Redistribution of Wealth

This is in part a response to libertarian ideology and in part a statement of my own thoughts on government, with somewhat more weight put on the former rather than the latter. I will elaborate more on my own views and goals in a future post, but this served as a decent framing device to get across some of my own views, so I think I will let it stand on its own as a first legit post on here. I have another post brewing that should implicitly serve as a set of commenting guidelines, but I think it needs a bit more tidying up, whereas this one stands on its own better (and I’m also eager to hear responses to it). Until then, I’ll summarize my proto-commenting guidelines with two words: be respectful. You may think I’m full of shit, but unless you have a better way to say it than that and some proof to back it up with, I’m not interested in hearing what you have to say. If you do have a reasonable way to say it and some proof to back it up with, however, I’m extremely interested in hearing what you have to say, so feel free to go for it.

From what I can tell, the key tenet of libertarian philosophy is that people are entitled to the fruits of their labor, and that, categorically, no one has the power to take away the fruits of another person’s labor. I will accept the first part of that philosophy, but I take issue with the second. It is impossible to create a system where compensation and reward accurately reflect one another; thus, it is important to have some kind of balancing system in place to ensure that wealth is reasonably distributed.

In an entirely farm-based society, it is much easier to balance work and reward. Suppose you farm turnips: if you spend so many hours farming turnips, you will probably get a bunch of turnips out of the deal. If your king tries to take away your turnips, it is probably not legitimate; all the king is really doing is acting like a big bully and not letting you have all the turnips you grew. Now, it’s possible that the king is instead going to jar and pickle those turnips for you and make sure that everyone has enough food in the winter or in a famine. I’ll get back to this in a bit, but presumably the reality was that the king would take everyone’s turnips and then have a giant turnip feast for him and his court. This is not okay.

It seems that libertarians believe that government today acts like that king: the establishment takes our turnips and has a giant party with them, stealing the fruits of our labor just because it can. But modern society is not the same as a turnip farm: it is much easier to assign a value of one’s effort to the turnips they farmed than it is to assign it to the money they earn. The use of abstract money allows for people to take advantage of the system in truly gratuitous ways that often have no bearing on the amount of effort put in.

For example, it is possible for someone to make huge sums of money just by already having huge sums of money. Maybe they also have to invest it, and that takes some cleverness, but the fact of the matter is that already having piles of cash is a more important factor in this money-making strategy than cleverness. Other people make money by exploiting those who work under them. The management of a corporation (for example, Verizon) can arbitrarily decide to take benefits away from its employees, all in the name of making (more of) a profit.

This is the part where I am accepting the first tenet of libertarians: people are entitled to the fruits of their labor. However, as we can see, this system explicitly prevents people from receiving those benefits, since someone with power over them can take it away for their own benefit. Things should start to sound familiar now—it’s not the government who’s acting like the turnip king, it’s the management of huge corporations. So where does the government fit into this mess?

In my opinion, the role of a government is to act as a redistributor of wealth. We need to acknowledge the fact that assigning monetary value to labor is subject to change, and that any system that attempts to do so will likely have gaping flaws in it. Being able to game the system should not entitle to you to hold on to the enormous stacks of cash that you managed to get essentially by cheating. In fact, it seems like libertarians should be up in arms about the fact that this sort of thing can happen! Some people spend their entire lives working as hard as they can and barely manage to scrape even, whereas some people are born into wealth and are able to glide on by their entire lives without lifting a finger.

This is not fair, and it is not reasonable. Denying the right of a government (or really, any regulating body) to take your money only perpetuates such a system. Any form of government should allow for the fact that the world is not perfect, and that we cannot come up with a perfect set of rules to correct any unfairness in the world. At the very least, one hopes that the government will make things more fair than they would be if the world were completely unregulated (and as bad as things currently are, I think we are technically succeeding in that area). Ideally, though, a government would make things very close to perfectly fair, and I think we can all agree that we are a long way off from that. But not allowing the government to correct for mistakes in the system and flaws in the conversion from work into money doesn’t fix the problem; it just makes things worse.

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7 thoughts on “Redistribution of Wealth

  1. Joseph says:

    One thing that popped out to me as I was reading this was the reference to the concept of “corporate exploitation”. In the US, at least, corporations are not a free-market entity. They are legal entities created by the State. More importantly, the State grants them the honor of limited liability, thereby remove some of the incentives against doing unpopular things. In addition, the massive amount of regulation imposed by the State creates a severe barrier to entry in many markets (especially that of telecommunications, in which Verizon operates), making it that much easier for existing businesses to behave badly.

    In short, I believe much of the negative perception associated with “free markets” is created by the actions of the State, rather than by some intrinsic feature of free markets. If the State would just get out of the way, we could see what a truly free market really looks like (no bailouts, no regulatory capture, etc.)

    I also take issue with your example of someone who has a lot of money being able to make money by investing cleverly. While they may not be putting forth much physical effort, they clearly are benefiting those they invest in, so why should they not be rewarded for creating these benefits? Of course, as I claim above, the economy is massively screwed up thanks to the State, but do you object to my previous sentence in theory?

    • oh hey there is a reply button. My actual response is down there!

      • Joseph says:

        I also like the identicons beside our names. They make it really easy to keep track of who’s who, as well as drastically increasing the difficulty of impersonation (though I don’t think that will be a problem here).

  2. I’m not saying I agree with every regulation that we currently have in place; granted, I am unaware of most of them, but I’m sure it would be possible to dig up a lot that I agree with, and a lot that I think are ridiculous. Presumably there are regulations that would make it difficult for a new company to enter the market in both camps.

    The problem is, we have already experimented with a much less regulated system than we have now, and it didn’t work. Or rather, it worked for people like Carnegie, Rockefeller, etc, and really sucked for everyone else. Do you really want to go back to the Gilded Age? Or a new era with even *less* regulation than the Gilded Age? I certainly don’t.

    Perhaps you’d argue that in the age of the internet, it’s less easy to get a monopoly on something digital than it is to get a monopoly on something physical, like steel. But look at the case of, say, Google. They essentially rule the search engine business, and their own biggest competitor, Bing, has resorted in the past to stealing Google’s results to make their own results better (http://googleblog.blogspot.com/2011/02/microsofts-bing-uses-google-search.html).

    Actually, Google is a pretty good example of what is presumably pretty close to your ideal of a company. They saw an opportunity, seized it, and have done spectacularly well. They have a “don’t be evil” policy that they seem to follow reasonably well (or at least, better than a lot of other huge companies), and are generally decent people.

    Well, except for that whole real names policy fiasco, and the related mandatory gender reveal thingy that they have since fixed. The only reason that they fixed the gender reveal thing was because they happened to listen to their users. Google is under no obligation to provide an equitable service; they just happen not to be complete jackasses, in that one instance.

    Essentially, people are at the mercy of these huge corporations. And yes, reducing the number of ways it’s possible for corporations to exploit people means that they are going to look for *other* ways to exploit people. But that doesn’t mean we should just give up and make everything fair game. Unfortunately, the people who will do anything to make a profit are the people who are best at making (and keeping) a profit, and the people I do not, under any circumstances, want to be allowed to gain any more power than they already have (which is considerable).

    Now, presumably some of those regulations have actually been put in place *by the companies in charge* (or really, by people receiving enormous sums of money) in order to prevent competition. But removing the power of the state to regulate corporations doesn’t mean that the corporations won’t find other ways to squash the competition. It just means they’ll have to get a bit more creative.

    As far as investments are concerned, you have a good point that I hadn’t considered. But I stand by what I said: it is absurd for someone to be able to make money just by the virtue of already having a lot of money. Sometimes you can start with seemingly reasonable assumptions and reach absurd conclusions; the only thing left, then, is to figure out which assumptions are unreasonable (in this case, “super rich people should be able to invest in stuff and profit off of it”).

    Of course, it’s not ridiculous for there to be incentive for investing, but what claim does the investor have over the money returned to them above and beyond the initial investment? If the investee wanted to pay back a bit more to make sure there’s incentive for them to invest in more companies, then that’s pretty reasonable, but they are not *entitled* to that money. It’s not theirs; they did not earn it. All they did was hand it off to someone else with the expectation that they’d get even more back later. That’s not work, it’s entitlement. Thus, I would argue that it’s legitimate to be subject to heavy taxation.

    But I’ve already put another framework in place for this kind of thing: after all, isn’t the purpose of a government, as I’ve stated it, redistribution of wealth? Then, through the money the government has already accumulated, couldn’t they be the investors, instead? Even better, if you believe that investors *are* entitled to the extra money that they get back from investment, you don’t even have to think of the money that the government will eventually take back from the successful businesses in which they have invested as a tax: think of it as the interest on their loan.

    In addition to this, the government would be the ones funding the businesses, so presumably they would have some right to tell the businesses what they are and are not allowed to do (just as boards of trustees are allowed to do today). We could not call it tax and regulation, but instead investment and…well, I guess still regulation, but of a different sort.

    I should really start to talk about my goals here. Right now, I’m talking about how (on a very abstract level) I think things should and should not be. Eventually, I need to start talking about why. But that will be the topic for the post after next, as I think this comment is already longer than the original post. I’ll try to respond more succinctly next time, but I make no promises.

    • Joseph says:

      Let’s not pretend there wasn’t a huge amount of government interference in the economy in the Gilded Age:
      http://en.wikipedia.org/wiki/Gilded_age#Politics

      While some State regulations may be able to alleviate the side effects of others, I’m advocating for none whatsoever. This is the problem I have with people who think “deregulation” is a bad thing. They seem to ignore the fact that some regulations are retained, making it possible for things to indeed get worse. I’d be surprised if Carnegie, Rockefeller, etc didn’t have limited liability, along with loads of other regulations, to help them along their respective ways.

      Google provides some ridiculously awesome services, and if people think that the various bad things it does aren’t bad enough to make them stop using the services, so be it. In a truly free market, there would be no artificial barriers to entry for competitors to get over.

      As for companies (note that I didn’t use the word corporation, since those don’t exist in a free market) that have to “get creative” to squash competition: if they can do so in a way that doesn’t involve violence or fraud (aka, doesn’t violate the non-aggression principle), more power to them. Presently, they are able to use violence by proxy, thanks to the State, to squash competition. But if the State didn’t exist, how many people do you think would be ok with company employees using violence against competitors? I imagine there would be a huge outcry, just as there would be if Apple attempted to force you to buy an iPhone, or not to buy an Android, under threat of physical harm. It is the State’s appearance of legitimacy that is responsible for enabling the injustices it and others (by proxy) commit.

      On to the topic of investment. You say that it is absurd for people to be able to make money by having money, that they have no claim to the profits of their investments. I, on the other hand, think your latter statement is absurd. Recall that investees have no claim to the investor’s money to begin with. The only claim that can be made is under the terms of a contract in which the investor is entitled to ask for more money in return. Surely you do not argue that all loans should be interest-free?

      “Then, through the money the government has already accumulated, couldn’t they be the investors, instead?”

      This sounds reasonable, until it is realized that governments obtain “their” money via theft. They have no legitimate claim to it.

      • I’m going to hold off on replying until I have a bit more framework on the table; I hope you don’t mind. You raise some excellent points, and I plan to address them as soon as I don’t have to put an entire blog in a comment to do so.

        Long story short, there are guarantees that I would like to see made that I do not believe a free market is capable of doing, or even capable of claiming to do.

      • Joseph says:

        (So, it looks like replies can’t go more than 3 deep, unfortunately. I’m replying to your most recent post here.)

        No worries about the delay. It’s taken me a lot of thinking and paradigm-shifting to adopt the beliefs I do, and I’ve probably got a ways to go yet. In the meantime, you might be interested in reading this essay about free markets vs. planned economies:
        http://www.econlib.org/library/Essays/hykKnw1.html

        as well as this thread which also talks about the economic calculation problem:
        http://www.reddit.com/r/compsci/comments/jmpj1/markets_are_efficient_if_and_only_if_p_np/c2depyq

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