Week 44: Redistribution
As a child, who didn’t enjoy The Merry Adventures of Robin Hood of Great Renown in Nottinghamshire? Written by American author and illustrator Howard Pyle and published in 1883, the novel evokes the spirit of the old English ballad, and it fuels the rebellious passion of its youthful readers. Tales of Robin Hood reach back to the 13th century, with works like Visio Willelmi de Petro Ploughman by William Langland and the Scotichronicon by Walter Bower. As time has passed, the ancient notion of taking from the rich to give to the poor has moved from popular culture to political reality.
Redistribution of wealth is the practice in which Robin Hood was engaged. To redistribute, by definition, is to dispense, divide or apportion something anew or in a different way. Some definitions will also indicate that the new or different dispensation, division or apportionment is to effect greater fairness.
Political rhetoric is replete with calls for redistribution. Each member of the Democrat slate of candidates favors an increase in taxes and the growth of government programs. Republicans in Congress and in the White House are running deficits of unprecedented magnitude, and this is in spite of historically high levels of revenue for the government.
I believe the question of redistribution in a political and economic sense is twofold. First, does redistribution advance what is good. Second, who is best positioned to make decisions about redistribution.
A simple example of redistribution comes to mind. I went to the hardware store yesterday to purchase an extension cord. Upon exiting the store, I met a bell ringer for the Salvation Army. I chatted with her for a bit and put a few dollars in the kettle. In both my purchase and my donation, I effected the redistribution of wealth, dispensing my money anew. For the purpose of the discussion at hand, I will focus on the latter transaction, as it is more akin to the notion of redistribution in today’s political debate. That notion being the transfer of money from one person for use by another, typically without any good or service being obtained by the person from whom the money is transferred. In this simple example, I gave a few dollars of my money to the Salvation Army, knowing I would receive no direct, tangible benefit (i.e., use of the services of the Salvation Army). However – and a vitally important however – is my belief, my informed understanding, that I will be an indirect beneficiary of that donation, as it will improve the lot of a fellow human being. If that improvement results in nourishment, shelter, warmth, etc., the person receiving the direct benefit may be less inclined to procure it in an illicit manner, which desperation sometimes induces.
Apart from the mitigation of potential criminal victimhood, I am an indirect beneficiary in a more fundamental and profound way. Believing in the connectedness of the human family, my belief system dictates that when one suffers, the whole suffers. This may be empathy run amok, but for me I cannot envisage in any meaningful way human dignity for one without human dignity for all.
Relative poverty, be it emotional, physical, intellectual or financial, diminishes society. Societies execute implicit and explicit social contracts to help individuals accomplish objectives that they could not accomplish alone. What, though, are those objectives? In Nicomachean Ethics, Aristotle states his belief (and it is a belief to which I subscribe) that the objective or goal of human beings is happiness. Consequently, social contracts and societies should exist to advance the happiness of its citizens. While Charles Schulz of Peanuts fame would have us believe that happiness is a warm puppy (and as the dog dad of three warm puppies, I would say he’s correct), happiness actually is an individually defined concept. Because we’re all in it together, so to speak, it may very well be desirable to advance societal happiness by promoting the happiness of the individuals who make up the society.
A facet of this advancement and promotion may be the dispensation of financial resources in a new or different way for the benefit of those who lack such means. After all, food, shelter, education, healthcare, etc. cannot be provided at no cost to individuals directly or to individuals via social means, such as government and taxation. The question now arises as to who is best suited to make decisions about dispensation, which is to say redistribution of wealth.
Redistribution of wealth may occur voluntarily, as with the Salvation Army example, or involuntarily, as with the case of taxation for the funding of welfare programs. (Note: In recent decades, the term “welfare” has come to be used in a pejorative sense. That is not the intent here; it simply means, as defined, aid provided by the government to those in need.)
In voluntary arrangements, each individual is empowered to redistribute his or her wealth in alignment with his or her values and with his or her own understanding of the needs of the community. Are we not humbled by the stories of school-aged children who, with their parents, distribute blankets to the homeless in the wintertime? Are we not inspired by the people who leave a $100 tip for the waitress in the local greasy spoon? Are we not amazed by the philanthropist who anonymously bequeaths the bulk of their fortune to organizations like the Shriners or St. Jude’s hospitals? These are not idealized examples. They are but a miniscule number of the real redistributive acts taken daily by individuals to advance the happiness of their fellow human beings.
Decisions about redistribution are weighed by the individuals. They give according to their ability and desire, and they have an immediate and vested interest in making sure their money will be used efficiently and effectively.
In the voluntary system of redistribution, what happens if a charitable organization does not deliver results or use resources effectively? Individuals can choose to allocate their resources anew to organizations that do perform well, or they can even start their own charitable organizations. I am reminded of some acquaintances who were dissatisfied with the percentage of contributions that went to overhead in some charities, as opposed to the provision of direct aid. What did they do? They started their own charity, with the premise that no more than one percent of contributions would be used for administrative activities. A full 99 percent would be used in direct care to those in need. Many people, who were in need in their community, have been helped through their generosity and initiative.
In involuntary arrangements, the ability to weigh decisions about the effectiveness and efficiency of the use of funds is taken away from the individuals who are footing the bill (i.e., the taxpayer). The citizen’s money is taken by the government and put into general funds for use by Congress and the government’s various agencies that do the bidding of Congress, supposedly to advance the objectives of our nation. It would be wonderful if this worked in an efficacious manner. It would be wonderful if those in need benefitted from the government’s use of taxpayers’ money, but as the economist Milton Friedman observed, no one spends someone else’s money as responsibly as he spends his own. Let me offer for your consideration, just three of the myriad examples that illustrate this point.
For decades, the federal government has used your money and mine, which is to say money they have taken from us in the form of taxes, to simultaneously subsidize tobacco farmers to the tune of approximately $60 million per year, while at the same time spending approximately $71 million per year funding smoking cessation programs. Who in their right mind would agree that this makes any sense? It does not, and in making no sense, it wastes roughly $130 million per year. Think of what might be accomplished with that money if it were not in the hands of Congress.
Regarding the Centers for Medicare and Medicaid Services (CMS), the General Accounting Office tracks and reports the amount of waste, fraud and abuse that occurs each year. In 2016, for example, GAO reported that this amounted to more than $60 billion for Medicare alone, or roughly 10 percent of the entire Medicare budget. Entrusting the government to resolve the waste, fraud and abuse caused by…well, by the government…CMS spent $117 million from 2010-2017 to audit a subset of this waste, fraud and abuse, specifically overpayments in the Medicare Advantage program. What did we, the taxpayers and the people covered by Medicare Advantage get for that $117 million audit? The government recouped a mere $14 million. Had they done no audits at all, the taxpayers would be financially better off to the tune of more than $100 million. How much care might that have provided to the sick?
As for education, look at the horrid disparities in our system of public education. As mentioned in Week 49, those most in need of quality education as a means for improving their lot in live and for advancing their happiness are the very ones who are provided by the government with the worst schools. (I believe this is an intentional and insidious way for those in Congress to maintain their power and control over those in lower socio-economic strata, but that’s just my opinion.) And what are the candidates’ proposed solutions? Throw more money at the problem – a solution that has been tried time and time again without effect. It is another government program fraught with waste, fraud and abuse, and it condemns generations of Americans to lives of poverty and despair.
The point in citing these examples (and examples from each and every government program could be described) is simply to convey the fundamental principle that individuals will spend their own money better than the government will spend it. In addition to fraudulence and mismanagement, each dollar that is spent – as intended or as wasted – is done so with a cut going to the agency administering those funds. They are simply middlemen, and ineffective ones at that.
Underlying the agencies that run welfare programs are the people who envision and create in a manner reminiscent of Rube Goldberg these welfare programs. I’m speaking, of course, about the people in Congress, some of whom are running for President. Think about these people and the scandalous behavior that seems to be part and parcel of their lives. Think about their hypocrisy. For example, Bernie Sanders and Elizabeth Warren decry the evils brought about by millionaires and billionaires, while being in that class themselves. In terms of ethical behavior, look at Katie Hill, the so-called rising of the Democrat party. Although resigning in disgrace over acts of sexual misconduct, she is still heralded as great by those in charge of her party. Examples exist on the other side of the aisle, too.
The point in bringing up these examples is simply to ask the question: Are these really the types of people we want making decisions for us about what is right and wrong? At what point do we become complicit in their misuse of our resources? Is it not time that we demand better judgment and more accountability? I think it is. I also think that it is the individual, you and I, who is best suited to exercise such judgment and to bear the mantle of such accountability.
It is possible. It has been done before. Prior to the rise of the massive government welfare state, we were a nation of people who looked after one another. In the 19th and early 20th centuries, prior to programs like federally funded education, Medicare, Social Security and the like, there was a tremendous blossoming of private, eleemosynary activity. Private, charitable hospitals opened. The system of Carnegie libraries spread across the country. The founding of the Society for the Prevention of Cruelty to Animals came about. This names just a few examples. These did not come about from government taxation and mandates. These came about from the inherent goodness of people. It was possible then; it’s possible now.
As you listen to those running for office – at any level – and as you hear them demand a redistribution of wealth to advance some objective, ask yourself these questions: Is he or she better equipped to spend your money than you are? Is his or her plan one that you yourself would propose in order to advance the happiness of your fellow citizen? Would you be comfortable entrusting your happiness and that of your friends and family to this politician? What is the cost of their proposals, not just in terms of dollars but in terms of individual liberty and societal well-being? Are his or her intentions fundamentally good, or are they a ploy by which he or she hopes to acquire or maintain power over you and me?
