| | Barack Obama advocates what David Leonhardt, writing in the New York Times Magazine, calls a "market-oriented redistributionist philosophy." (Obamanomics, August 24, 2008).
A popular macroeconomics text used in principles of economics courses devotes a brief section to "Redistributing Income." Here is what it says: The market system is impersonal and may distribute income more inequitably than society desires. [Note the collectivist term "society."] It yields very large incomes to those whose labor, by virtue of inherent ability and acquired education and skills, command high wages. Similarly, those who, through hard work or inheritance, possess valuable capital and land, receive large property incomes. But many other members of society have less productive ability, have received only modest amounts of education and training, and have accumulated or inherited no property resources. Moreover, some of the aged, the physically and mentally disabled, and the poorly educated earn small incomes or, like the unemployed, no income at all. Thus society chooses to redistribute a part of total income through a variety of government policies and programs. They are:
* Transfer payments: Transfer payments, for example, in the form of welfare checks and food stamps, provide relief to the destitute, the dependent, the disabled, and older citizens; unemployment compensation payments provide aid to the unemployed.
* Market intervention: Government also alters the distribution of income through market intervention, that is, by acting to modify the prices that are or would be established by market forces. Providing farmers with above-market prices for their output and requiring that firms pay minimum wages are illustrations of government interventions designed to raise the income of specific groups.
* Taxation: Since the 1930s, government has used the personal income tax to take a larger proportion of the income of the rich than of the poor, thus narrowing the after-tax income difference between high-income and low-income earners.
"The extent to which government should redistribute income is subject to lively debate. Redistribution involves both benefits [to whom?] and costs [to whom?]. The alleged benefits are greater "fairness," or "economic justice"; the alleged costs are reduced incentives to work, save, invest, and produce, and therefore a loss of total output and income [which is what we have to look forward to under Obama's leadership]. (Macroeconomics, McConnell and Brue, McGraw-Hill, 2005, pp. 79-80)
To being with, who is the moral agent "society" that "desires" a "less equitable" distribution of income? There is, of course, no such person. "Society" simply refers to all of the individuals living together in a geographical area. In practice, of course, "society" is whoever happens to be in power (e.g., Barack Obama and his leftist cronies).
Further, observe the presumption of "greater fairness" and "economic justice" as the alleged benefits of redistribution, even though the alleged costs are reduced output and income. In other words, it is deemed beneficial, fair and economically just to reduce people's standard of living -- to make them poorer -- if doing so narrows the income gap. We are also expected to believe that there is no unfairness or economic injustice in robbing Peter to pay Paul -- in robbing the productive for the sake of the non-productive. Such robbery is presumed, without any hesitation or embarrassment, to be fair and economically just.
It may be objected that since an heir has not earned his inheritance, it can properly be taxed and redistributed. But even this form of taxation constitutes an injustice, for although the heir didn't earn or produce his inheritance, he is nevertheless the intended recipient and beneficiary of the person who did. He therefore has a right to the income, because the original producer had a right to dispose of it as he chooses.
The notion that there is some kind of justice in redistributing income and an injustice in allowing people to keep what they've earned and to dispose of it as they choose is an entrenched part of the conventional wisdom and a consequence of altruism and egalitarianism. Unfortunately, we now have a presidential candidate who believes in applying this ideology with a vengeance. Not that John McCain is a big improvement, but he's not as explicit an advocate of redistribution as Obama is. The Democratic candidate is Hugo Chavez light.
For a devastating critique of tax-the-rich redistributionism, see the article I posted recently by George Reisman entitled "Anti-Obamanomics: Why Everyone Should Be in Favor of Tax Cuts for the "Rich."
- Bill
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