Saturday, September 19, 2009

Forget inequality, Liberty will Triumph in its own course

In the Weekend Ruminations the Business Standard T N Ninan pose an interesting question but wrong conclusion and with wrong theory in head. So what is that question?

  • “Which country would a poor person like to live in? He has two options. In Country A, the average income per head goes up by 1 per cent each year, while that of the poor goes up by 1.25 per cent. In Country B, average income goes up by 3.5 per cent each year, but that of the poor goes up by only 3 per cent. It is easy to see what will happen over time in the two countries. In A, inequality will reduce and everyone will become more equal. In B, however, poverty will reduce much faster, even though the level of inequality will increase. So which of these two countries would a poor person choose?

The answer is known at least decades back as has been clearly pointed out by Professor Mises.

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