The majority of Europeans during the middle ages lived as serfs on land owned by Kings and Lords who ruled from fortified castles. They were trapped in subsistence living, but this was accepted because people had no concept of advancing from one class to a higher class. The medieval church even wrongly supported this system with their teaching. But the Judeo-Christian truth of God desiring for people to advance, began to take hold and bring change.

The principles of Biblical capitalism eventually led to the triumph of the Judeo-Christian ethic over Greek and Roman thought. Capitalism was the system, which freed the Western world from the greater oppression of the powerful over the mass of humanity by giving each person the opportunity to advance. Capitalism allowed a middle class to arise and displace the ruling class. It also catapulted the Western world ahead of other civilizations, creating economic inequality in the world. Should those with means be punished or should those without means be lifted up?

Today some advocate that government should tax the rich and give to the poor to reduce inequality. However, this ignores how “growing the economy” seems to be a better answer to help the poor. Between 1990 and 2010, the number of people worldwide living in extreme poverty (i.e. on less than $1.90 a day) was cut in half, and has continued to decline since then. This is 20 years of enormous progress. Two economists, Tomas Hellebrandt and Paolo Mauro, studied this and concluded, in a 2015 paper published by the Peterson Institute for International Economics, that global income inequality declined between 2003 and 2013 due to rapid economic growth in poor nations.

There are two ways to close the gap between the rich and the poor. The first is to concentrate on making the poor better off. The second way to reduce inequality is to make the rich worse off. In a relatively free economy, the main way to get wealthy is to produce something that people value. This has been a basic economic insight at least since Adam Smith’s “The Wealth of Nations,” published in 1776. Wealth is one of the main rewards for productive work. High taxes on wealth and the wealthy reduce the incentive to produce.

For example money to be invested in business and commerce will tend to move to the place where taxes are the lowest. So raising taxes will tend to move capital investment, the associated jobs and a rising standard of living, away from those that the “taxers” are trying to help.

Sources:

Compassionate Capitalism – A Judeo-Christian Value by Harold Eberle, 2010, Worldcast Publishing.

A War on the Rich Won’t Help the Poor by Henderson; Wall Street Journal, Feb 9, 2018. Mr. Henderson is a research fellow with the Hoover Institution, and an editor of the Concise Encyclopedia of Economics. Appeared in the February 9, 2018, print edition.