Thursday, September 27, 2012

On Redistribution

We hear many commentators opine that governments should not 'redistribute' wealth from the rich to the poor. According to them, this kind of redistribution is what socialism is all about. I say: 'really'?

NFL takes money from rich team and gives the funds to the poorer teams. So does NHL and MLB, and almost all corporations. GE transfers money from more profitable subsidiaries to less profitable ones every day. Critics would say that corporations can do so as it is 'their money'. It is actually the shareholders' money.

If individuals redistribute funds and have no resources they may ask for a loan. And when that happens they engage yet another set of redistributive processes (where do financial institutions get their money if not from savers or from almighty Fed?).

When you save money to buy a car, a house, or a boat you actually redistribute money from present potential expenditures to future expenditures. When you give lunch money to your child you actually redistribute money from somebody -you- who has money to somebody who does not -your child-, for very legitimate -and moral and noble- reasons.

We are redistributing money every time when we engage in financial transactions. Why should the government not protect the interests of all of us by harnessing the power of redistribution? We, after all, can choose to move to another country with less public redistribution or we can elect representatives who support the notion that private redistribution is more effective than public redistribution. But maybe it is not that simple.

Given the 2007 private banking generated crisis we could successfully argue that the government is the only institution with authority, durability, and credibility to preserve the value of private redistribution over the long term. So, I say, public redistribution is actually more desirable over private redistributive processes, at least on large and public scales.

Long live public redistribution, I say. Private redistribution will always thrive, no matter what the government does, so it can fend for itself just fine.

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