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The Pamphlet Collection of Sir Robert Stout: Volume 81

III — "The Richer the State the Poorer the People"

page 21


"The Richer the State the Poorer the People"

Dear Mr.——,—People sometimes talk as if the poor could be benefited by making the State richer. They argue that if the State owned the land on which modern London and hundreds of new towns and parts of towns have been built, it would now possess millions and millions' worth of property, and that out of this property a handsome provision could be made for the poor.

No greater mistake could possibly be made, and for this reason:—.

There is only a certain amount of wealth in any particular country. Hence, whatever you place in the hands of the State you must take away from Brown, Jones, and Robinson. You do not increase the total wealth by placing it in the hands of the State; you merely pile it up in one big heap instead of in a multitude of little heaps. If the moment you had got the wealth into the big heap you dealt it out afresh into little heaps, page 22 there might not be much to object to in theory, because you would not really be making the State rich, you would merely be redistributing property. That course would be objectionable for the following very sufficient reasons; but it would not be making the State rich. In the first place, it would be most unfair and unjust to take away property from one set of people in order to deal it round to others. And even if this objection did not exist, it would be a most unwise course to pursue, as it would cause an enormous amount of waste to collect the wealth from its present owners and then to redistribute it. The waste caused would be like that produced when first a big bucket is filled out of a number of tea-cups, and then the tea-cups are refilled out of the big bucket. The "slopping" would waste a very large percentage of the water. Besides, if people knew that the moment they got rich they would have to return their riches to headquarters and have it divided out, they would soon cease to be rich. They would say: "Why toil and save when it will do us no good? We had far better keep idle and wait till there is a new distribution of wealth." The notion, then, of merely collecting money to redistribute is absurd.

We must, however, deal with the notion of making the State rich and of keeping it rich, just as any great corporation or company remains rich. Of this notion we can say with certainty: "By page 23 making the State rich you are only impoverishing the people." As I have pointed out already, there is only a certain amount of wealth in any country. If, then, the State possesses so many hundred millions of this money, the inhabitants are so much the poorer.

But it will be argued that the inhabitants are the State. Therefore, though they are poorer individually, they are just as wealthy collectively. In one sense of the word "wealth" this is no doubt true. In another, and in the proper sense, it is not true at all.

What do we mean by being wealthy?

We mean possessing the power of controlling, using, and disposing of—that is, of enjoying—so much wealth. But we can only enjoy wealth which is our own. Wealth which is our own—ours to dispose of exactly as we choose—is a hundred times more valuable than wealth which is doled out to us in a weekly allowance. Hence such wealth as the State possesses is not enjoyed by the persons who contributed to create it. This is what our ancestors meant by objecting so strongly to land and other wealth passing into mortmain,—being held by the "dead hand" of corporations lay and ecclesiastical. They argued that wealth can be best enjoyed when held by a particular individual as his very own, and that everything should be done to prevent it passing either into the hands of the State or of those corporate bodies page 24 which hold property in the same way as the State—i.e. not individually, but collectively.

So far, so good. If I say no more, I shall be told, however, that I am omitting a very important aspect of the question. It will be said that when the State is wealthy it has to spend its money, and that, in this act of spending, its wealth passes out of the dead hands into the living, and becomes at once capable of producing enjoyment. That is, if the State out of its funds pays away a million a week in £1 doles, each recipient of the dole will get the full pound's-worth of enjoyment out of his dole. In other words, it may be argued that by first making the State wealthy, and by then doling out its wealth in wages, salaries, and allowances, the distribution of property may be equalised and the community as a whole benefited. Possibly this is true up to a certain point, but no further. The £1 State doles may go as far as any other £1; but this does not meet the fact that if the capital fund out of which the £1 doles would be paid were in private hands, instead of in those of the State, it would not only be giving far more enjoyment, but would also be being employed in a thousand ways in producing more wealth. Experience shows that the officials who look after State funds must be considered to have done well if they have not diminished those funds. They have not the motive that the private individual has to increase his little piece of property, and to page 25 make it more productive. Hence, while State wealth tends to be barren, private wealth is reproductive.

Take an example: If the State owned the factories and workshops, the great public offices controlling them would make little or no effort to extend business. They would be content to let things remain as they are. The private individuals, on the other hand, who make up a company, spurred on by the hope of more wealth to enjoy, are always endeavouring to find means of increasing their stock of wealth, and with it the stock of wealth at the disposal of mankind.

In spite, however, of this, I am willing to admit that if making the State rich, even with its consequent waste of wealth, were the only way of getting a more equal distribution of property, there would be a great deal to be said for it. As a matter of fact, however, nothing is more certain than that, if we do not waste wealth by aggressive wars, by forbidding the free exchange of commodities, and by absurd and unjust taxation, but allow as much freedom of exchange as possible, wealth will rapidly tend of itself to a more equal distribution. The inequalities under freedom tend to disappear, for, as I have said before, wealth is always tending to spread itself abroad. The maximum of freedom in the matter of exchanges, not State interference, is the short cut to a more equal distribution of property. page 26 Accumulate vast amounts of property in the hands of the State, and we shall simply create a community of State slaves at the bottom and of comfortable but inert officials at the top. Allow, however, wealth to accumulate in the hands of individuals, and prevent its waste by State action, and we shall be on the high road to a fair distribution of property.—Yours very sincerely,

J. St. L. S.