SUMMARY
Means testing for very poor people does not work because for a segment of them this raises their standards of living above the people residing in the next upper bracket. It doesn't work either for the very poor because it destroys the economy that would allow them to get out of poverty. This doesn't work either for the group of people within the middle bracket because it removes any and all incentives they may have to work harder and increase their standards of living. This doesn't work either for the very rich people because from their perspective it is patently unfair but from a more objective perspective it is draining the capital which they would otherwise have to put to good use and would result in a generalized rise in the standards of living… which would decrease the number of "Poor" people (even dirt-poor ones). See, we told you we would go around to address this point.
You will find "means testing" in almost any country in the world defined, described, regulated and administered in a myriad of ways but with always the same result: more poverty. The problem is that the idea that the government can get you out of poverty by giving you money is a bankrupt notion. Literally. Governments do not produce anything, much less wealth. The only thing that governments do is to consume wealth and print money, which is not wealth. Wealth is produced through the use of capital in an entrepreneurial manner. This is real wealth that we can all share through cheaper and more abundant products and services. Unfortunately this is not going to happen for as long as governments "manage" social responsibility and equality. We have said time and time again that if you want prosperity you will absolutely, positively, definitively have inequality. This is not the notion that is ever considered by most people because they have been seduced by communism and communism – light (socialism). Yet, it is true and it has always been true. It is quite easy to prove. Take a look at the stuff that you buy, who made it and under which political system was it more abundant? Communism or free markets? Let us put this in a different way, can you eat money? Can you dress with money? Can you shelter under money? Obviously not. You can only eat, dress, and shelter with stuff that somebody else made and you exchanged for money. The government can print as much money as they may want, but if people do not produce clothing, food and shelter, you know what you can do with your money, right?
If we now remove regulations (and indeed governments) the net effect is a widespread increase in wealth. These results can be seen in the graphs below.
This picture represents the effect of free markets on the overall wealth of people. Everybody becomes wealthier but it does not change the shape of the distribution of wealth. Free markets do not achieve equality; they don't even try to achieve equality. Yet, by not achieving equality everybody's standards of living increase. Inequality is the price we must pay if we want a better life for everybody. We do believe it is a small price to pay considering that all other political systems had failed and continue to fail miserably.
This graph represents what would happen in a true free market. If we take upper most picture (Theoretical) you will see that governments subsidies are hypothetically designed to raise standard of living towards an arbitrary 100%. However, if we look at the next picture down (Reality) what we see is that even with government subsidies, most people are not only far, far from 100% but there are issues and "unfair" situations precisely because government subsidies exist and are administrated through "means testing". The solution is obvious. Take a look at the last picture (Free Market). Here we see how almost all the population now lives over the previously unachievable 100% boundary.
And yes, even in the Free Market there will be poor people. However, consider this. Would you prefer to be a minority in a very rich society or would you prefer to be a majority in a poor society? Thought so.
CONCLUSION
Means testing is yet another scam that governments use to justify their existence while stealing your money. Means testing is something that doesn't work for any person regardless of their standards of living. Means testing will seem to solve the immediate problem but at the price of only making it worse as time goes on. If you don't believe us, just take a look at the expenditure of government services that your country has. You will notice that as time goes by governments take over more and more services while the quantity of said services declines, gets more expensive, and the overall economy slows down. Means testing it's a convenient tool for politicians in order to gather votes because it is almost impossible to gauge its damage. Economic calculations describing what this destruction of capital does to an economy are quite difficult to estimate and obviously highly inconvenient for politicians. Isn't that interesting how statistical bureaus are capable of measuring even the most nonsensical of variables but they fail to estimate the damages that political decisions in the economic field produce for all of us?
But then again, perhaps you enjoy means testing. Perhaps you enjoy working harder for less. That' all right. It's your right to be a masochist. But please, include us out.
Note: please see the Glossary if you are unfamiliar with certain words.
