The conventional liberal wisdom is that the capitalist system has to be tightly controlled by a benevolent state in order to prevent the rich from getting richer and the poor from being trapped in poverty. And yet, anyone reading this post already is more than familiar with evidence that the strongest indicator of poverty is the failure to follow a couple of basic rules: don’t have children until you’re married, and don’t marry until you finish high school. Most of the other things you’ll need to do will follow naturally from those humble beginnings.
Oh, but people cry, how can you understand how difficult it is for someone starting from nothing, you heartless silver-spoon types? I think a more interesting question is how difficult it is even for someone starting with quite a lot, if he doesn’t first absorb some basic precepts for maintaining prosperity. A case in point is NFL players who hit the jackpot. An ESPN documentary called “Broke!” found that an astonishing 78% of NFL players go into bankruptcy within two years of retirement. It’s not a question of never being able to earn enough money to get your head above water, quit living hand-to-mouth, and accumulate some capital for investment. It’s more a question of learning to live within an income — any income — while taking fully into account what expenses you’re facing now and will likely face in the future. NFL players are an exaggerated example because the money-spigot starts and stops so abruptly relatively early in life. Few NFL stars find a lucrative second career. But the income from their first careers is enough to support any family in security for life, with the most modest attention to simple principles.
(I encountered something new in the article: “jock taxes.” These are “stop-and-frisk” state income taxes levied against non-resident professionals who earn well-publicized salaries while traveling around the country. Even if they live in states without an income tax, like Texas, they may find themselves paying as much as half a million a year in income taxes to various states where their games are scheduled. While not an athlete, I ran into something like this years ago when I was a partner in an enterprise with offices in New York, and had to pay New York City and state income taxes that would curl your hair. New York owes me big time.)
Immigrants from entrepreneurial cultures arrive here penniless and build good futures within one generation. Lucky SOBs from non-entrepreneurial cultures win the lottery and still go broke in a matter of months. Capitalism and the free market are not the culprit in poverty. Nor is denial of access to a “good education” the issue, unless we are to imagine that American colleges routinely graduate young people with a grasp of basic economics.
There is no income, private or national, that will cover an infinite wish-list. When budgets don’t balance, financial systems collapse, whether we’re looking at individuals or great nations.Loading Likes...