Comments and observations on social and political trends and events.

Saturday, February 7, 2009

Does the government create wealth or redistribute it?

I recently received this e-mail containing a quote by the late Dr. Adrian Rogers (1931 to 2005) Memphis, TN, that seems particularly appropriate in light of the Obama election.

You cannot legislate the poor into freedom by legislating the rich out of freedom. What one person receives without working for, another person must work for without receiving.

The government cannot give to anybody anything the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend is about the end of any nation.

You cannot multiply the wealth by dividing it.

While I agree with this sentiment it will most likely carry little or no weight with those who, like Obama, want to “spread the wealth” as he said in the famous exchange with “Joe the Plumber” during the election. I’m sure Obama and Democrats don’t argue that the government creates wealth. Instead they feel it is the appropriate vehicle to redistribute wealth.

A key premise behind redistributionism is the idea that the free market unfairly distributes the wealth, that businessmen and the wealthy ultimately don’t deserve what they have, that they succeeded by exploiting others. (In other words, they hold a form of watered-down Marxism.) Therefore redistributionists believe it is moral to use progressive taxation and other measures to right past wrongs and to create a more egalitarian society.

So in order to make any kind of impact on those who argue this way is to show that:

  1. The free market isn’t rigged to exploit the lower classes and that everyone has an equal chance to succeed.
  2. The distribution of wealth is such that you could tax the top earners at 100% and still not make a major impact on the people at the other end of the income spectrum.
  3. It is moral to pursue one’s own interests as long as you don’t violate the rights of others.
  4. Perhaps most important, it is immoral to take what one has earned by their own efforts and give it to others.

Obviously accomplishing all of this is more than I can cover here. I’d recommend sites like the Ludwig Von Mises Institute for the economic counter-arguments and the Ayn Rand Institute for the individualist defense.


mvonnied said...

I'd like to comment on your comment "You cannot multiply the wealth by dividing it."

This comment fails to recognize the benefits that come from redistribution of wealth. Students and families with children often benefit directly from redistributed wealth. These groups of people experience a decreased financial burden that allows them to raise children and obtain an education. Due to decreased financial burdens these children are able to obtain a college education. This education results in higher wages. These higher wages results in increased wealth which then allows them to contribute to society.

Henry Scuoteguazza said...

Thank you for your comment. I wish I had been able to reply sooner. I understand your point and have some sympathy for it although I disagree with an implicit premise in your comment: That the government has the right to redistribute wealth as it sees fit in order to accomplish a certain objective. The libertarian part of me balks at the notion that the fruits of our efforts do not ultimately belong to us. Or, perhaps more accurately, if you make “too much” money (whatever that is) the rest of us have the right to redistribute it as we want.

On the other hand I disagree with the libertarian (and Randian) premise that there are no positive rights and only negative rights.

To me there is a valid need for some level of taxation to support the legitimate government actions. As I’ve posted elsewhere I also believe we should be willing to pay a certain level of taxes as a form of gratitude and recognition of the fact that we are not entirely responsible for the good fortune of being born with normal human capabilities, in a relatively free country and in this era of human evolution. However this doesn’t give others or the government carte blanche to tax us into oblivion or to support whatever causes strikes their fancy. I believe the scope of appropriate government action is limited to helping those who truly cannot support themselves due to severe handicaps.

One final comment. Mvonnied points out the positive effects of redistribution does not address what would have been created had the wealth stayed with the person (or company) who created it. It’s easy to point out what was produced by the redistributed wealth; it’s impossible to show what would have been created if the person who created the wealth had used it for his or her own purposes.