Wealth redistribution
March 23, 2009
Over half a century ago, one man wrote that “all men (in this case human beings) are equal, but some are more equal than others”. Some individuals are allowed to amass great wealth, others take comfort in unevenness and are allowed to live comfortably, while still, others embrace letdown, and strive to always make ends meet. It is a fact that some people have more wealth than others, but the extent, how much more of the wealth is what matters.
It is in light to this that economists have come up with a form of defining ‘how much more’ difference occurs and how it can be redistributed for the general wellbeing of the society. Thus, wealth redistribution is the transfer of wealth, income or property from some people in a society to others.
Methods of wealth/income redistribution
One form of income redistribution in most egalitarian economies is through income-regulated taxes. This aims at equalizing the amount that an individual is allowed to earn, with the purpose of correcting the incompetence of a market economy, to pay based on the amount of labor an individual expends. The amount of tax paid goes to fund programs that help the society, particularly the poor. Another way of income redistribution is through progressive income taxes, where the rich are taxed more than the poor.
Arguments on Wealth redistribution
One basis of wealth redistribution is that it should be distributed with the aim of benefiting the less fortunate members in the society, and that the rich are morally obligated to help the poor, therefore creating a more financially democratic society. It is argued that more often than not, the poor members of a society are exploited by the rich, or else gain unfair benefits than the poor.
Still on point, it is argued that in a fair, balanced economy, a large number of people are able to become consumers, whilst providing commensurate opportunities for people to attain a better living standard.
Promoters of wealth redistribution cite economic inequality as one of the major causes of social injustices, such as homicides and crimes. In the same way, they argue that private entrepreneurship ends up in an unequal distribution of wealth. The law of diminishing returns is also cited by the proponents of wealth redistribution. They interpret that taxation is commensurately less than how the poor gain wealth from social wellbeing programs.
In addition to citing unequal access to essential services such as basic health care and education, proponents also argue that the poor members of the society should be taxed less than the rich, since the rich receive better benefits such as protection by the governments, in that since they own more properties, the government is somehow obligated to defend it.
Opponents on the other hand argue that wealth, income or property redistribution legitimately obtained, is not and will never be fair. They cite that historically, the living standards escalate with lesser wealth redistribution, and at the same time increasing imbalanced results due to the creation of wealth.
The critics tend to argue on the basis that economically, wealth redistribution punishes the good hardworking individuals, thus punishing excellent economic activities and rewarding pitiable, poor economic activities or individuals. By the same token, they argue that redistribution in a society creates a culture of dependency, hence creating a lazy lot in the society. Rationally, if one can turn a need into an asset or an income, of what importance should they work hard for?
However, proponents counter this notion by arguing that in a capitalistic culture, success is not measured by how hard or lazily one works, but by the measure of an individuals’ wealth. The more one has wealth, the more useful they will be to the society.
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