Should we steal from the rich and give to the poor?

Question

The top 5% of wealthy households in this country control 59% of the wealth (~$18 trillion). If the government confiscated half of their wealth, and redistributed it evenly to the poorest 95% of American households, each household would receive approximately $200,000. Then nobody would be poor, right?

Assuming the above situation, comment on the following:

Economically, what is wrong with this solution to poverty?

Morally, what is wrong with this solution to poverty?

Speculatively, how do you foresee the 'wealth gap' 25 years after the hypothetical "Great Redistribution"? In other words, after every family was provided a more than adequate chance at prosperity, would poverty exist 25 years hence?

Answer 1

I will attempt to answer your hypothetical question.

Will it work economically? It would be an extremely short stop gap to the economical situation and would be nearly impossible to do. People think the rich just have loads of cash lying around. Most of their net worth is tied up in investments. If you were to liquidate those investments to create cash to give to every family in the US capitalism would crumble. Businesses would close their doors with out funding and mass amounts of people would lose their job. Prices would escelate and the "rich" would out source and build their companies elsewhere. There would be a mass exidus of industry from the country and our markets would crash. This would also have huge ramifications on the world markets. Throwing money at an issue with out any responsibility has never worked.

Of course it is morally wrong. It would be blatent thievery by the government. Would you be OK with those the government stripping you of half of everything you had to provide for those less fortunate than you? Your hard work and risk rewards you nothing. Whether people believe it or not, there are millions and millions of dollars donated to charities to help those less fortunate by the rich every year. What is wrong with having choice and control on where you send YOUR money to charity. I am very picky and I donate roughly 10 - 15% of my income to charity. It is also morally wrong to just hand it to the less fortunate as it strips them of their self worth and does nothing to better them in all other fascets.

It wouldn't take 25 years for poverty to rear it's ugly head after the "Great Redistribution". I would be surprised if it didn't take less than five. Look at how many spent the money given to them in the wake of Katrina (strip bars, booze and other un-needed items). A good example is the Vanderbuilt family. The Vanderbuilt's were the richest family in America in the 1800's. He gave nothing to charity and before he died gave 1 million to the University of Tennessee which is now Vanderbuilt University. The rest of his 134 million dollar fortune was divided amongst his heirs. In the 1970's they held a family reunion and there was not a millionaire among them. People always treat what they earn better and they typically place a higher value on it.

Good hypothetical question though.

Answer 2

One of the biggest misunderstands people have about economics is that a wealth gap or income gap is a bad thing. Instead people may want to focus on absolute poverty. Why should it matter that someone else has it better if you have it good?

Anyway, if we took away the wealth of the richest people we would have an insane economic fallout that would cause the next great depression. The United States would probably take 50-100 years to recover.

Why would this happen? The top 5% of the country's wealth is what finances the entire economy and allows us all to live in a country with such a high standard of living. Even people who live below the "poverty line" have unlimited access to free education, health care, food to eat, a home to live in and even luxury items like nicer clothes, cars and televisions. If we to steal the money from the rich, peopl would no longer be able to get loans for homes, college, cars, etc. There would not be any new business investment, factories would close, unemployment would skyrocket and so on. You'd be surprised at how fast people would burn through that 200k.

Answer 3

But it's not the same 1%, 5%, 10%, and while they "control" it, that measure is faulty - for example, if you control enough shares of a corporation, you're considered as "controlling" its entire value. Also almost all of such wealth is invested, creating jobs, not sitting in a back room in the form of gold coins like a scene from a Dickens novel. And most importantly, you're looking at the relative rather than the absolute - - - - we're all better off, just by different amounts. The alternative is more equality but less wealth in the absolute - - - the increase in the size of the pie more than makes up for the changes in one slice RELATIVE to the others.

What is wrong with taking from some people to give to others does not change, regardless of whom you're taking from or to whom you give the spoils.

Moreover, it is not effective - when we did it that we we created poor people - by removing that wealth, that capital, from the private sector, which reinvests it, thereby creating jobs.

There is more poverty in the US - well actually in 2006 there was less than in 2005 - - but the main reason we have poverty is because of immigration from poor countries. Legal immigration patterns shifted toward poorer and poorer immigrants starting in the 1980s, and starting in the 1990s we have had a high and ever-increasing level of illegal immigration, also almost entirely from poor countries. That skews the poverty figures and masks the progress that a free market makes on poverty - - - you import 1.25 million poor people a year, and the total number of poor people usually goes up by about 250,000 per year, that means that on a net basis, about 1 million people ESCAPED poverty. Meanwhile 3/4 of a million households cross the 1 million dollar liquid (excluding home equity) net worth figure every year.

What is "wealth" - it is income saved over time. That means it's a function of what you make, what you spend, and time. And the biggest factor is age - the millionaire households (which now are about 1 in 11 households in the US) are headed by a person who on average ages in the 50s. 1 in 4 households in the US has between $100K and $500K liquid net worth - average age of the head of such a household is late 30s. Simply put, the longer you've worked, the more wealth you have. This "gap" is between the young and old, and it is increased the more we move toward a knowledge-based economy - in which your income rises with experience even after your physical abilities plateau.

This isn't just a "different way of looking at things" - it's what the numbers show.

Answer 4

Awesome question! Hopefully you'll get some well thought out answers instead of the usual nonsense on here.

I think wealth redistribution is unconstitutional, and only serves to bring about greater poverty (at least on a federal level). I've always wondered why failing government programs, like the war on poverty/drugs/etc, never get looked at twice even after decades of failing. If I failed a test for 3 decades in a row, at some point I would at least consider studying differently. Our government would be much improved if we started looking at the effectiveness of our programs, and making appropriate changes (not just spending more money and not checking if that helped).

I think wealth redistribution is morally wrong because it isn't voluntary. Charity is a voluntary, laudable, and moral action. Because it's not voluntary it is essentially stealing by the government with the threat of force. It deprives people of a basic part of what it means to be human: providing for yourself. It robs people of self worth and pride. I think it also has a lot to do with the rise in drug use too.

Answer 5

1) What is wrong economically with what you are talking about is that these wealthy 5% that you are talking about deserve to control 59% of the wealth because that is what their hard work or the hard work of their relatives have earned them. This 5% is comprised of people who have contributed greatly to the economy and being leaders in industries that provided millions with jobs. To redistribute this wealth would be to dissuade people from making progress in industry because they would not see the rewards and discourage people from helping the economy.

2) Morally it is wrong because it is communism. Those people who made their fortune have a moral right to keep it.

3) In 25 years I think that the gap would start to grow bigger provided that there is not another redistribution because there still would be new leaders of industry and new innovators making a fortune as there would also be drug addicts and just dumb people to waste their money.

Answer 6

Economically, this approach makes infinitely more sense and would be 100% more effective than the current crop of programs.

Morally...it's wrong to take what one person possesses and give it to another without that individuals permission (I know, taxing is the same thing, but slower).

Speculatively: Most of the poor would resume being poor. They would not use the money as a springboard towards a career, they would not invest, they would view this as another program..."when I pour through this money, they'll give me more like they always have."

Some would change their lives permanently...but they can do that now...without a $200,000 handout. I know I did.

Answer 7

Poverty doesn't happen just because people don't have money. It happens because people don't know how to make, save or spend money.

This isn't a solution. It's an absurd thought. It's the liberal thinker's equivalent of learning that a negative multiplied by a negative doesn't equal a negative. And I'm a liberal.

The solution to poverty isn't about reworking economics, because that's pretty much impossible to do anyway. It's about educating people on how to live a sustainable life with or without as much money as the next guy. They have to learn how to spend or save according to their own incomes and purchasing power. People have to learn that if they can't afford groceries, they can't afford an iPhone. Remember, some people in poverty would take $800 and go buy an $800 purse. Remember? It happened with FEMA money after people's houses were destroyed by a hurricane.

Answer 8

You had better hope it works the first time and don't have to do it again or there will be no reason to become one of those people who you took the money from and this will be the world's most mediocre place.

Besides, most of the poor didn't get that way from just bad luck. Most of them are just too damned stupid to manage 200k. If they weren't, we wouldn't be talking about this in the first place.

Answer 9

Anyone who believes stealing is moral is a threat to all other people. They are one of the reasons I carry a 10mm Glock to defend mydelf.
Jesus said the poor will always be with us and no one will prove Him wrong.

Answer 10

No but the rich should pay a fair share of taxes. Income from investments is taxed at a 15% rate while the working man pays a 30% rate. The worst offenders have accounts out of the country and pay no taxes. The problem is that we allow the rich and corporations to get away with cheating the system and try to punish those that are in need of help, for example, those that are in financial trouble because of catistrophic illness. And don't forget that the infrastructure suffers because the rich cry about paying a fair tax.