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Socialism, Capitalism, and Income


The plight of the poor is best judged by their income, since that is what pays for their quality of life. Income inequality, i.e., their income relative to the rich, is of little consequence, in the data but more importantly in the lives of the poor. The former is shown clearly in Edward P. Lazear’s Prosperity Project paper Socialism, Capitalism, and Income. The latter is common sense.

Eddy Lazear’s 13-page treatise is deeply needed, fundamentally sound and solidly foundational. It provides a strong kickoff for The Prosperity Project, of which the eminent economist who authored this paper is co-chair.

It examines the income of the poor in two ways, in absolute terms and relative to the rich. Improving the former is the way to help the poor since it measures their ability to support themselves and their families. Jealousy doesn’t put food on the table.

Lazear documents how economic freedom correlates with greater income for those at the bottom of the economic hierarchy, albeit barely advances why. Several of my Comments below seek to fill that causality gap based on Economic Control theory.

Socialism, Capitalism, and Income by Dr. Edward P. Lazear



The lede is buried in the middle of the second paragraph.

The poor, defined as having income in the lowest 10 percent of a country’s income distribution, do significantly better in economies with free markets, competition, and low state ownership. Socialism, Capitalism, and Income by Dr. Edward P. Lazear

The back half of the lede is buried on the bottom right of page 1.

Inequality is not a good measure of how well the poor fare in general. Socialism, Capitalism, and Income by Dr. Edward P. Lazear

A foundational point comes in the General Discussion of the Literature.

The notion that incentives matter is found throughout the economic literature and goes back to Adam Smith. Adam Smith in 1776

Let’s note that intelligence matters just as much, because intelligence at some level is what responds to incentives. Nucleon-focused theories of economics – which is to say all to date – miss the largest factor at play in any large scale socionomic system. The googliest thing is the vast imbalance in population and collective-IQ between electrons and nucleons.

Axiomatically, socionomic electrons (families and singles) vastly outnumber nucleons (government agencies, businesses and religions). Multiply that mass multitude by what each person possesses: a brain connected to two ears, two eyes, a nose and a pair of opposable thumbs, plus purchasing power. In short, every socionomic electron has a noggin, a phone and a wallet. En masse, they swamp the nukes in collective-IQ, even if they (we) get bullied by centralized power, mostly from GovNukes.

Solving for a Decentralized World

“No single consumer, worker, or firm can possess all the necessary information” to coordinate the world. Socialism, Capitalism, and Income by Dr. Edward P. Lazear citing Von Mises and Hayek

Lazear’s reference to individual consumers and workers covers, if inelegantly, eCon’s socionomic electrons. However, his universe of nucleons is grossly incomplete. It’s missing two full classes of nucleons, namely GovNukes and religions.

He is right to focus on maximizing possession of all necessary information to make smart socionomic decisions. One reason for dCon’s superiority over cCon is that it harnesses a socionomic system’s max intelligence.

Socialism is stupid.

Rusmich and Sachs (2004) argue that the failings of the socialist system have to do with the lack of feedback mechanisms that allow inefficient organizations to fail. The absence of the natural selection that capitalism ensures results in low growth, less change, slower productivity growth, and therefore stagnant wages. Socialism, Capitalism, and Income by Dr. Edward P. Lazear

Defining Socialism & Capitalism

Key to exploring the relation of system to income is settling on common definitions of socialism and capitalism. Socialism, Capitalism, and Income by Dr. Edward P. Lazear

Their position on the eCon axis defines them.


Economic freedom improves the incomes of all groups. Socialism, Capitalism, and Income by Dr. Edward P. Lazear

This summation comes on page 13. You can pretty much skip pages 6-12.

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Who is David Burkean?


I am David Burkean, America First patriot, ethical pragmatist, avid Burkean and advocate for Decentralized Control - dCon. I'm wary of Centralized Control - cCon. I see in cCon-dCon terms. #More4More follows in the wake.

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