24.3 Wealth And Poverty
From The Reality Of Welfare part of 'The Australian Achievement' by M Cooray (1996)

The second major factor which has become obscured by socialist sloganism is that the creation of wealth directly and indirectly contributes to the elimination of poverty. The philosophy of capitalism works for the alleviation of poverty at two levels. Firstly it destroys artificial social and hierarchical barriers and generates opportunities for the poor to become rich or less poor. The modern socialist will argue that this reasoning is fallacious because those with capital will exploit those without it and therefore the rich will become richer and the poor poorer. The scope of this paper does not permit refutation of such specious arguments. It is sufficient to remind ourselves that capitalism, where it has flourished for any length of time, has had a better record of reducing poverty than any system of state paternalism. See the quotations from Friedman and Williams in section 3.

At the second level, capitalism, by the creation of wealth, promotes benevolence. Human beings whether poor or rich have characteristics both good and bad. Capitalism makes benevolence affordable to individuals. The great charity foundations of the United States which have benefited all mankind through the advancement of learning and science are by-products of free enterprise. Under socialist welfarism benevolence and charity becomes the responsibility of the state. Individuals are deprived of their capacity to show concern for their fellow men by being deprived of their wealth, through taxation and other controls. Vast bureaucracies are set up to extract money from the public and to spend it on state determined priorities. In the process, the bureaucracy itself soaks up most of the public revenue.