Thursday, November 12, 2009

Arguments For and Against Redistribution

Arguments Against
  • It is unfair to take my property and give it to others
  • Is a disincentive to be productive due to marginal tax.
  • Is a disincentive to be productive due to free riding.
  • Hurts productivity by taking resources from the most productive people and giving them to the least productive people.
  • Reward merit – hard work, intelligence.

Arguments For
  • It's unfair to have so much inequality.
  • Increase the total value to society (taking a dollar from a rich person and giving it to a poor person hurts the rich person less than it helps the poor person, and so is a net gain to society).
  • Prevent/undo accumulation of wealth and power into the hands of the few.
  • Undo the effects of unequal starting points (born into wealth vs. born into poverty).
  • Increase market representation of the poor (democracy of capitalism – vote with your dollars for what goods and service should be produced. The rich have more votes.)
  • Don’t reward based on chance – birth circumstances, chance opportunity, the genetic lottery.


  1. So after weighing the costs and benefits, where do you stand?

  2. I think I'm still not really clear on that. I probably ought to think about it some more and see if I can draw some lines that define my position.


  3. I am mostly against redistributive policies. I am tempted to respond to each of the arguments for you’ve listed individually, but I will resist that temptation for now.
    I think it is a more complicated issue than most libertarians would like to admit, though. I think we can agree that extreme forms of redistribution are definitely bad -- without exception, every communist regime has been a failure. But on a smaller scale it is less clear.

    I believe in the equality of opportunity, not outcomes. But it can be argued that sometimes you need to re-distribute outcomes in order to equalize opportunities. I am sympathetic to that view, but prefer that acts of re-distribution (along with most everything else) remain in the private sector.

  4. Justin,

    I really want to hear your thoughts on this! Don't resist the temptation!

    I also believe in equality of opportunity. But there is also the wrinkle of caring for the disabled. Disabled can mean so many things. Is it fair that someone should be consigned to a life of poverty because they were born with a mind that will always limit their productivity? There is definitely some level of intelligence that we don't recognize as being deficient, but that will still be a severe liability.

  5. Factors to consider regarding distribution are preparedness and the ability to effectively steward resources.
    As an example, several years ago I watched a program that followed the lives of people who had won millions in lotteries, and what became of them. The majority of them divorced and ended up losing their "wealth" through frivolous spending or unwise investments. Consider giving a six year old your food budget for the month, and have her make all of the purchases. What would the outcome be? Although we expect that adults have learned sufficiently to be good stewards of assets, the sad truth is that many have yet to learn good personal monetary policy. Consider, on the other hand, giving Warren Buffet your monthly food budget (or your lottery winnings!). Ask him to make the purchases. He'd probably end up buying items required in the short term, and investing the rest until needed. Like him or hate him, he's likely to augment the funds because he knows how to govern money. Someone will come out ahead financially - possibly Warren himself, but he will have earned it. If people knew how to manage money, they could fare well with the resources that are distributed to them. However, if they knew how to manage money, they could also advance their present personal finances. What about miracles achieved by hard working, truly poor individuals in third world countries who have made huge strides through the aid of a microloans? $25 dollars, hard work, and an increasing understanding of how to make money a tool has bettered the lives of many in destitute locales such as India and Africa. Teach a man to fish?

  6. Thanielson,

    Good points! I want to do a post on foreign aid soon...

    I read somewhere recently that Bill Gates shouldn't be getting into philanthropy, because he's shown that his talent is in running software companies, and that's where he's already done a tremendous amount of good. If he wants to keep making the world a better and wealthier place he should stick with what he knows.

    Also, an argument against redistribution that I forgot to include is that the government is (reputedly) horribly inefficient, so there's a dead weight loss from passing monies through their hands, even for benign purposes.

  7. I think these are great lists and that they help to illumniate what the core issues are.

    And you know I'm always going to come back with questions about definitions of terms and the soundness of the underlying axioms. For example, what do "fair" and "unfair" mean, and why would it be reasonable to expect that such a condition would exist? This problem is, I think, well illustrated by the appearance of "unfair" on both sides.

    Next, "reward." Reward whom? What does it really mean? Amass wealth and power? I think until we're really prepared to examine the assumptions that we're making, we won't even understand the questions we're asking, which makes finding the answers super-improbable.

    This dilemma reminds me a lot of your heroes posts about Conservatives and Fundamentalists, and also your political spectrum. I think we're quick to model things as diametric opposites and not consider more complex possibilities. Still, I think there are different kinds of people (with differing values) who would give different answers to my questions about what fairness is and what reward means, and would make different choices when finding themselves in positions of wealth and power.

    Maybe the real question is what role government should play in all of this (not unlike the marriage question), and the answer to that hinges on the purpose and competency of the existing government.

    What a mess, eh? I have no answers, only slight alterations to the questions.

  8. Bob,

    Just to clarify, I only intended that these are arguments, in the general sense -- not necessarily arguments I find compelling. I actually agree with you that 'fair' is a pretty hopeless concept. Most people just use the word to mean, 'in keeping with what I have come to expect'.

    Your question about 'reward' though is one I should address. I used the wrong word. I should have said 'incentivize'. Put that way, I think this is an argument that I find compelling.

    As far as putting everything in terms of dichotomies, I do have a tendency to do that. However, that doesn't mean that I never saw a dichotomy I didn't like, and I DO try to watch myself and make sure I'm not simplifying away something important. Call me on it if you think I am.

    I think questions about government's efficiency and effectiveness are the next step after deciding whether we can hypothetically accept redistribution in some form or not.

  9. Bob,

    Boy is my face red. Looking back at what I wrote about 'reward' and 'incentivize' I realize I lost the context a bit. It might be hard to effectively incentivize intelligence. But there's no reason you can't incentivize development of one's own productive human capital - e.g. education.