Monday, October 10, 2011

The income inequality nonsense

The occupy Wall Street rabble have brought to the fore the old mantra of the badness of income inequality. Of course they have no idea of what is "equitable" because even few of this bunch would argue that everyone should have the same income. But let us imagine that everyone had the same income. Would this mean that wealth would also be equal? Of course not. My favorite example is the economics of a prisoner of war camp ( Essentially all the prisoners start out the same. They have equal income. They are issued the same clothes and other goods. Monthly they all get the same package from the Red Cross. Thus, all incomes are the same. Complete income equality. Yet before long, the wealth distribution is skewed. Some prisoners are wealthy while others are poor even though their income is the same per month. How can this be? Well tastes and preferences differ. Some smoke and others don't. Barter takes place for cigarettes. Some gamble and lose. Some gamble and win. Some incur debts to others. Soon when the prisoners receive their monthly package, some have to give it or parts of it to those they owe. Some accumulate wealth while others go lacking. As a consequence even if you could start out in perfect socialist heaven, it will quickly become full blown capitalism if left to its own devices. Socialism simply does not work because it goes against basic human nature. The only way to make it work is to have the state enforce it through coercion. And be honest, would you want to share your wealth with society's dregs who don't have a life and are occupying Wall Street?


tom said...

Do you have an opinion on Cain? He has come a long way in his life, I hate to see him screw it up with politics. What about his 9-9-9 tax plan?

H.A. Black said...

I like Cain. As I have said before I do not like a tax on consumption since it hides the cost of government. If implement there would have to be some way not to let it be subject to the same creep as income tax rates and social security taxes because one day it would be 20-20-20.