On Wealth Distribution

Paul Graham has an interesting article on wealth distribution:

Mind the Gap

For those who are impatient to read the whole (long) article, here are some excerpts that are relevant to our topic:

"With the rise of the middle class, wealth stopped being a zero-sum game. Jobs and Wozniak didn't have to make us poor to make themselves rich. Quite the opposite: they created things that made our lives materially richer. They had to, or we wouldn't have paid for them."
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[snipped]
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"If you suppress variations in income, whether by stealing private fortunes, as feudal rulers used to do, or by taxing them away, as some modern governments have done, the result always seems to be the same. Society as a whole ends up poorer."

Curiously, some people in this country still think wealth is only limited to tangible entities like land, batu seremban, and teh tarik. Thus, wealth division to those people is still similar to dividing a cake with you will take less if someone else takes more.

However, is this really true? Here is an interesting analogy I read somewhere:

Get a few friends, say 3 of them and form a circle.

Take out a $5 note and ask the person next to you to do you a favor, say give a massage, help to scratch your back, etc. and pay that person the money. The person who receives the money will do the same to the next person. This process is repeated until the money is circulated back to the originator.

Has anybody become a loser in this game? No! Each person has gotten something that he/she desired and the $5 note remains the same shape.

We have created a trivial $20 worth of wealth with everybody winning

In other words, people create wealth by providing conveniences and advantages to others (think Apple or Toyota), which in turn, will aid others to create wealth. In the process everybody is getting richer and has better living standard. Why can't Malaysia do that for a win-win outcome?

Should you have the courage to read something heart-sinking and discouraging, take a look a blog entry by Lim Kit Siang below:

Keris-wielding Hishammuddin the most divisive and polarised Education Minister in history