We hear stories about people winning the lottery and then losing all of their money within a relatively short time period.  It is no coincidence that this is a frequent occurrence.  People who are poor and don’t know how to handle money still don’t know how to handle money if they happen to stumble upon some of it.

The majority of people who play the lottery on a regular basis are not good with money.  If they were good with money, they probably wouldn’t be playing the lottery.  I am speaking in generalities.  There are exceptions.  There are people who are good with money who also throw a couple of bucks each week towards the lottery, whether it is buying a couple of tickets or contributing to the office pool.

There are stories about people winning the lottery who handle their money quite well. These are people who probably already had some accumulated wealth, or at least would have likely accumulated some in the future.

There are self-identified socialists and welfare statists out there who think we need more equality.  The problem is that they are not talking about getting rid of the Federal Reserve, which disproportionately hurts the poor with the inflation tax.  They are not talking about getting rid of government regulations that keep the poor from competing against businesses.

The socialists and welfare statists want more equality of outcome through wealth redistribution. Whether they know it or not, they are advocating that everyone be poorer.  They can get more equality by making everyone equally miserable, except of course for the elite running the show.

Nobody is equal in this world.  You probably heard it from your parents that life is not fair.  We are all born with different looks, different talents, different skills, and a different environment.  LeBron James was lucky in that he was born with DNA that gave him great size and extraordinary basketball talent.  That’s not to say that he hasn’t worked hard.  It’s just that there is almost nobody else on this planet that could have been as good of a player as LeBron James, even if they devoted every free second to working on basketball.

The fact that we are all different is actually a great blessing.  I have no idea how to build a car and don’t know much about fixing a car.  Yet I drive one almost every day.  I am lucky that there are people in this world who do know how to make cars and fix cars.  If everyone were the same, we wouldn’t be blessed with the division of labor that we have that makes us so wealthy.

Why the Rich Get Richer

We could take all of the wealth in the world and divide it up equally amongst the 7 billion plus people on the planet.  This would be impossible, but let’s just say that it was possible.  It would be quite devastating just in the shifting of resources.

But let’s just say this could be pulled off, but it was a one-time socialist policy.  If the policy continued that everyone would stay equal, then it would be a typical socialist disaster such as the Soviet Union, or, more recently, Venezuela.

If all of the resources were divided up equally just one time, what would happen after about 5 to 10 years?  While not everything would return exactly back to the way it was, it is easy to predict that most people who were previously wealthy would once again be wealthy, at least in comparison to everyone else.  Those who were previously poor (before the one-time redistribution) would find that they become poor again.  Just as with the lottery, there would be exceptions.

This would occur from country to country, and it would occur within countries.  The U.S. would become a relatively rich country again because of a relative respect for property rights and entrepreneurship. The people of India would find themselves poor again.

Within the United States, the people who were previously wealthy would largely become wealthy again. They would find ways to make and keep money.

There is a reason for this.  Wealth is largely a reflection of people’s mentality.  People who get wealthy and stay wealthy tend to have long-term outlooks. They tend to work hard. They tend to work smart. They also do things consistently.

Think of someone who goes to his or her job during the day and does the bare minimum.  They get home and watch television the rest of the night.

Then think of someone who goes to his or her job and puts in extra effort.  They work a little overtime to make sure their work is done and of high quality.  They get home and relax a little, but then they spend some time reading and learning a new skill.  They pay attention to their finances.  Maybe they even start a small side business.

The person that puts in extra effort and does it consistently is going to end up further ahead.  Maybe this person only does 5% more every day, but this compounds over time.  It pays dividends in the form of more opportunity, higher income, more savings, and other ways.  And again, it compounds over time.

Luck plays a big factor in life.  Your health can be subject to luck.  Your childhood was subject to luck.  There is no question you were lucky if you were born into a family with two loving parents.  Your looks are an element of luck.  Your talents are an element of luck.

At the same time, there is an issue of drive and good decision-making.  If you have drive and good decision-making, then maybe you could say that you are lucky that you were born with that.  But no matter how you look at it, those are major factors in life.  If you have a lack of drive and a lack of good decision-making, then you probably aren’t going to be successful in life. You probably aren’t going to get much fulfillment.  Ultimately, you probably won’t find much happiness.

In terms of wealth redistribution, it doesn’t solve anything.  It makes everyone worse.  It causes more poverty.  It causes resentment from both ends.  It certainly doesn’t give anyone drive or better skills at decision-making.

Wealth redistribution is a recipe for misery, whether it is done out of jealousy, envy, or truly caring about the poor.

We are not meant to be equal.  We all have different talents and different goals in life.  Some people are content with working less and enjoying a more modest lifestyle.  There is nothing wrong with this as long as they aren’t trying to force anyone else to subsidize them.

We should celebrate our inequality.  Our diversity is what makes our world go around.  And if you want to get rid of poverty, then you should advocate for less wealth redistribution, not more.  We need to create more wealth, not forcefully redistribute it.