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Should government redistribute income from high to low earners?

         9 May 2015 08:52 AM




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Dahlen 10 May 2015 07:42 PM
70%

Abstractly speaking, under conditions of perfect fairness, no. Everybody makes as much as they make; no more, no less. (So this is why analytic propositions seem to appeal so much to Randians!)

Less abstractly speaking, but not by much, the government is by nature an extractive institution which rules as it pleases under the threat of overwhelming force. If sovereignty were a coin and one side of it were military protection against outside invaders, the other side would be the right to impose laws and to demand taxes from its employees. It can be justifiable if it wields those forces to prosocial ends, but in itself it's not just, it's cold hard inescapable force. Of course, it can do whatever it wants with the tax money, including giving it to the poor. So for the callous, there's a justification for welfare spending: might makes right.

Even less abstractly, some theoretical aspects of modelled economic behaviour tend to break down when it comes to extreme poverty, because after all humans have needs, and either they fulfill them or they die. Poverty can be a catch-22. To have money, you have to work; to work, you have to be healthy; to be healthy, you have to be well-fed, sheltered from the elements, clean, and ready to fend off illness with the use of medications; to have access to these things, you need to have money. Start over again. Or, here's another one! To get a white-collar job, you have to have a CV and show up for an interview, in which moderately well-off people are going to make a better impression than the homeless. (Nice smell, nice suit, good teeth, good health, no bleeding wounds or scars, no loud stomach growling etc.) If people can't get out of these downward spirals, it doesn't matter how many opportunities may exist at higher socioeconomic levels. These people are essentially out of the economic circuit. Labour force can be lost to squalor, disease, crime, hunger, and death.

So I don't know about fair, but it sure is practical, from an eagle's eye perspective on the system.

Not sure that charity is, in this day and age, a suitable replacement for a welfare system. As far as the uppermost classes are concerned, a common strategy vis a vis the poor is to shelter themselves from their world, to forget they even exist. To get a snobby socialite interested in charity you would have to organize it as a social event that provided an opportunity to showcase everybody's latest conspicuous consumption. Otherwise, import the Catholic Church. Only the effective altruist movement can be said to represent a step away from that state of affairs, and it's still not best equipped to deal with the structural reasons for poverty.

Personally, the moment the money is out of rich people's hands after taxation, it's no longer their business where it goes to, whether it's welfare or parks or roads or the military -- of course, ignoring the small matter that the government itself tends to be composed of mostly rich people.

The minutiae of how the government goes about the redistribution -- how much is being redistributed, what the criteria are and how they are evaluated, the existence of welfare traps, the very kind of government that performs the redistribution, the tax regime and so on, these are matters more worth discussing.


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Dahlen 10 May 2015 07:46 PM
73%

If sovereignty were a coin and one side of it were military protection against outside invaders, the other side would be the right to impose laws and to demand taxes from its employees.


*Subjects. Sorry.

See, this is why we need an edit button.

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melian 11 May 2015 02:44 PM
73%

Poverty can be a catch-22.


In the first-world, countries that spend the least on welfare (East Asia) have a lot less people who are visibly poor or chronically unemployed than countries that spend the most (Northern Europe). Redistribution (at least in the way it is done now) does not seem to have a positive long term effect on poverty.


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VoiceOfRa 11 May 2015 06:38 PM
63%

I wonder what happens when one controls for IQ demographics.


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Fwiffo 16 May 2015 04:22 PM
59%

Interesting as a northern europer I don't find us struggling so bad on poverty. Maybe making poverty suck less makes it less of a society dragger?

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Fwiffo 16 May 2015 04:36 PM
58%

Customers and deal makers are not required to be fair in making their deals (in fact they want to favour themselfs as much as possible). Therefore it isn't obvoius to me why the state of no intervention would be the state of perfect fairness. I could argue that it is the unadultered cruelty of the unhumane world before any fairness is built into it, that is a state of 0 fairness.

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DanielLC 3 June 2015 10:49 PM
62%

Income isn't going to just happen to be distributed perfectly. Either we should redistribute it from high earners to low earners or vice versa. I think high earners to low earners makes more sense.

If the value of money was linear and was the same from person to person, along with all those other assumptions, capitalism would distribute resources in the ideal manner. Since it's optimal, the derivative is zero, so small changes result in smaller costs to the total money produced. Redistributing a small amount of money from high earners to low earners would not significantly reduce the total wealth produced, but would make it so the people who have it would appreciate it more. Thus, it's clear that some wealth should be redistributed. The only question is how much.


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melian 4 June 2015 05:04 AM
73%

Benthamís argument ignores the downsides of redistribution policies. In particular, redistribution tends to demotivate people on both ends of it. Thus, in addition to negative impact on the economy, it may also hurt the psychological well-being of people it aims to help.

Redistributing a small amount of money from high earners to low earners would not significantly reduce the total wealth produced


History shows that once the principle of redistribution is accepted, it is only a question of time before a small amount turns into as much as government can take without imploding the economy.


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DanielLC 4 June 2015 02:07 PM
65%

In particular, redistribution tends to demotivate people on both ends of it.

In an ideal scenario where the value of money is linear etc., if you redistribute money from the poor to the rich, you will over-motivate people. They will perform work that doesn't create enough wealth to justify putting that much effort in, because the subsidies will make it worth it.

As I said before, since we're dealing with a local maximum, small changes in the conditions will result in smaller changes in the results. No matter how big the problem caused by redistributing money is, there's some sufficiently small amount where the benefit-to-cost ratio is above one.

History shows that once the principle of redistribution is accepted, it is only a question of time before a small amount turns into as much as government can take without imploding the economy.

That's not an amazingly ... read more


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Fwiffo 16 May 2015 04:33 PM
59%

States are a major player in why their economies work like they do. They can easily favour some sort of economic activities. Even if they didn't actively encourage certain industries the kind of status quo they uphold will end up benefitting somebody. That those beneficiaries are deducted somewhat to make amends where the status quo screws with people the most is perfectly legitimate. Also in todays world nobody makes their money alone and the principal backer of private property is the public police force. So all activity has a shade of public support in it (even if less than in others). In a sense the supply of high paying jobs is limited and the low earners can be seen as participating by allowing (peacefully) to someone make more money (if this is seen as neccesary for incentives and such).


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