Labour economic policy and cake

As I was reading Ben Kelly’s excellent piece on Labour’s misguided education policy, I encountered something which has been bothering me for some time about Leftist understanding of wealth, and which I do not recall seeing addressed properly by anyone:

It’s safe to say that Jeremy Corbyn’s chilling threat of a “reckoning” is exactly what we don’t need; he thinks it will mean giving back wealth to “the people”, actually it will mean wealth rapidly leaving the country.

Leftists seem to assume that the country’s wealth is like a cake of fixed size — so they just need to decide how to slice it up. And Ben’s rebuttal has not tackled that — the implication is that a slice of the cake would head abroad as a result of Labour’s policies, which, while undoubtedly being correct, is not the whole story, nor indeed the major impact.

The reality is that the national cake would diminish in size under Labour’s policies even if none of the slices emigrated. Wealth is not static, but is constantly being consumed, and so new wealth needs to be created to replace it. At a basic level, some forms of wealth might be durable, but others are perishable; since we are talking about cake, people don’t just exchange a fixed number of slices of cake with each other; some of them get eaten. And since we know that you can’t both have your cake and eat it, once some the cake has been eaten, someone needs to bake a new one in order to restore the overall amount of cake available to everyone.

The point is that Socialist economic policies result in less wealth creation, due to the “strawberry picking effect” — hence the national cake would shrink, and those who would suffer the most — ironically the intended beneficiaries of Labour policies — being the poor.

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