2. Redistributing income from the rich to the poor increases economic growth
Governments that aggressively redistribute income hurt the poor in the long run while freer economies actually create a net benefit for lower income groups. Over time, a relatively free market with a limited role for government will provide the greatest economic benefits for the lowest income earners.
Numerous studies found that raising living standards and redistributing income
are mutually exclusive goals: Freer economies enjoy higher rates of economic growth than those economies with less freedom. Freer economies are more equal economies; economic freedom reduces inequality by increasing the share of market income going to the poor and reduces the share going to the rich.
Economic growth increases income inequality, but the effect is small. Overall, any slight increase in inequality from economic growth is outweighed by the reduction in inequality caused by greater economic freedom — creating a net benefit for lower-income groups.
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