Monday, July 20, 2009

The Immorality of redistribution

When Barack Obama told Joe the plumber that we want to spread the wealth around, he pretty much admitted that his administration was going to institute a redistribution policy. On the surface the progressive tax code seems fair and just. People who do well and prosper should pay a higher percentage of their income in taxes to help supplement the less fortunate. But, let's examine what is really behind this policy. Free market capitalism inevitably will lead to income inequality. People make varied personal choices that determine their lot in life. Some are satisfied with a mediocre job with mediocre compensation. Some want and work for more. Some put whatever capital they have at risk to start a small business. Many put countless hours and sweat into these ventures, all the time working for a better future for their families. Some won't even accept the extra shift, choosing rather to have a beer with the buddies. Others have opportunities to start their own businesses, but for whatever reason choose the security of their current job. None of these choices are wrong, because we live in a free society. But, what is immoral is the government telling one group of people you have to sacrifice your life's energy and supplement the income of those that have chosen their lot. The American way has, up until now, been equality of opportunity, not equality of outcome.

Let's suppose for a moment, that redistribution, has the desired effect, and the rich are dropped down a peg or two, and the poor are raised up. Great an egalitarian society is now in the making, everyone is more equal, and the central planners are patting each others backs.
But, are there any unintended consequences? Two huge ones. First the recipients begin to develop an entitlement mentality, and instead of working for their own best interest they look to Washington for their needs, which by the way is really what this administration wants. You dependent on them. Secondly, the so called rich now have less disposable income to invest, expand, and hire, so the economy inevitably shrinks, employment stagnates, and every one's standard of living drops. You need not look any further then Europe. Those countries with high taxation and huge entitlements have a much larger constant unemployment rate, and a much lower standard of living.

Wealth creation is the biggest boom to employment and a higher standard of living for all. Wealth is accumulated by putting capital at risk. Those dependent on government assistance are not the risk takers. The wealthy are constantly looking for ways to become wealthier, and have disposable capital to put at risk. That is until the redistribution advocates have their way and enact extra fees and taxes on them.

Now the central question is, do these people really care about the poor, or are they simply using redistribution as a way to attain and keep power? As an entitlement mentality and the bureaucracy, which divvies out the largess, grows, much of that confiscated wealth is eaten up before it ever gets to the intended recipients. There comes a point of critical mass, where the entitlement community, and a huge bureaucracy begin to outgrow the producers, and everybody simply votes their best interest, and therefore the social engineers win. We must as a country stop this insidious attempt to enslave our citizens in an entitlement mindset, and squash the human spirit from reaching it's full potential.

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