Friday, January 24, 2014

Wealth Redistribution by Socialism

Walter Williams is a black national columnist. He is also a Professor of Economics at George Mason University.
I mention that he is black, because it is unusual for a black person to deviate so strongly from the Democratic Party line and the present choreography of the Obama Administration. Black people tend to congregate with other blacks and particularly follow a black leader, such as Pres. Obama, without any regard to issues.
Prof. Williams issued a nationally syndicated article in the Lubbock Avalanche Journal on January 20 entitled, "Wealth Redistribution Is Poor Solution for Income Inequality".
In this article, Prof. Williams clearly explains that income results from having made a contribution. A contribution is something which has improved the lifestyle of an individual or group of individuals. He uses the example of a person mowing a lawn for $50, which is the value of the contribution to the lawn owner. Conversely, he mentions Brin and Page, who are cofounders of Google. As is apparent, Google is believed to be instrumental in improving the lifestyle of millions of people. The resulting income for Brin and Page runs into the billions of dollars, because of the magnitude of that contribution. This is similar to the previous old capitalistic idea that one doesn't profit much from the sale of a needle and a spool of thread, but it makes a huge difference if the sales are to millions of people. Hence, the development of Woolworth.
Prof. Williams goes on to make a second analogy. In this case, Tom, Dick and Harry play poker once a week, with Tom winning 75% of the time. Close investigation shows that Tom has not been cheating, and he has been winning because he is a better poker player.
Prof. Williams says that Brin and Page should keep their billions of income and Tom should keep his poker winnings, because it is the fair thing to do. Prof. Williams goes on to say that operations of government to institute rules, which would not allow these gains, is basically unfair. He does not mention that the institution of such rules inhibit further development. If Brin and Page cannot keep their income, what incentive will future persons or partners have to make significant contributions? Similarly, why would anybody want to become a better poker player, when the opportunity for gain is eliminated? One could say that there are compensations for success, other than money. One is simply a desire to be the best by recognition. That is certainly helpful, but a physical benefits such as money, with the conveniences that it can buy is perhaps of equal or greater significance. Without opportunity for profit, would Rockefeller have developed the US railroad system, Carnegie the steel industry, or Edison the electric light bulb?
We have been in the throes of developing socialism, with the removal of profit incentive, since the time of Franklin Roosevelt. In the past few years, Pres. Obama has strongly accentuated the process. The question is where we go from here?
We have seen the results of capitalism and the results of socialism. As the US has become more socialistic, it has sunk deeper into debt, has reduced its power through financial weakness, and has achieved a reduction of respect for its government. The two available options are to continue with increased socialism or to swing back toward a more capitalistic operation. However, Newton's first law of physics says that a body in motion tends to remain in motion. It is also apparent that a program in development, such as socialism, will tend to remain in development. In other words, it will take a major effort to stop the socialistic development and swing back toward capitalism.
There are two major incentives for the continuation of socialistic development. We have an electoral system of government, which means that the people can elect its government officials. This results in a system whereby government officials attempt to satisfy the public for reelection and retention of their special benefits as government officials. The second major incentive for continuation of socialistic development is public attitude. In the US, the public perceives the opportunity for contribution which will reap the benefits of rewards through greater control and improved lifestyle. Conversely, the public also has an inborn desire to improve its lifestyle through less effort and a tendency for jealousy toward those who "have more". This leads to a public desire for a redistribution of wealth and pressure on government to achieve that result.
The simple question then is the controversy between opportunity, with personal benefits including private property, or "be at rest", with redistribution of wealth and no private property. Government officials personally have more to gain with the second alternative and will tend to promote it among the public. Will the US public be deceived by pie-in-the-sky socialistic promises? We will see.

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