There are several mechanisms which can cause the rich to get richer and the poor poorer:
https://secure.wikimedia.org/wikiped...wiki/Oligarchy
https://secure.wikimedia.org/wikiped...ki/Meritocracy
https://secure.wikimedia.org/wikiped...iki/Plutocracy
All of these are positive feedback towards wealth condensation. Could you give some examples of government regulation that cause wealth condensation?
Sure, but they are complex. Examples include regulations on medical school licensing (AMA), drug regulations (FDA and DEA) and allowing currency to be created by only one bank (the Fed).
Let's focus on drugs. Government regulations currently ban human ingestion of poppy flower sap, which contains morphine. Poppies are used to manufacture myriad pain killing drugs, including oxycodone. Oxycodone is regulated by the government, with the intention to stop addiction and abuse. This is a noble goal, but creates consolidation of wealth in a few ways.
The first is that the regulation raises the price of effective opiate pain killers. People who legitimately need the drugs are required to pay higher prices to drug companies (consolidating wealth for the owners of drug companies) instead of growing poppy flowers in their back yard, or buying them at a supermarket for 99 cents per pound. Drug companies also enjoy power and wealth consolidation when the FDA requires ten years and ten billion dollars to approve a new drug that I might invent. I don't have the $10 billion, so my only option is to sell the rights for my new drug to a giant drug company so that they can spend the money to have the FDA approve it. Without this regulation the profit generated would go mostly to me and not to Merck.
The second way it consolidates wealth is in the hands of medical doctors, who have a government protected monopoly on selling poppy flower derivative drugs like oxycodone. Without the regulation we would buy oxy in the same way as Tylenol or aspirin, and it would be extremely cheap in the same way.
The third power consolidation is in the hands of poppy growers who create and sell heroine or morphine illegally. Currently Afghanistan and Colombia are centers of government protected wealth. If cocaine and morphine were legal they would be literally as cheap as aspirin; drug cartels would not exist.
These are just three examples of power consolidation regarding drugs. Laws that appear to help society actually end up consolidating power and wealth and also making everything more expensive and dangerous for the poor, who may buy illegal morphine instead of spending $200 to see a doctor who may or may not give him a prescription that he can't afford.
Drug makers get old and introduce their sons to their friends in government, and the cycle is continued via family ties. New wealth becomes friends with law makers and begins lobbying (using money) to create changes in regulations that favor his business. The most capable and intelligent men will become friends with law makers or become lawmakers themselves, controlling the flow of money and keeping it funneling straight to the top -- drug makers, medical doctors, and drug cartels all benefit at the common man's expense. This is only one example, every regulation has a similar story.
With diminishing resources and energy sources I don't see many things getting cheaper in the future. I also don't see how regulation to protect the individuals would in any way hamper the collective prosperity, although I'm sure it would affect the individual prosperity of those whose business practices are centered around those regulated areas.
See above for how regulation harms the common man.
How is that an ad hominem? Do we not need trees or should we not care about the environment? The free market has not and is not in any sufficient rate moving towards sustainable energy sources and lowering emissions, in fact it could be argued they're doing their best to silence the scientists and continue reaping profits while they can.
Pollution is illegal in my Utopia because it harms other people.
I completely agree, I'm just not limiting this to harm by fellow citizens, but to harm indirectly harming us (the environment) and businesses that do that.
Exactly.
"There have been examinations of who gives more to charity. One study conducted in the United States found that as a percentage of income, charitable giving increased as income decreased. The poorest fifth of Americans, for example, gave away 4.3% of their income, while the wealthiest fifth gave away 2.1%. In absolute terms, this was an average of $453 on an average income of $10,531, compared to $3,326 on an income of $158,388."
Nation & World | America's poor are its most generous donors | Seattle Times Newspaper
The poor may be more generous than the wealthy. That's okay, the rich and poor are both still giving away money for no reason except to help other people, which is great for a free system but absolutely not necessary. In the salt example we can see why charity is not needed to provide salt for the poor.
Are you saying the subprime mortgage crisis was caused by regulation?
Absolutely. I explained why several pages ago. Let's start on the island and arrive at the crisis after we agree on simple terms like "what is wealth?"
You're assuming that people who work for an "evil person" always have a choice. Working to support yourself and your family are not optional, and the job opportunities are not limitless, especially if you were born on the wrong end of the wealth spectrum. Some of these people are able to strike gold with a scholarship or something similar, but that's the exception, not the rule.
Translate this to the island. Some are born smarter which makes them lucky. It is optimal to let smart people harvest salt as fast as they can and allow them to do what they want with the extra salt, including trading ten pounds of it for one fish, as is currently the case today. Salt is virtually free even though it was used to pay soldiers 1,000 years ago.
How is the society as a whole better off when he sells his knowledge to the highest bidder compared to him teaching everyone for free? If he were altruistic in some form of a "socialist" group, he would have less incentive to try to reap as much out of his invention as he could, as his survival wouldn't depend on it.
Currently regulations make sure that he can't teach everyone for free. Patent and copyright laws protect inventors from others using their ideas. Without the regulations an inventor would make a ton of money after inventing a new drug, but others would not be prevented from buying it and analyzing it to determine how to make it and competing with him. This is another way that regulations consolidate power and wealth at the common man's expense.
He automatically creates wealth condensation and has an unequal starting point, doesn't he?