Redistribution
Mitt Romney, the supposedly "intelligent
business man," said something yesterday that may be one of the stupidest
things to ever come out of his mouth.
And I'm not talking about the 47% comment; I'm talking about his comment
that Obama wants to redistribute wealth, while he wants to create it.
I've blogged about this
before, but I think it needs to be hammered home, wealth is not a
commodity. It is not like Cadillacs or
Yachts that can have production increased and flood the market. Wealth, while not a finite resource in strict
terms, does not actually increase over the long term. It may grow in limited windows, but over
time, it will normalize to proportional levels.
What this means is that
inflation will overtake gains every time.
A few decades ago, a millionaire was the pinnacle of wealth, now
millionaires are a dime a dozen. In
today's world, the billionaire occupies the same lofty status as the
millionaire did in 1900, and they probably represent the same proportion of
society, after adjusted for population growth.
This does not mean that an
individual cannot attain vast social and financial mobility, both in the
positive or the negative direction. What
it does mean though is that, in our current economic model, there will be
roughly the same proportion of very wealthy people to the rest of society, and
there will always be a poor underclass, at, again, roughly the same percentage
as exists today.
This is simple economic
fact. Pumping more money into the system
ultimately will only spur inflation, it will not increase the number of wealthy
people, nor will it decrease the number of people living in poverty.
Therefore, the only way to
change the percentages and proportions of rich and poor is to redistribute
wealth. Redistribution moves money
around the in system, altering the relative proportions of the people in each
category.
The Bush years saw one of
the largest redistributions of wealth seen in this country since the Gilded
Age, which was the last time that the rich controlled a similar share of the
nations wealth. That was also the last
time the net worth gap between the rich and the poor was at this level of
disparity.
Understand, this was not
caused by creating wealth at the top, it was created by redistributing money
upward, taking it out of the pockets of those with the least, and giving it to
those with the most. It has been a case
of trickle up economics.
And this is where the
"business man" shows that he knows very little about how economics
work. It harkens back to his comment
about "making this a country of haves and soon to haves." He acts like all Americans can be rich at the
same time.
This is not possible in a
capitalist society.
The only way change this
ratio is to redistribute wealth from the rich to the poor. This disaggregates money, spreading it
around, and reducing the gap between the ends of the spectrum. Many of our Social Safety Net programs do
this.
Unemployment is one of the
best examples of a redistribution program in this country. Businesses, who typically have some amount of
liquid assets, pay into the unemployment insurance fund, which then gets spread
around to the unemployed, keeping them from falling further down the social
ladder.
Other redistribution programs
include subsidized student loans, Pell Grants, The Earned Income Credit and
many other programs that allow people to maintain their place society, and even
improve their lot in life. These
essential programs are funded by income taxes on the wealthy, and move money
into the hands of those who need a hand up or steadying support in life.
These programs help equalize
society, but they are, by strict definition, somewhat socialist. They are not, however, hallmarks of
dependency. They are not a "hammock"
for lazy people to lie down in and have the world handed to them. This redistribution makes society stronger,
because it does open doors for everyone to have the possibility to become rich.
If you become homeless
because you lost your job, finding another while in that situation can be
almost impossible. Unemployment supports
people so that they don't fall so far that they can't recover. Student loans and grants allow anyone to go
to college, and as a result, dramatically increase their lifetime learning
potential. Earned Income Credits allow
people with families who also have jobs, try to get a little bit ahead in life,
to provide more for their children, and maybe make their lives better.
These downward
"redistributions" make society stronger, and give more people
opportunities to improve their lives.
And this is the dirty little
secret that Mitt Romney does not want to admit, if he wants this country to be
a place where everyone can be rich, he will have to end capitalism as we know
it, and replace it with egalitarian communism.
It's kind of a strange
position for the Republican presidential candidate to be advocating.
