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.
People in rich countries are (mostly) very nativist, so I doubt this kind of think would be popular. For whatever reason, people tend to value the lives of those in their country many times more than those in other countries.
So unfortunately, buying their labor at cheap rates seems to be the best way to transfer wealth right now, at least a big scale [0].
[0] - On a smaller scale individuals can donate to charities like Against Malaria Foundation or GiveDirectly, which I highly recommend everyone does if they have excess wealth.
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 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. :)
While I agree that increasing productivity is the prime directive when it comes to improving standards of living, dismissing the benefits of wealth transfer is naive.
Direct wealth transfer is a useful tool for mitigating market failures like labor market monopsony and the various negative externalities of excessive inequality. When used correctly, it does in fact improve economic efficiency and societal well-being.
True, but anything you do to unlock wealth from the super rich - who tend to hoard it - and transfer it to less wealthier folks who are much more likely to spend it (they can't afford not to) will improve the health of the broader economy (more money flowing around). Even if companies have high profit margins, they will use that profit to expand production and hire more people (a good thing) or buy more goods (leading to more employment elsewhere).
I am under the understanding that the largest wealth transfer the world has ever seen was the various flavours of colonialism that have been practiced over the past few centuries. We are the beneficiaries of this sort of thing, and yet, we have forgotten all about it...
Incidentally, would you consider someone getting paid 1/10th what an American worker would need to get paid, to make a widget, to be wealth transfer? In which direction? To me, it seems to be a wealth transfer from the person employed in the sweatshop, to the west. [1] We have been enjoying the benefits of this sort of wealth transfer for the past four decades. I must say, hundreds of millions of people giving you their labour for next to nothing, for decades, dwarfs whatever impact IP has in, ah, transferring wealth.
[1] For some odd reason, a large number of modern politicians think that it is a wealth transfer in the other direction. I'm not sure they understand, or appreciate the fact that people on the other side of the world are willing to work for us, nearly for free.
Every action has a reaction, while redistributing wealth seems like it would create a utopian world there are consequences and problems it would also create. These billions of dollars aren't simply sitting around in bank accounts doing nothing, they're being invested in companies which are (should be) providing some form of value to the world thus increasing the wealth of the world as a whole. If that money was taken and given to those less well off it could be squandered and then we're in a worse off position than now.
I'm not saying it's a bad idea, it seems fantastic, but there are always consequences and the reason we have capitalism is because so far it's proven itself as the best method of improving the wealth of everyone (through technology and cheaper goods.
I am a libertarian capitalist, and I agree there has been a government-inspired (Fed-inspired, really) transfer of wealth from the poor to the rich.
Let's say you are a smart hacker and I offer you this "deal": you put in $15K, I will lend you $150-300K at very low interest rates, which you can invest as you see fit. The gains (minus the low interest paid) are yours, and in the meantime you can also charge me reasonable expenses. If you fail, you get to walk away, with no personal liability. Will you take this deal?
That was the deal private equity, hedge funds got from the Fed & the banks (aided and abetted by the Fed). In good years, they took great money home. In bad times, many of them go bust, with no personal consequence to themselves.
End result: societal transfer of wealth, from the poor/middle-class to the wealthy. This is not a consequence of a free market. The original sin is the easy credit, supplied to the financially well-connected.
I'd build on that to point out that the systematic transfer of wealth from the bottom to the top is not something that "we're doing", but simply the natural product of capitalism. It doesn't require an evil mustache twirler sitting in a dimly list room scheming about how he's going to systematically conduct a massive wealth transfer. Wealth transfer is the natural result of any system that rewards the deployment of capital with more capital.
There exist lawmakers that focus on cutting taxes on the rich and reducing access to education, health care, and economic opportunity. While they are helping to widen the gap between the haves and the have-nots, they're unnecessary--the gap would widen with or without them.
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!
I’ve got bad news. Wealth isn't a number in your bank account that you can carve up and redistribute. Its the output of a properly managed system of assets and liabilities. If you just seize the outputs and give them away it will turn to ashes in the mouths of the recipients. They’ll have nothing after it’s spent while those who produce the wealth will have taken their knowledge and capabilities with them. All this has been tried before and it always fails because it’s the wrong way to solve the problem.
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