Saturday, February 13, 2016

Redistributing Wealth

Given the current campaign season, I thought I would write something concerning the morality of transferring wealth from "the top 1%" to the rest of the population.

The standard argument against such a claim is that whatever a person earns they have a natural right to keep and to deny to others - and that it is simply wrong to take what another has earned for oneself.

Well, there's no natural moral law of that type. That is all fiction.

We have reason to promote an aversion to taking the property of others without their consent on normal circumstances. To the degree that we are successful, this generates a  "feeling" of wrongness at the thought. Some people mistake this "feeling" for some moral rule written into the very fabric of the universe. But that is a mistake. It is just a feeling that people generally have reason to promote; and the legitimate range of that feeling extends only so far as the reasons that exist to promote it.

Of course, our reason to promote it in certain cases is also a reason to promote something else in different cases. Consequently, on matters of national defense, or a police or court system, the government takes the property of others without their consent (as it does when it fines a perpetrator or orders compensation be paid to a victim). This is not a wrongful transfer of wealth simply because the reasons people have to promote an aversion to taking property leaves room for an exception where the public good can be served. This includes cases where there are public goods to pay for and the fining of criminals.

Education also counts as a good that benefits the whole community, and not just the one being educated. Consequently, there is a reason for the community to help to finance that education, rather than to demand that each individual bear the cost, and then have the community walk off with the benefit without cost.

On this account, there are many and strong reasons to stop this aversion to taking the property of others where it concerns massive accumulations of wealth by a small number of people - using that wealth to help those who suffer greatly without the help.

An example that I use is that of an airplane that crash lands in the desert. It crashes near a huge estate built on an oasis, where the owner has built lavish fountains and swimming pools out of the water that the oasis makes available to him.

According to the idea that there is a natural law prohibiting people from taking the property of another, the survivors of this crash are duty-bound to sit and die of thirst if the owner of the estate fails to share his water with them. The mother must watch her child wither away, and all others must suffer and die, with more than enough water just a few feet away, if the water is on the opposite side of a property line.

We do not even need to imagine a fence that will keep the survivors of the crash out. All we need is a property line drawn in the sand showing that water in the fountain, not ten feet away, has an owner and the owner denies the survivors a drink. And we are to judge it wrong to cross the boundary, walk 10 feet, and take a drink from the fountain.

I would hold that people are justified to hold the owner of this state in the greatest contempt, and do have a right to see to it that enough water to sustain the life of the crash survivors is redistributed from the person who has more than he needs to those whose quality of life can be significantly improved. The person who would hoard water as others die of thirst is on a moral par with those who hoard wealth while others die.

In fact, people generally have many and strong reasons to make an exception to the rule against taking the property of others - when those who have the property have but a slight need for it, and it would make a significant contribution to the well-being of those who acquire it.

Now, on this matter, there is reason for a warning. If we allow each person to decide for themselves what they may take, it is almost without a doubt that they will take too much and leave too little. Consequently, this reason to provide for an exception to leaving others with their property must still require a devotion to due process - to some system of how much to take and who receives it that will keep the natural proclivity both to take too much and to keep too much in check.

On the matter of redistributing wealth, the matter that has struck me as most reasonable is an estate tax. A person makes his wealth within a community - within a system of rules, laws, and customs without which trade and the acquisition of wealth would not even be possible. When that agent no longer has a use for the wealth he or she has accumulated, then it goes to help those who are in the most need - who can obtain the greatest benefit.

I do hold that society should not interfere with a parent's concern with the well-being of the members of their family. Just throwing a number on the table, it would seem that a gift of about $2 million properly invested can generate a reasonable income for the recipient. Consequently, we can allow the wealthy person to include an inheritance of up to $2 million, for those they care about like family, with the balance being taken under an estate tax.

On the other hand, putting all of this money in the hands of legislators will simply guarantee that the wealth gets transferred from the rich deceased to the friends and supporters of the legislator. This is something many liberals overlook. They wish to put huge amounts of wealth and power under the control of legislators that they then claim in the very next breath cannot be trusted to use it for the public good.

To get around this problem, I like the idea of having this 100% estate tax come with a rule the very wealthy can avoid this tax entirely if they donate the money to a private charity that serves the public good. This will keep it out of the hands of the legislators and ensure that the money goes to something that the person who earned the money cares about. For example, the money Bill and Melinda Gates and Warren Buffett donate to the Bill and Melinda Gates Foundation would not be subject to tax.

An objection is raised that if we take the wealth of a person we will reduce their incentive to make a meaningful contribution. Why put one's effort into earning what others will then take?

That is not entirely true. The system described above, for example, will take no wealth away from Bill and Melinda Gates nor form Warren Buffett - their money would go where they have already decided that they wanted the money to go. The same is true of Mark Zuckerberg, Elon Musk, and several hundred other very wealthy people who wish to see their wealth go to serve a public good.

The only people who would lose an incentive to acquire wealth are people who seek to build an economic dynasty - who seek to create an economic fiefdom that they hand down from generation to generation. If such rules mean that these people are so disincentivized that they spend their lives in middle management, I hardly see this as something that society as a whole has much reason to be concerned about. This simply leaves more money-making opportunities for people like Bill and Melinda Gates, Warren Buffett, Mark Zuckerberg, and Elon Musk.

And that is not a bad thing.

None of this denies that there is reason for a general aversion to taking the property of others without their consent. It helps to keep the peace, it helps people to be able to control their lives, and it gives people an incentive to take care of things with the expectation that they can continue to use them in the future.

But we already recognize that this sentiment comes with exceptions - such as when the government pays for public goods. Another quite reasonable exception is that, once the person who accumulates wealth has no more use for it, ensure that helps those who need it.

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