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.
> 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.
That's a testable hypothesis, and as it turns out it's already been refuted: research has shown that dollar-for-dollar, tax cuts are a net drag on the economy, and food stamps deliver the biggest bang for buck economic stimulus. Even investments in infrastructure don't deliver as much of a GDP boost as food stamps. Giving that $100 to a wealthy person is one of the least productive things you can do with it.
And I actually think that furthers the idea that "money == wealth" isn't a helpful way to look at the world. Why are food stamps so effective? Because when you're hungry, food stamps are astonishing wealth to the recipient, far more than the societal costs of providing it.
Unfortunately for people who read this as a strong endorsement for general redistribution, it is indeed the "biggest bang" and once you have filled someone's belly (and generally filled in the lower Maslow levels), you no longer have such simple options to take a bit of wealth from one and give a lot of wealth to another. At the margins that's not the choice we face; usually it looks more like my original post.
I am a libertarian, but I greatly value the social safety net. It is an incredible, incredible source of societal wealth. The problem is that there's no way to scale the safety net up beyond being a safety net, because again let me emphasize that would be awesome, but it just doesn't work.
Yes, wholeheartedly agree here. I was not thinking of having the basic Maslow levels met, as I think that kind of social net should be somewhat guaranteed, and the economic benefit is obvious. Once those needs are met, does a redistribution of $100 have a net positive or negative on the overall economy? Not sure, but gut tells me negative. The wealthy will invest, which has a tiny net positive on the economy that compounds over time. The non-wealthy will consume, which has a positive immediate benefit on the economy, but poor long-term benefit along with terrible environmental consequences. Really, we probably need both for any economy to survive, but consumption is what the middle class is for anyway.
Economy is driven by consumers so making sure consumers have more money is surefire way to improve economy. Giving the money to business owners (or not taking it away) doesn't improve anything beacuse their investments are not limited by money owned but by their customer base which does not change. At best they'll spend additional money on advertisment which will just steal some customers from their competition at almost no benefit to the economy apart from increased activity in advertisment agencies.
>I would go a step further and ask whether or not that $100 is better in the hands of a wealthy person or in those of the poor person. Certainly the latter can put it to great use buying necessities of life
There has been a lot of thought and data on this already. The answer is in - giving money to poor people is much "better" as the money travels much further. They buy the "necessities of life" quite quickly, and the money changes hands several times, benefiting other (mostly poor) people along the way. Wheras in the hands of a rich person the money is unlikely to do that. It mostly goes into an investment as there are no necessities of life urgently needed. (lower Marginal Propensity to Consume http://en.wikipedia.org/wiki/Marginal_propensity_to_consume#... )
I found these posts interesting, and I don't know what to think of them. In terms of large corporations, I do think it would be more beneficial to split the money more evenly amongst the people who helped create the wealth, and, with bill gates in particular, is having money in stock actually generating wealth? Sure, if he sold it all at once it would crash, but if he slowly started getting rid of it and turning it into cash, what would Microsoft actually be losing? Wealth, more evenly distributed, would give more people a greater chance at, in turn, creating more wealth. I think one of the things, or at least one of the things that perturbs me, is the huge difference in salary that key players are able to command, through connections or plainly through the non-unionable work that employees can offer, limiting, collectively, their negotiation power.
This was just a guttural post, I'll probably need to re collect my thoughts and edit this or post something again more in line with the op
I think I get what you're saying... mainly that when wealth is so centered in that 0.1% upper crust of power brokers, that it keeps potentially wealthy people off the boat. Combine that with the fact these people are well connected and intertwined, and it becomes
> Wealth, more evenly distributed, would give more people a greater chance at, in turn, creating more wealth.
Yes and no. Look at lottery winners (or other windfall recipients) as an example that the average person cannot create wealth. Some people are able to create wealth and most are not. Let's say Bill Gates does indeed give every person that shares his picture on Facebook $5000 dollars. Most people will waste it, some will use it to pay down debt, and a small percentage will create wealth from it. I think there are two groups that could potentially benefit the most from this. Upper lower class folks can easily put this money toward education and skills that would have a net positive. Upper middle class folks might potentially start new businesses and markets which have a definite impact.
If people have a problem with current wealth distribution, there is a very easy (not easy in the sense of doing it, rather in understanding it) way to reallocate it - get out of debt. Debt is one of the main ways rich people get richer, by reallocating money from the poor to the rich. Getting rid of their main source of income would force them to invest in real, tangible businesses that solve real problems (because presumably without debt, nobody is buying a new TV yearly anymore). I believe debt is the primary source of economic stratification right now, not income.
> In terms of large corporations, I do think it would be more beneficial to split the money more evenly amongst the people who helped create the wealth.
Amen to this. This culture where CEOs earn 20x the average employee salary is screwed up. Also, it would be beneficial if they didn't own every politician ever created, but that's another story.
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.