Thursday, October 3, 2013

The Methods of Wealth Distribution

Long before we developed the brain that has allowed us to start a movement we call civilization, nature itself had invented the concept of the redistribution of wealth. It did so by encoding into the DNA of most living organisms the instinct of the parents to gather food and distribute it among the young.
               
The moment that we, as a species, began to live in communities inside of which some people produced the goods and services that would be shared by all, the idea of how to distribute that wealth became an issue for debate, assessment and constant revision. This was the beginning of civilization in whose name so much that is uncivilized has unfortunately been committed.

After several thousand years of debating the issue – sometimes violently by insurrection, civil strife or cross-border wars – we have boiled it down to a few simple principles. We recognize that to survive and to advance as a species, we must live in large societies that will be bound together by a social contract. That contract sets, among other things, the rules by which the wealth that is created by some members will be shared by all. There is no going back on this idea, but the debate continues as to the way that the distribution of the wealth is done, and how much each member is entitled to receive.

Before the printing of fiat money by a central bank, the distribution of the wealth was left largely in the hands of those who produced it. The more that someone produced, the more that they and their loved ones had to live on and enjoy. But mindful of the adage which says that “everybody's business is nobody's business,” the producers of the wealth rendered some of it onto the government to take responsibility for providing such collective services as national security, the administration of the law, and the construction of large utility projects that serve the whole community.

Then came the printing of fiat money, and the method of wealth distribution was changed beyond recognition. Instead of the goods and services being a measure of the wealth that is being produced and distributed, the amount of money that is printed and given out became the measure of someone's wealth. Thus, A and B could be producing large amounts of goods and services, yet remain poorer than C and D who produce little or nothing. This can happen if C and D are given more printed money than A and B for one reason or another; under one pretext or the other. The consequence of this shift has been that the method and instruments by which fiat money is distributed became the focus of the debate pertaining to wealth distribution.

By and large, the debates unfolding most everywhere in the world reflect a relatively high level of understanding as to what the issues are. In contrast, the debate that is unfolding in North America was highjacked by one side, and made to degenerate to the level of demagoguery. You can see this in two articles published on October 3, 2013. The first is titled: “How ObamaCare Wrecks the Work Ethic” and subtitled: “The health-care law, starting Jan. 1, will begin driving up marginal tax rates – well above 50% for many.” It was written by Casey B. Mulligan, and published in the Wall Street Journal. The second article is titled: “Why Divorce attorneys will Love Obamacare” and subtitled: “Someone in the White House thinks marriage is a bad idea.” It was written by Jacqueline Leo and published in the Fiscal Times.

To be a demagogue is to scare people about an issue instead of debating it on its merit. As you can see by the titles of the articles, the issue here is the Affordable Care Act that came to be nicknamed ObamaCare. Instead of pointing out that a universal healthcare – in one form or another – has been implemented everywhere in the civilized world, and that it is working perfectly well, the authors chose to scare their readers by predicting that the law will cause some kind of apocalypse when fully implemented because it will redistribute the wealth which, in their view, is evil. Mulligan predicts that the tax rate will be driven up; Leo predicts that married couples will divorce.

The irony is that these articles were published on the day when the real apocalypse that is plaguing the American system is unfolding in the nation's capital where the federal government has been shut down. It was not shut down because of ObamaCare but because the making of political sausage in America has become a mess. And if there are minor points to be ironed out in ObamaCare, these points exist not because the idea of some form of universal care is bad, but because the political process that produced it is bad. Thus, the debate should center on how to improve the political sausage making in America, not be driven by the demagoguery that would trash the law with speculations about apocalypses that only false prophets can come up with.

Wealth distribution is part of our civilized heritage not because we invented it artificially but because nature wrote it into our DNA. Those who fight it are fighting a losing battle; if they do not personally lose, they will make the whole nation lose.

Instead of doing this, such people would do well to use their considerable intellect (some of them are very smart) not to trash a fundamental principle of our civilization but to help make it work better.