I’m having some trouble, in my own mind, arguing down wealth redistribution. The arguments I know don’t seem strong enough. Am I missing something? Am I not extending strongly enough?
Generic agency problem of the state - seems weak because does not directly address inequality/poverty
Opportunity cost of stolen goods - Reduces investment elsewhere in the economy, harming the poor in the long run - seems weak because I’m making a judgement about the time preferences of the poor.
Incentive - both from the recipient and extractee side - But even if I win this point, it is still possible for a less productive world to be preferable if people aren’t starving
Interpersonal comparisons of utility are stupid - they are, but no one else seems to think so. The best case scenario is that I corner them into admitting its an emotional measurement… but since they never cared about being rigorous in the first place, this doesn’t seem to matter to them.
(1) Empathy is endogenous, not exogenous to society. People care in the face of suffering. It doesn’t follow that they always care about everything, but do care in general are willing to put effort to it.
(2) It can even be a lucrative business. In Belgium we have ‘music for life’, which every year tries to gather as much money as possible to donate to charity and people all over Flanders try to set up stuff to be able to donate. Note: this does validate a ‘socialist’ critique that people are inclined to donate to ‘popular’ topics more than ‘non-popular’ topics, but I don’t consider this all that important. There will always be gatekeepers who will organize these events and there is no reason to assume government is better.
(3) Obviously: natural rights argument.
(4) It’s not that clear that redistribution -as a policy - is all that favorable for the poor. (Mix it in with the corporatist state critique.)
(5) Redistribution as a national policy excludes those who are really poor (foreigners) in favor of the people who just are relatively poor.
(6) Redistribution is seldom a ‘now or never!’ case. (E.g. It’s like almost never ‘If I don’t manage to have something right now, I’ll die!’ I could even argue that it’s not morally wrong to steal in such a case, although, obviously, it’s still a rights violation and should be considered as such.) It’s always a policy of systematically donating money through a political process to certain groups. It’s basically a subsidy.
Well, if you are going purely utilitarian, the prospect of losing wealth makes people less likely to try to generate it. Societies with redistributionist policies are poorer overall.
But why not make the moral arguments? Those are always stronger. Wealth redistribution of the sort generally referred to is also a performative contradiction.
By the way, redistributing the wealth is not bad per se. When we take what a criminal has stolen and give it back to the proper owner, we have, technically, redistributed the wealth. Theft is what is wrong; redistribution is neutral without further details.
What is your goal here? Are you trying to prove that wealth redistribution cannot work? Are you trying to show that it hasn’t worked? Are you trying to prove that it’s wrong to redistribute wealth?
My own take is that, if your opponents aren’t even interested in logical rigor in the first place, they’re being intellectually dishonest. Calling people, in essence, liars tends to cause notice.
Unless your opponent is recommending giving guns to the poor and to let them redistribute wealth vigilante style, the argument is very much centered around the state and doesn’t need to address inequality.
You don’t need to make judgements about the poor’s time prference here. The poor are not going to invest 100% of their welfare check into capital goods. Some percentage must going to be used for food, clothes, etc. If they were not in need of these consumer goods, and were going to invest redistributed wealth at the same rate that the rich would have, then there was no need to implement redistribution in the first place!
I agree here. Don’t go down this road unless you plan on demonstrating how capitalism will bring about higher productivity and wealth for everyone (If they would agree with pure capitalism, you wouldn’t be arguing with them in the first place).
If you’re arguing against people who don’t plan on being consistent or rigorous, you might as well resort to sophism.
Insofar as you are confiscating wealth garnered via entrepreneurial profit, you are directing factors of production away from the entrepreneurs who have proven themselves most efficacious in serving the wants of consumers (all the individuals in society). This destroys the selection mechanism of the market, leading to error-based capital consumption and a worsening of living standards for everybody.
Insofar as you are confiscating wealth accumulated as interest, you are directly encouraging capital consumption, which leads to a drop in the productivity of labor. This means fewer consumer goods and services, and a worsening of living standards for everybody (particularly the proletariat who redistributionists often want to help, as lower productivity of labor leads to a drop in real wages).
Most efficacious in serving the wants of consumers in proportion to their purchasing power. People without sufficient purchasing power are excluded from obtaining essential goods and services.
I think their argument is that equality trumps economic progress. A 20% tax rate doesn’t seem that significant to them.
The counterargument is that regardless of their investment rate, you’re still reducing inequality and providing a safety net for the poor.
This is a different utilitarian argument, and in fact I would argue is a moral argument (whether we should reduce inequality and provide a safety net for the poor). The actual utilitarian argument was provided by Daniel, and that is that you are redistributing capital from the more efficient to the less efficient, ultimately at the expens of both (since the less efficient will never enjoy what production was foregone as a result of that wealth redistribution).
The most successful entrepreneurs are not the ones who serve already-established luxury markets. Profits in old markets tend to dwindle to zero. They are the ones who figure out how to serve the teeming masses who have not yet been reached. For any given stratum of purchasing power, the more you hamper entrepreneurs, the more you slow them down from reaching that stratum. And in the meantime, a stratum that has not yet been reached can be charitably provided for much more bountifully in a world where the strata that have already been reached are having their wants met efficiently (thanks, again, to entrepreneurship).
As Mises wrote in Human Action, all parties (even the most socialistic), no matter what they say in their cloistered esoteric musings, promise their flock a higher absolute standard of living.
They think it is a utilitarian argument. From their perspective, they don’t have to pay attention to the loss in utility of the upper class, because they’re doing just fine. Only the poor matter because the poor are living so horribly. They’re making an interpersonal comparison of utility on emotional grounds. Are there any good direct responses to this?
Your opponents should investigate why the poor are living so horribly. Often, unfortunately, it’s a result of their own choices. But many of the poor are living so horribly because of the very policies your opponents advocate.
So first, the leftist problem is not with profit, its with actual costs. So even if the profit rates in the medical industry are nil, the cost can still be “too high”.
Second, this is the “long term” argument. Things will eventually get better, but it isn’t fast enough for the left. As Austrians, we can’t give them a timeframe…
They just say it won’t be enough. How can they know? Empirically. Empirically it has never been enough. It is never enough for them.
At bottom it’s about neither profits nor costs. At bottom it’s about standards of living. And that depends on the provision of goods and services. And whether they like it or not, that depends on the coordinating function of entrepreneurial profit and loss.
It will be fast enough if they realize there’s no other way.
If they refuse to talk economic theory, then you have to talk methodology until they start to talk economic theory. Playing by the rules of their false methodology won’t work.
They dont want to do away with the entrepreneurial function, they just don’t want to rely on it entirely. They’re cool with sacrificing a little bit of the market to have more welfare.
Their methodology isn’t wrong per se. They aren’t trying to derive axioms from evidence. Economic theory will not clarify the amount of charity that will be produced, they’ll concede that. They just look and see “whoah, not enough charity. Better produce less yachts and more health care”.
Sacrificing the market sacrifices welfare, for all the reasons I’ve stated. Confiscating the wealth of those who would otherwise purchase yachts will lead to less health care, for all the reasons I stated.
I find the biggest problem most anti-redistribution arguments fall into is the dichotomy between taxed redistribution and charitable redistribution.
Why is one good, while the other bad? If redistribution is bad, what makes it any different when it’s done voluntarily? It was still redistribution from so-called productive to so-called unproductive.
Then of course there’s the ever popular “the poor are poor because they are lazy.” This has been shown to be false too many times for any thinking person to even consider (what did people suddenly get super productive in the 90s?).
Lastly, why is upward redistribution good? By this I mean the flow of wealth, which tends to center in fewer and fewer hands through open trade. Privatizing roads or public transportation is just adding a new tax to the poor (the rich have always been paying this tax)… why is that good?