Yes - we will feel better if we are taxed more. It's true!

America is the fountainhead of modern capitalism, so the enemies of capitalism love to tell us the American poor are getting poorer and the rich are getting richer. These claims are based on movements in real income corrected for inflation, and overlook productivity gains and changes in earning structure. The statistics of ownership of goods, however, present a different picture.

According to Arnold Kling in "How much worse off are we?" the percentage of US households lacking such basic items as a telephone, refrigerator, stove, color television, vehicle and complete plumbing was about 50 times higher in 1970 than in 2004. In 2001, the US economy enabled households in “poverty” to own the same percentage of the old “luxury” whitegoods as found in the average household only three decades earlier. By 2001, many luxury goods, which did not exist in 1970, for example large-screen televisions, answering machines, VCRs and microwave ovens, were commonplace in households - even in those below the poverty line. If these figures are evidence of the failure of capitalism, what would count as success?

But what terrible price have these families paid to earn the money to own these frivolous goods? Obviously they have had to work far too long and enjoyed too little leisure. The way we allocate our time varies according to our goals of the day, but over the long term, we are the winners.

Contrary to another popular myth, Americans are working much less than they used to. In The Escape from Hunger and Premature Death, 1700 - 2100, economist and Nobel Laureate Robert Fogel, writes, “In 1890, retirement was a rare phenomenon. Virtually all workers died while still in the labour force. Today, half of those in the labour force, supported by generous pensions, retire in their fifties”. Furthermore, Americans work many fewer days than they did a century ago. Assuming a work year is 365 days, Fogel calculates that in 1880 an average male head of household worked 8.5 hours per day, while his 1995 counterpart worked only 4.7 hours per day.

With less time spent working and somewhat better health, total leisure available has more than tripled - from 1.8 to 5.8 hours per day. Additionally, the lifespan of the average male has more than doubled since 1800. Before governments attempt to solve social problems with more social engineering they should be sure these problems actually exist.

In New Zealand, we are told of our increasing poverty and how we are failing to reduce the number of children in poverty. This is hardly surprising when a household is defined as “in poverty” if its income is less than half the average. By 2100, when the average household income will be about a million dollars a year, families earning a miserable $250,000 a year will remain officially below the poverty line.

So, reducing poverty is hard - but increasing poverty is easy. All we have to do is persuade Bill Gates to move his head office and key staff to New Zealand. The immediate effect would be to increase the average income - and so increase the number of households in poverty.

We can’t have that - can we?