With the gap growing on a worldwide basis between those who
have much and those who have little, the debate has been ongoing for some time
now as to how that gap can be closed whereupon some people started to question
if we should even try to do something about it. One of these people is Scott A.
Hodge who is president of the Tax Foundation in America. He wrote an article on
the subject in the February 14, 2014 edition of the Wall Street Journal that
came under the title: “Here's What 'Income Equality' Would Look Like” and the
subtitle ”Take about $4 trillion from the top 40% of families and give it to
the bottom 60% – voila, no more inequality.” Before we look at this article,
let's try to understand what it is that we're tackling here.
Society produces wealth and consumes it. Most nations,
however, export some of what they produce, and consume some products they
import from abroad. This is called foreign trade; a commercial activity that is
important to the economy of some nations but not as important to other nations.
To better understand the gist of this discussion, we ignore the foreign trade
portion of a nation's give and take, and stay with its domestic activities.
A modern nation produces goods and services more or less
abundantly depending on the natural resources it is blessed with, the level of
development it has attained, and the culture that determines how hard and how
efficiently its people work at producing what they consume. And what people
consume are of two kinds: There are the essentials and there are the luxuries.
What must not be forgotten, however, is that the line separating that which is
essential from what is luxury varies from nation to nation depending on several
local factors.
For example, a society that is barely developed and living
on a tropical island that is bathed in sunshine throughout the year does not
view as essential having running hot water in the bathrooms, but considers
essential having ice by virtue of owning a refrigerator, or being able to buy
ice at the store. Likewise, a society that is living close to the arctic region
of the planet does not miss seeing sandals and bikinis displayed in the windows
of its department stores, but would miss seeing boots and warm clothing.
There are, however, a number of generic products that all
societies need as a minimum to preserve life. They would be the sort of
products that all organisms require such as food, a covering to protect the
body from the elements, and a shelter to also protect from the elements and
protect from the kind of predators that would prey on them. As it happens,
every society is able to provide these essentials for its members unless
something happens to the climate, such as a drought or a flood that would
inflict a calamity on the land.
In addition, most societies are able to produce a surplus of
essentials, a blessing that allows them to free some of their members who then
engage in the production of luxuries; be they hard goods or services. This
happens because every able body in the society contributes time and effort to
get the work done, and everyone – able bodied or not – receives a share of the
bounty that is produced communally. Harmony is thus ensured in a place where
everyone knows everyone, and a kind of idyllic life sets in where everybody
contributes to the welfare of the young, the old and the frail.
Looking now at a modern industrial nation, we see that most
people live in urban centers called cities where the essentials that are
required to sustain life exceed by far those of a setting that is not developed
as much, such as a tropical island, for example. Two such requirements would be
mechanical means by which transportation is done, and electronic devices by
which communication at a distance is achieved.
Unlike the simple life of the tropical islands where people
know each other and look after one another, the urban people rarely get to know
their immediate neighbors, let alone interact with strangers. And they refrain
from helping each other unless a disaster strikes, and they all find themselves
in the same proverbial boat. This is why there arose the need for government to
provide everyday services that range from babysitting the children of working
mothers to providing assisted living for the elderly who happen to live longer
than ever before given the breakthroughs that were achieved in medicine and the
delivery of healthcare.
When you add to this the fact that children need more
education to work in the modern age than they did at a time when they joined
the farm at the age of fourteen, it becomes clear that the working age segment
of society is now required to support a larger number of people than ever
before. And this is where the question as to how the wealth produced by a
nation ought to be taxed by government and redistributed among those who need
assistance – all this to maintain the sense of fairness toward everyone, and to
ensure domestic tranquility.
Getting back to the Hodge article, we see that studies have
been conducted in this regards and have yielded some surprising results. The
studies say that everybody in America receives a handout from the government,
even the households in the top fifth of the income scale where they received 17
cents for every dollar they paid in federal taxes in 2006, the year before the
recession. As to the middle class, they received $1.19 in government spending
for every dollar they paid. Only those at the bottom fifth of the income scale
received what may be called meaningful help. They received $9.62 in federal
spending for every dollar they paid. And this is a finding that even Mr. Hodge
admits “isn't surprising since people with low incomes pay little in taxes but
receive a lot in transfers.”
Since there is nothing that is shocking in these studies, we
ask: What is it that ruffles Scott Hodge and people like him at the idea that
some sort of income distribution is essential for maintaining a sense of
fairness toward everyone in society, and ensuring domestic tranquility? You
find that the answer to this question lies in the way that these people look at
the subject. You get a taste of this in the first paragraph of the article
where the author writes: “the [Obama] project would require redistribution on a
staggering scale.”
And so you ask: Obama project? Which Obama project is he
talking about? You look through the article to see if there is a hint of it,
and find this: “How much more would be needed to make every family equal?” But
there is nothing in the Obama project that says every family must be exactly
equal. To think that this is what the President is trying to achieve is to show
mental instability. To be paranoid is bad enough; to self induce paranoia on an
ongoing basis is another thing because it makes you sound like a relentless
idiot.