The Wealth Gap

One of my sons sent me an interesting article from MSN about the wealth gap in the world. The article title cannot help but grab your attention: "Got $2,200? You're Rich on a Global Scale."

The artcle points out that the world's three richest people are worth more than the 48 poorest countries combined. That is a very serious gap, we are informed. Further, the article points out that the top 2% of the population makes more than half of the world's household wealth.

I believe that these articles are truthful in content, but often have an agenda beyond being informative. Often we come to moral conclusions about right and wrong when it comes to information such as this, without understanding the larger economic issues.

The question articles like this might want to address is, why are some countries wealthy and others are not?

Why is the United States the richest country in the world?

Why is Japan among the world's most affluent, yet it has virtually no natural resources of its own ("natural resources" is one of the excuses used by some to describe why some countries are affluent and others are not)

Why is Singapore, which is one of the most densely populated countries in the world, prosperous when Somalia (which has a density that is similar to the US) is one of the poorest countries in the world? We have been told that people cause poverty, but it isn't working in this and many other scenarios.

The answers to these questions are far more useful than the issuess offered in the article and the answers point to the power of free enterprise. The countries that are affluent and enjoy far more wealth, also have stronger committments to private property, lower government cost for doing business (fewer regulations, licensing laws, or taxes), and generally smaller (or at least more efficient) governments. Conversations on how the world's poorest countries could pursue such an agenda of their own, would make those countries far richer and would make for more interesting content.

Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.