I Introduce Austin Frakt to Moses
This is Austin:
From time to time I run into a charge that I or someone supporting some seemingly non-market policy or other “just want to redistribute income (or wealth).” Something like that is often hurled as if “redistribution” were a glob of tar that soils the opponent’s entire position. Once the accusation has been leveled, the leveler then rhetorically struts around like an alpha rooster, crowing as if the argument has been won.
This is my comment:
“Redistribution of income” is simply another term for “theft.” Was Moses strutting around like an alpha rooster when he brought us the commandment not to steal? Redistribution through the political process is nothing more than legalized theft. Does it become more moral if the thieves cast a vote before they loot their victims?
Also, as Aaron Director pointed out years ago, redistribution rarely helps the poor. Generally, they are one of the groups who most frequently gets plundered.
There is much more to Austin’s argument — including an interesting discussion of welfare economics and Pareto Optimality. There is no discussion of public choice, however. He seems completely unaware that there is no known political process that can achieve Pareto Optimal results, something Phil Porter and I showed some time back.
I enjoy Austin’s blog — I will have to go read his post on income redistribution. Although I don’t always agree with Austin’s assumptions, his methodology is generally pretty sound.
I find the concept of widespread, organized redistribution a difficult position to support. From an economists’ point of view, it is inefficient because it plays with incentives. It is one thing to argue that individuals exhibit bounded rationality, and may discount the future at too high a discount rate. In this example, the solution to preventing society from having to bail out seniors who did not save for retirement is to force people to save for retirement. But it creates long standing problems to create a bureaucracy that exists merely to administer a redistributive scheme that funnels only a fraction of the proceeds to the intended group, but supports a cottage industry of bureaucrats and service providers who perpetuate an inefficient system. America and Europe (especially Greece) provides a good case study on how unsustainable redistributive schemes are. Voters (or well-organized interest groups) lobby politicians for benefits; and politicians figure out they can manipulate the purse strings and misappropriate income and redistribute it to favored constituents. Debt created by deficit spending accrues to tomorrow’s taxpayers, who will object long after the current beneficiaries are dead or out of office. Examples like this illustrate how the risks of starting redistributive policies outweigh the benefits. I’m also someone who believes in American exceptionalism. I don’t see why we cannot continue to be the Land of Opportunity rather than morph into an American version of Europe’s social safety net, where you cannot fall too far behind other people in society; but neither can you get too far ahead.
Redistribution of wealth assumes that the government owns the nation’s wealth and allows the citizens the privilege of holding some of it. This notion may (or may not) violate the Mosaic law. But it certainly violates Jefferson’s Declaration of Independence..
John, excellent rejoinder.
I like this. It’s a good kick in the shin.
Good to see that someone recognizes most redistribution benefits the wealthy.
Steve
I like the Goodman/Porter article. And you are right. People on the left completely ignore public choice. They undestand market failure. They don’t understand govenment failure.
On some level, people on the left probably do understand government failure, but they err where they just keep trying to come up with better redistribution schemes upon realizing the inherent failure of government (i.e. moving from traditional Marxism to Fabian socialism)