| Income Redistribution |
[Oct. 10th, 2006|12:19 am] |
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Obviously, no one wants people to starve to death. Most people feel that there should be some sort of income redistribution, but the question is to what extent. Chapter 7 mentions many different theories of income redistribution, some of which are based on merit, and others of which are purely idealistic. I am libertarian so I am generally inclined to feel that the market distribution is just. However, I understand that in America there is no equal opportunity, although it's better than most countries, and due to that fact the market is biased, and flawed. Poor people can easily become successful in America, but children with bad parents are at a major disadvantage, and it is extremely difficult for them to become successful. Therefore, these people have to be taken care of, however, if you give these people too much money then more Americans will commit fraud to receive those benefits, and these people will have less incentives to work. Wealthy people will also be less inclined to work, because they will presumably face higher tax rates to pay for those poor people, and therefore leisure will be a cheaper commodity for wealthy people (more likely to be consumed). So, both poorer people and wealthier people will be less inclined to work. This will ultimately hurt the economy significantly. So, while there does have to be income redistribution (economic equity), it can't be done without taking into consideration the detrimental affect it has on economic efficiency. Economic equality leads to less incentives to work, and that's why there is the saying socialism (pure economic equality) leads to equality at the lowest common denominator. The text points out how the distribution of income has been continuously becoming more concentrated in the upper classes, but yet the standard of living has also continuously been rising. This means that while even though poor people are worse off in comparison, they are still better off now then they were 50 years ago. That should be the only thing that matters. I also, like the pragmatic concept of redistributing income to make sure poor people don't up rise against the government. Overall, redistribution has many positive aspects of it, but it can't be too extreme of a redistribution because economic efficiency will be sacrificed, and then all Americans, poor and rich, will suffer. |
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