by Simon Black, Sovereign Man:
Two months ago I was with the former President of Colombia, Alvaro Uribe, at his home outside of Medellin.
He was telling me some hilarious stories about his interactions in the early 2000s with Hugo Chavez, who had recently seized power in Venezuela.
Chavez was a fanatic socialist. He believed so strongly in the idea of redistributing wealth from rich to poor.
Yet even when it was clear his policies weren’t working and Venezuela was rapidly sliding into economic chaos, Chavez’s only solution was to double down and redistribute even MORE wealth.
It was the classic definition of insanity.
Chavez failed to understand what Uribe told me so succinctly: “If there’s no wealth creation, there’s nothing left to redistribute.”
We know how Venezuela turned out; its failed socialist experiment led to today’s infamous shortages of food and toilet paper.
But here in Russia is perhaps the most famous example in our modern times.
Marxists came to power in a bloody 1917 revolution with the goal of eradicating poverty and redistributing wealth.
Yet like Venezuela, the only equality the Soviet Union managed to achieve was making everyone equally poor to the point that this vast wasteland of destitution finally collapsed in the late 1980s.
These economic disasters almost invariably start with a rising gap in wealth and income– a growing percentage of the population feeling left behind who rally behind someone promising to “spread the wealth around.”
As Historian Will Durant wrote in his incredible 1969 book Lessons from History:
“The concentration [of wealth] may reach a point where the strength of number in the many poor rivals the strength of ability in the few rich. . . which history has diversely met by legislation redistributing wealth or by revolution distributing poverty.”
This is exactly what’s happening in the West now.
The statistics are obvious: the wealth gap is bigger than it’s been since the Great Depression.
Middle class wages, when adjusted for inflation, are stagnant.
2015 was the first time in years that the average wage increase in the United States actually surpassed the rate of inflation.
But on a longer timeline, household incomes haven’t kept pace with either productivity or the cost of living.
We can see the effects of this anecdotally.
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