Income Redistribution..............

We have the distinguished honor of showcasing a piece by Laura on WEALTH REDISTIBUTION! Straight Up with Sherri is pleased to have Laura allow us the opportunity to let us share her hard work and brilliant and erudite writings with us. This should certainly hit the point home on this issue. (Once you finish reading Laura’s piece, be sure to protect YOUR rights and YOUR wallet from the corrupt UN and elected officials that would have American’s return to the tyranny our great forefathers fought so bravely to free us from. Don’t just follow the link at the bottom of this post- be sure to ACT!)


Topic: The U.S. government presently utilizes the practice of income redistribution. From whom should this income be taken, and how much is appropriate?


In order to appropriately analyze the action and results of the practice of governmental income redistribution, it is important to understand all influences being brought to bear upon said action. Both policymakers and economists raise questions regarding the effectiveness of current redistribution programs. One principal responsibility of government is to redistribute income from the wealthy and redistribute it to the impoverished, disadvantaged and unemployed. How much truth is contained in this statement? The reality seems to be that 75 percent of public assistance and social insurance is distributed regardless of need. To consider this thought, it must be understood that regardless of whether or not redistribution occurs, that distribution has less to do with the relative income of the recipients and more to do with political clout and lobbyist influence. Consider also that when assisting the poor, cash helps more, when accompanied by education programs, because the funds to directly to the needy. Only 30 percent of redistributed funds [perceived value] are received as ‘cash’. To complicate matters further, looking at redistribution actions only to the poor leads to incomplete and often incorrect answers to the question of the impact of this practice.

Although government affects the distribution of funds in numerous ways, the result is a by-product of a multitude of other programs, some related, some not. Should the goal of government be explicitly to redistribute income from the rich to the poor? Not necessarily: this should be a well-supported action. It should be the government’s responsibility to determine and establish guidelines, based in principle, to lead people to the best decision for all involved. Capitalism is here to stay; however the power and wealth generated by that capitalism should be, at least in part, used to reduce poverty, unemployment, and disability. It is a noble foundation of ideal that if you are given the gift of wealth or talent, with it comes an inherent responsibility to use and apply a percentage of that gift to the cause of improving the world around you. Receive, but also give back in return…maintain the balance.

In 1993, nearly seventeen percent, or one dollar out of every six received as personal income, reinvented itself in the form of old-age, survivors, disability, and health insurance benefits, unemployment insurance benefits, veteran’s benefits, government employees’ retirement benefits, aid to families with dependent children, and a miscellany of other government transfer payments to a total tune of $912 billion. It rose from $29 billion in 1960 – a growth rate of approximately 1% per year, seemingly compounded.
This overt rise in government transfer also reflects the growth of the government itself. (D. Lee, UGA, 1997)

Present day senior citizens enjoy an extraordinarily high standard of living by their Social Security returns. In contrast, young workers and taxpayers will most likely never recoup their own contributions. Overall, nearly every government action changes the personal distribution of income. To reiterate, the most important factor appears to be political power, not need, when considering the redistribution and transfer of government funds.

Sadly, there are numerous neglected consequences to continuing the process that are unchecked and unmonitored. (If checked and monitored, who is doing the checking and the monitoring? Are they unbiased? How do we know?) Consider that redistributed transfer payments received by individuals discourage continued income earning. As a result, many individuals often choose idleness; if income can be acquired without the action of earning, there is less effort to earn. There is less production of goods and services, less [wealth] is accumulated, and thus society suffers and is poorer, in a multitude of ways. It becomes the proverbial vicious circle; as a consequence society’s reaction is to become more contentious.
“Taxpayers who consider themselves disproportionately burdened grow to resent their exploitation by the tax-and-transfer system of redistribution.” [1]

In closing, if our society allows its’ government to redistribute income on a grand scale, much of liberty is sacrificed. The thread returns to the idea of altruism, controlling the invisible hand, weighing all the options and doing what is best for as many as possible; this determines in the end how much and from whom with regards to the practice of income redistribution.


[1] R. Higgs, The Freeman, 1994, December 5th