Thursday, June 21, 2007

Redistribution

Marginal Revolution:

We don't take steps to redress inequalities of looks, friends, or sex life. We don't grab a kidney from you to save someone's life, even though that health difference was unfair brute luck. Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation. But the power of wealth redistribution to produce net value is quite limited. The power of wealth creation to produce net value is extraordinary. Most of America's poor are already among the best-off of all humans in world history. We should be putting our resources, including our advocacy and our intellectual resources, into wealth creation as much as we can.

The first sentence of the comment compares inequalities in "looks, friends, or sex life" with inequalities in distribution in wealth. You might notice that each of these categories is extremely personal. How our economy functions and distributes wealth is extremely not personal: do you know who made any of the possessions in your room? Even if you're crafty, you got the materials from somewhere. The "market" is an amazing wealth creating tool. Well-functioning markets are created by governments and civil society: the individuals who create and obey the laws of property, contract, and tort. Tiny amounts of wealth creation can be attributed to individual efforts, while cooperative civil society makes a modern industrial society possible. Most of the massive income some individuals earn can be attributed to a well-functioning civil society or the accrued technological knowledge of generations bygone. Bill Gates's nerd-power would not get him much on a desert island. (Perhaps he has realized this and started to share his wealth.) Accordingly, it is appropriate to distribute some of the gains to everyone in the society who had created them. Even the poor.

Looks? Society as a whole does not help create good looks. Friends and a sex life are not something that can be redistributed. Even with these seemingly insurmountable barriers, "we" still try to help. Our government gives everyone an education, giving them tools to overcome deficits in looks and social connections. Institutions often judge people by tests without viewing an individual, avoiding the influence of social networks and smooth skin. Non-corrupt government bureaucracy itself is a large normalizing force.

The second sentence notes we do not take kidneys involuntarily. Again, society/government does not create kidneys.

One of the most important values Americans hold is equality of opportunity. The quote suggests that in the absence of redistribution, a meritocracy would exist. This assumes an equality of opportunity that does not exist. Children need well-off educated parents in order to perform to their potential.

Perhaps Tyler (the author) accepts a system that does not provide for equality of opportunity or provide wealth equal to contribution. All that is important is future aggregate wealth. Or, in other words, "We all had a shot at the wealth lottery. It just so happened that my family and I won. If you lost, too bad. And please stop trying to take money from me."

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