Income Redistribution Hurts the Poor: NCPA Study

Conversely, Freer Economies Create a Net Benefit for Lower Income Groups

DALLAS, March 31 /PRNewswire-USNewswire/ -- Governments that aggressively
redistribute income hurt the poor in the long run while freer economies
actually create a net benefit for lower income groups, according to a study
released today by the National Center for Policy Analysis.

"Freer economies are more equal economies," said NCPA Senior Fellow Gerald
Scully, author of the report. "Over time, a relatively free market with a
limited role for government will provide the greatest economic benefits for
the lowest income earners."

The study found that raising living standards and redistributing income are
mutually exclusive goals:

-- Freer economies enjoy higher rates of economic growth than less free
economies.

-- 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.

Conversely, the study found that nations in which government aggressively
redistributes income have significantly lower rates of economic growth, and in
the long run this income redistribution hurts the poor.

"Economic freedom benefits the poor because any extra money they receive as a
result of government's redistribution of income is more than offset by even
higher incomes resulting from economic growth," Scully added.

SOURCE National Center for Policy Analysis

Richard W. Walker of the National Center for Policy Analysis, +1-972-308-6483,
richard.walker@ncpa.org