Friday, February 6, 2009

The problem of wealth re-distribution

In this country, when men and women with any publicity talk about economics, the idea of 'wealth re-distribution' is pre-conditionally rejected. No serious commentator can be thought to be a re-distributionist. So, except for Republicans who use the word to accuse their Democratic counterparts, nobody brings the idea up. As a result we never talk about the idea in a serious manner. We talk about economics as technical, but the distribution of wealth as ideological. Public communication continues to be dominated by a dogmatic -- rather than an empirical -- approach to wealth. This is a problem for two reasons.

1. It reduces confidence in the efficiency of the market. Under some conditions, it is simply possible that re-distributive policies have their technical merit. The supply-siders know this: much of their credibility stems from their willingness to say precisely how their distribution of wealth -- tax cuts -- leads to efficient markets: by increasing the incentive of economic actors to generate wealth. The demand-siders tend instead to use a moral, justice-based approach. They are not as proficient in explaining how their spending programs will lead to growth. Right now President Obama should be explaining how the bill will re-create -- 're-grow' -- a vibrant middle-class of consumers. He should not call it stimulus, but a major growth package.

2. The big reason this narrow communication pattern is a problem is because it's false. Any activity by a givernment impacts the distribution of wealth. They print the money. They determine the interest rate at which they give it away. They choose who they give it to. Tax cuts, tax increases, spending programs, spending cuts -- these are all major factors in who gets their hands on America's wealth. The evil of re-distribution is a false myth we tell ourselves. Re-distribution is a banal reality. I have no problem with myths. Every society holds them. But what good are they if they ring so damn untrue?

Finally, it is remarkably brazen that at this moment we hear cries of redistribution. Are we not aware that America's wealth is now socially owned? That this massive nationalization -- we still don't quite call it that -- happened during a Republican administration? I can't help but think this American form of socialism is here to stay for a while. The need to admit the fact of re-distribution, and tackle it in a sensible and technical matter, is as great as ever.

2 comments:

Anonymous said...

The Government of this country does not print money: Federal Reserve does. Federal Reserve is a private bank/agency which charges our government for the printed paper which is not supported either by gold or by silver. It appears that Federal Reserve was created to benefit the richest families in America so they could control the financial markets.

Sociological Reports said...

While you are technically right, the distinction you make strikes me as unimportant. The Federal Reserve is best thought of as a government institution, not a fully private one. Certainly you don't disagree?

Your final statement about why the Fed was first created could use more explanation. What exactly are the 'appearnaces' you are talking about?

Thanks!