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No one has yet given the most basic answer: maximize utility.

There are two effects at work here that are pretty much undisputed in mainstream economics:

1) Redistribution distorts economic incentives, lowering total production. This produces the Laffer Curve.

2) Individual wealth is subject to diminishing happiness/utility returns.

Taken together, these lead to an optimal level of redistribution that's greater than zero but somewhere short of the peak of the Laffer Curve.

There are various other effects we might consider, but probably none as widely accepted as these two. For one example, there are worries on both left and right about the effects various policies will have on politics.


Deficit spending is essentially orthogonal to the issue, entangled only by politics. Budget balancing is indeed associated with the fiscal right in the US, but as long as taxes are as high as spending, it's possible to have a balanced budget with any level of GDP-relative spending.






Suppose the economists could precisely calculate each individualís happiness for different redistribution policies. Then you would be able to choose a policy that maximizes happiness for any population set. The question is how this set is to be chosen. Some people might argue that you need to include all citizens in it. Others may argue for a less inclusive set (for example, excluding criminals and people unwilling to work). The set can also be extended to all humans or even animals.

Do you have a suggestion how this set can be objectively chosen?
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melian
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