenon recognized by the economist J. B. Say.

The production of goods generates varied rights. There are no rights that have not been assigned by others. All production consists of exchanges of goods that take place by transferring rights over them.

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The graph outlines the average income per person for each of the countries in 2020. The vertical axis shows the average income for each country, in official dollars per inhabitant. It ranges from USD 250 to USD 110,000, per year and inhabitant, as conflicts and unresolved obstacles are freed. And on the horizontal axis, countries are accumulating by increasing level of average income. The differences between the extremes are surprising. That they are not caused by the shortcomings of some peoples or the greed of some or the laziness of others. The formula is that it is no secret knowledge.

No undue sacrifice is required. On the contrary, the recipe is to achieve the greatest satisfaction from people. As long as they manage to agree on activities that are freer of obstacles, income and wealth will increase. Freedom from interference to transactions, competition, is expanding the average income of nations. Argentina, with an average income of USD 8,433 at the official exchange rate, is now well behind, 32% below the world average. Failure of politicians and their voters. In 1980, the income of Argentines was almost triple the world average.

The miracle of the multiplication of wealth

It expands by extending agreements, establishing institutions-rules that smooth transactions. Institutions are general agreements, norms that facilitate business.

Although it is popular to recognize the contribution of technological inventions, the agreements, the new institutions, gave the greatest impetus to the progress of humanity. Credit explodes transactions, displacing uncertainties, obstacles, and barter. Politics has been overtaking the violation of wills.

Units of measurements, languages, norms, laws, governance continually open to more precise and precious transactions. Competitive individual ownership unleashes creative forces when recognized, driving revenue.

Negotiating reciprocal shortages increases income, the value of assets, encouraging training, education, in the trades that best suit each one, according to the competition of transactions. Each person specializes in what is most advantageous for themselves Negotiating reciprocal shortfalls increase income, the value of assets, encouraging training, education, in the trades that best suit each one, according to the competition of transactions (EFE)
Negotiating reciprocal shortages increase income, the value of assets, encouraging training, education, in the trades that best suit each one, according to the competition of transactions (EFE)

Creating more value is the indirect method. Through private businesses, each individual is perfected in meeting the desires of others. And so others attend to their own needs, as long as they give themselves credit. Confidence in the certainty of contracts measures the volume of transactions, markets and the wealth of nations.

On the contrary, inflation and uncertainty hold back contracts. The certainty is dimensioning networks of exchanges of individuals who go out of their way to care for others. The cooperation of the whole, encouraged by their individual interests, achieves the greatest possible satisfaction, the more free of artificial impediments. The trust, certainty, of individual relationships and contracts is the greatest determinant of income and asset wealth. The creation of greater value is the indirect method. Through private businesses each individual is perfected in the attention of other people’s desires

Politics, the organization of the State and institutions should ensure that exchanges are voluntary, freer from impositions that twist individual wills. The information networks and media, education and justice should be in charge of preventing impositions contrary to personal wishes, since they reduce the satisfaction of the population. The wealth, the income of the countries, reflects the freedoms of unwanted impositions. The greater the impositions, the greater the poverty. Taxation does not refer only to tax burdens but to all frustrating limitations of individual transactions. A State can collect high taxes with the consensus of the population and satisfaction of the services provided.

The economic history of the last 200 years

In 1820, the current Argentine territory was occupied by 530,000 inhabitants. A desert with endless confrontations, which, with the Constitution, 1853/60, inspired by J. B. Alberdi, with the support of the winners of Caseros, was transforming into spaces of Freedom, Apertura, Encounter. Individual rights.

The data show the following demographic evolution: 1.9 million inhabitants, in 1869 (33% immigrants); 3.4 million inhabitants in 1890, and 7.7 million in 1913, with the highest income in the world. The commitment and validity of laws and contracts in Argentina dazzled humanity, “making America” ​​became the motto of immigrants and settlers.

In stark contrast, in the last 40 years, individual incomes fell by less than half and poverty reaches half of Argentines.

While the rest of humanity had the opposite movement: it reduced its poor, from 40% to less than 9 percent.

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