More questions for redistributionists
President Obama considers income inequality a “defining challenge of our time.” Continuing from my previous column ( “Questions for redistribution's proponents” ), I have some additional questions for Mr. Obama and others who want government to redistribute more income from “the rich” to “the poor.”
• When you describe growing income inequality in the United States, you typically look only at the incomes of the rich before they pay taxes and at the incomes of the poor before they receive noncash transfers from government such as food stamps, Medicare and Medicaid. You also ignore noncash transfers that the poor receive from private charities. Why? If you're trying to determine whether or not more income redistribution is warranted, doesn't it make more sense to look at income differences after the rich have paid their taxes and after the poor have received all of their benefits from government and private sources?
• You often speak of income inequality as being evidence of economic failure. Can you identify an economic theory that predicts that every well-functioning market economy generates incomes that are equal (or close to equal)? I'm an economist and have never encountered such a theory, so I'd be delighted if you expand my intellectual horizons.
• You also often warn that large differences in incomes make society dangerously unstable. Can you point to historical evidence in support of this claim? But remember: To be valid, the evidence must be from market economies in which the great majority of people — rich and not rich — earn their incomes through voluntary market activities and where the size of the economic pie isn't fixed.
Evidence of social unrest in pre-industrial and nonmarket societies doesn't count. Economic arrangements in such societies are fundamentally different than in our own. And unlike in our market economy, the amount of wealth in nonmarket economies is largely fixed. Therefore, in nonmarket economies, more wealth for some people does indeed mean less wealth for other people. Our economy differs: Because the amount of wealth in market economies isn't fixed, people can get rich by creating more wealth rather than by seizing the wealth of others. In market economies, more wealth for rich people does not necessarily mean less wealth for other people.
• Have you considered that greater income inequality might result from demographic changes that reflect neither weakness or injustice in the economy, nor any increasing differences in economic well-being? For example, do you account for the fact that retirees rely heavily on “consuming” their capital — by, for instance, selling their expensive large homes, moving into less expensive smaller homes and using the differences in sales proceeds to fund some of their living expenses? People's annual incomes are typically lower when they are retired than when they were working, but their wealth — their ability to maintain their standard of living — isn't necessarily lower.
Americans are today on average older — seven years older than we were in 1980. And a larger portion of Americans being retired means that the fall in the annual incomes of the increasing numbers of Americans who retire quite likely causes a rise in inequality of incomes without causing a rise in inequality of spending power.
• Do you not share Thomas Sowell's concern that efforts to “de-concentrate” incomes among the people require concentrating power among the politicians? Asked differently, if you worry that abuses of power are encouraged by concentrations of income, shouldn't you worry even more that abuses of power are encouraged by concentrations of power?
Donald J. Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Unlike years past, strength of 2014 Steelers could be offense
- Wedding aboard Pittsburgh’s Gateway Clipper ends in arrests
- Steelers Lookahead: Previewing Sunday’s game vs. Cleveland
- Love locks tokens fall prey to renovations on Pittsburgh bridges
- East Allegheny teachers to hit the picket lines
- Homestead to celebrate one of its own at jazz festival
- Flexible-use building in the works for Duquesne
- Campus visit sells 4-star Ohio recruit Hall on Panthers
- Housing market remains ‘disaster’ in Westmoreland County
- Pa. judge identified who denied Trib request to view sexually explicit emails circulated in AG’s Office
- Nearing 25 years together, WPXI anchors Johnson, Finnegan defy odds