This is rare on the Internet nowadays, but I totally agree with everything you say. I often annoy economists by pointing out that due to the diminishing marginal utility of money any transfer of money from the rich to the poor increases overall utility. They don't like that at all. :)
Are you saying that it is morally wrong to take money from relatively rich people to give to relatively poor, but not the other way around? I think any (Government) wealth redistribution is morally wrong, but that's just my 2 cents!
To expand on this poster's point (at least, I think this is where you were going with it), one of the biggest differences in perspective between non-economists and economists is that the former focus more on money and the latter more on goods. Economists recognize that money is in and of itself useless, it is simply a store of value. At the end of the day, it matters not who has more money in their bank account but who has claimed more of the scarce resources of the world for themselves.
Seen in this way, statements about redistributing the monetary wealth of the world are pretty much useless, since people spend money in different ways. It may be that everyone holds $52,819 after the great redistribution, but the value of money and price of goods would have to change drastically such that the number is meaningless and not representative of what such a state of the world would be like (we would have to build a lot more big screen tv's, medium income housing, etc. if the plan were taken to fruition, and a lot fewer opulent dwellings in big cities and yachts).
Furthermore, the very wealthy invest and save a lot more (how else would the great wealth accrue if they spend it as quickly as they earn it?). If the wealth of the very wealthy were redistributed we would quickly learn that what really limits the welfare of your average consumer is the production capacity of the economy-- not the total amount of nominal money they hold.
Money is a social construct. A person can only earn money because as a society we've decided to create the rules and institutions that allow that to happen. Our current free-market system that assumes money should be accumulated freely and its ownership preserved by default is based on ideology, not physics.
Given the current massive wealth inequality, one really simple, effective, and ethical way to help people who are poor and suffering is to redistribute wealth. We don't do that because our political and cultural systems disproportionately represent the interests of the rich.
It's reasonable to say that as long as there are poor and suffering people, as long as we don't all have access to health care and education, as long as there are causes for the common good, there may be an asymptotic upper limit to the amount of wealth a single person can ethically have, when that wealth could be going toward improving other people's lives instead.
1. People with so much money that they have enough to save thousands of people from starving to death, or dieing from prevantable diseases etc. etc. without ever noticing the difference to their wellbeing.
2. The fetishisation of people who give an irrelevant amount of their wealth away.
There are literally people alive today who won't be in a week or more because they don't have enough money, and these people could save them and they would never notice. All the difference to them would be the tiny change in a number on a balance sheet.
You're dangerously close to making the leap I made a while ago which is horrifically un-PC. I'm going to say this and hope HN can appreciate the point of view even if they don't agree.
A fundamental problem with wealth redistribution as practised by governments (and credit card companies) is it makes the easiest route to riches taking advantage of people of . . . not necessarily the greatest ability to manage their finances responsibly. This means an enormous proportion of the smartest people in the western world are engaged in attempting to extract cash from people they are essentially exploiting, which ends up costing society as a whole since those people should be actively employed doing things which are more valuable.
You can't regulate taking advantage of stupidity out of the market, so the only answer is to come up with a redistribution mechanism that doesn't create such giant holes.
Agreed. If they ever spend it, it'll trickle down. If they don't spend it, it'll be increasing the value of all the dollars that everybody else has - they've basically lending money to the rest of the world until such time as they decide to spend what they have, then it'll cause some inflation and the poor people will effectively be paying back that loan.
If they never spend it, then everyone else wins. Setting fire to money or burying it in a hole is like donating it to everyone else who also has money.
I don't understand what the problem is with a small number of people having a lot of money. What harm are they doing? Or is it simply plain old-fashioned jealousy?
1. Ignore, for a second, the diminishing marginal utility argument. What do most poor people spend their money on? Food, household items, and rent in low-COL areas. Mostly, these are commodity goods. What do most rich people spend their money on? Trophy properties, expensive wines, and brand-name art-- in other words, items whose value is indexed to the status they confer. If you give the poor more money, their standard of living will improve. If you give the rich more money, the things they buy just become more expensive, and their standard of living doesn't change that much. The same argument holds when taxes are increased.
2. The rich get more, even on a percentage basis, from the government. If the government builds a road to a factory, each worker is a stakeholder in the project, using the road to get to work every day. However, the factory owner is a much bigger stakeholder; not only does the road enable him to get to work every day, but it also enables his workforce to do so. He's getting a lot more out of that road.
3. Money is the world's first AI algorithm-- an algorithm to allocate resources and manage society. Like many crude algorithms put to complex problems, it does a terrible job of this if left to its own devices, making improvements for a few iterations but later diverging to a degenerate state, and needs constant correction through means such as progressive taxation.
Agree with that, but that's better represented by modelling poor agents as systematically transferring small portions of their wealth to the rich rather than randomly losing or winning large portions of wealth.
I think it is a good thing. Short of all the rich people in the world donating their wealth to poor people, I do not see any other way for the wealth transfer to happen other than labor price arbitrage.
This is a really salient point. I would go a step further and ask whether or not that $100 is better in the hands of a wealthy person (in the context of this article - a person who would put that money to work in the local/national economy to make more of it), or in those of the poor person. Certainly the latter can put it to great use buying necessities of life, but in the hands of the former it might increase the latter's ability to find a productive job. I'm not really a fan of trickle-down economics, but I think it's more realistic than Robin Hood economics, for the reason you espouse.
I agree that in theory it would be awesome if wealth redistribution worked the way we think it might. I'd love to live in a Trekkie world where everybody seems to have all needs and wants met. In reality, redistribution is very much like throwing money away, considering the long-term impact of such. I think people are mostly either wealth generators or destroyers. Money in the hands of a benevolent generator has the possibility of benefiting many (even though in practice only a few wealth generators actually benefit the average person). In the hands of a destroyer it benefits only them, and only for a short time. Trickle down sucks, but it might be the most realistic option.
That said, while redistribution doesn't work, getting rid of tax shelters and deductions for the wealthy would.
It sounds like you're saying that society does not have a diminishing marginal utility of money, and/or that they shouldn't have axed the golden investment opportunity for everyone (had they IPOed). Is that right?
People should have to give up greater degrees of utility to obtain something scarce and valuable, yes. If someone rich gives up more currency to get something then so be it - they built up that currency by creating value for others in the first place.
So, direct wealth transfer is happening from the rich to the poor.
The only flaw with this is that people have to work economically inefficient jobs delivering food, instead of the wealth transfer occurring through taxes on the rich and funding something like basic sciences.
This article is a troll. It is not a good faith argument. It's an attempt to gain attention by saying something outlandish. The proper response to a troll is to ignore it.
There are real discussions to be had about how to best redistribute wealth to benefit society. This isn't it. Thy picked an arbitrary number and declared people with more money than that "bad" and "immoral". There is zero mention of what mechanism would be implemented to stop people from attaining more money than the arbitrary "bad person" number, so there is nothing to discuss in terms of whether this would be helpful.
I don't begrudge anybody their small pleasures in life. I also think they can do what they want with their money.
But, when the topic of wealth redistribution comes up I do start to have a lot more questions about what people want to do with the money. After all, it's not their money. They didn't earn it. Somebody else did. I think it's pretty fair to at least have the conversation. I absolutely hate the "helpless poor people" trope and the idea that if they just had more money everything would be better. How often do good and well meaning ideas have horrible and long lasting consequences that were not intended.
Thank you - Jesus Christ I don't know if people around here are being deliberately obtuse or if they just have no imagination whatsoever. I think they don't understand that wealth redistribution is in fact the entire fucking point.
The level of wealth we have is disproportionately assigned to the minority of people best able to exploit the majority of people. Obviously we can go back and forth on the specifics of how the world's current state of prosperity has benefits and harms, but to present that level of wealth as intrinsically beneficial is disingenuous.
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