Why is unequal wealth distribution “unfair”?

Great Debates
1

I have been wrestling with this for a while. On this board, and many other places, people have been talking about economic “fairness” I’m not sure what they even mean by that, but if it’s what I think it is, then I’m confused. Why should anything be “fair”?

Any trade system values some items more than others, including job skills. So, those with valuable skills are paid more, and those with less valuable skills are paid less. Simple enough so far, but then we get into people claiming that executive bonuses and taxation rates are “unfair” to those who have less skills. Then I get confused…

There is obviously no more value in one person over another in terms of rights, but there is an obvious value to those who have more skills, and they should make more. There’s nothing unfair there. I make less than $28,000 a year, based on my skill set. I hate it, but I am working to change that - I go to school, and run a small business at home. I have very little free time, but I am working toward massive amounts of wealth (I hope). That’s fair.

No, not everyone can find the time, money or capacity to build their skills, so they bottom out. Or they have poor role models or schools or something else and never quite make it. But, even without the massive government spending to even things out, that’s how life is. No one guaranteed fairness or stuff or money to anyone. It must be earned.

So, what am I missing? Is it just jealousy and anger?

2

I think before there can be any honest debate on the subject, the term needs to be defined. My definition of “wealth distribution” or “wealth redistribution” may be completely different than yours.

3

Fair enough, it is a slippery choice of words…

Wealth = assets - liabilities

Distribution = how that wealth is concentrated across the American population

Redistribution = any government program that takes wealth from one person in order to give to another person, rich or poor

I’ve tried to stay general in order to get at the meat of the “fair” question.

4

By that definition the Bush tax cuts were “Wealth Redistribution” to the richest Americans, right? They kept taxes high on the middle class and reduced them for the few wealthy Americans. So the money that the middle class paid was used to offset the upper class’ lower taxes, right?

Getting rid of the Bush tax cuts and cutting taxes on the middle class is to you an onerous thing?

Progressive taxes are all about moving wealth around. Unless you think all Americans should pay a flat tax I don’t see a solution for this.

5

Three reasons, at least -[ul][li]“I work just as hard as him, and he makes three times what I do!”[]“You are only rich because you were lucky enough to be born to a doctor!”[]“I think being a teacher is just as valuable as playing in the NFL.”[/ul][/li][quote]
By that definition the Bush tax cuts were “Wealth Redistribution” to the richest Americans, right? They kept taxes high on the middle class and reduced them for the few wealthy Americans. So the money that the middle class paid was used to offset the upper class’ lower taxes, right?

[/quote]
No, because the government isn’t taking money from one person and giving it to another.

6

Sure, right. And I do support a flat tax, or at least a complete overhaul of what taxation is and how it works. But I’m not worried about taxation with this question - it’s meant to be an examination of the concept of “fair” and how other people see it. Because I just don’t see it.

That’s why I left it open - I want to discuss this issue of “fair” not end up fighting over GWB or Iraq or whatever.

7

[quote=“Shodan, post:5, topic:471519”]

Three reasons, at least -[ul][li]“I work just as hard as him, and he makes three times what I do!”[]“You are only rich because you were lucky enough to be born to a doctor!”[]“I think being a teacher is just as valuable as playing in the NFL.”[/ul][/li][/QUOTE]
There’s that powerful sarcasm muscle I’ve come to admire.

When it’s for rich people it’s about building the economy, when it’s for middle income people it’s welfare. Gotcha. [/palin_wink]

Wealth Redistribution is a fallacy, it’s what the McCain campaign was trying to use to motivate angry, ignorant, small towners to make them think that Obama wanted welfare queens to be rockin’ the projects with their Dub Spinnaz and 1000 watt sound systems. Thank goodness we’re all smarter than that, right?

8

This is obviously butting into the age old debate between Equality of Opportunity and Equality of Outcomes.

Many of us who believe in redistributive government policies, myself included, would argue that we support equality of opportunity, but without a certain move towards equality of outcomes (through the form of redistribution of income) such a result is not possible. Inherited wealth for example tilts the scale, and does not reward anything other than an accident of birth in the recipient.

More importantly, many people are placed in a poverty trap through no fault of their own. My son, for example, is able to go to an excellent public school, because my ex-wife was able to move to a much better school district. There is an element of unfairness there, because that option isn’t available to others - and the effects hurt most on those who are not responsible in any way for their parents inability to move - the children.

So I would argue “fairness” requires a degree of redistribution. While I don’t think it is ever possible to level the playing field fully, it strikes me as unfair in some true sense that the opportunities provided to some so massive outweigh those provided to others. And this cycle of inequality perpetuates itself.

That’s also ignoring the many practical reasons for supporting a more equal distribution of wealth…

9

Really? You’re going to derail my thread with Bush bashing and veiled accusations of racism? It’s only been posted for 30 minutes!

Shodan’s comments are good representations of what I’m talking about.

10

I agree a doctor should make 4 times what I make, I do not agree that the skill set of a CEO means he deserves 300 times what I make. There is a point the scale of fair compensation for work goes ape shit. I’d even be ok with it all if an armed robber taking $200 out of a gas station cash register got a sentence comparable (in jail time to money stolen) to Enron CEO’s.

In the words of John D. Rockefeller, “No one ever made their first million honestly.”

11

Progressive tax systems are in use because of “fairness”. If Person A makes 30k and Person B makes 250k and we go to a flat tax system of say 20%. Person A pays 6k and person B pays 50k.

This is viewed as unfair because Person A now has 24k on which to live. That 20% of his income effects him tremendously. Person B now has 200k and the taxes have impacted much less on his ability to live.

Flat taxes favor the rich, so that dirty communist Teddy Roosevelt instituted the Progressive Tax, where the richer pay a higher percentage is meant to make the burden of taxation apply equally to all Americans. The idea is that your quality of living should be more equally affected by it. So poorer Americans pay less or not at all and wealthy Americans pay a higher percentage of their income.

You have to ask, is it fair that Person A has to struggle under taxation while Person B doesn’t feel the bite at all. No one is saying Person B shouldn’t have the fruits of his labor, but he can give more without feeling it.

12

I didn’t say anything bad about Bush did I? McCain’s campaign created this notion of Wealth Redistribution and it’s a fallacy. McCain was against the Bush tax cuts. So is he a Wealth Redistributor?

And you can’t believe that the thrust of the claims of “Wealth Redistribution” wasn’t the idea that the hard earned money of hard working America was going to poor people. Have you heard McCain surrogates repeatedly calling Obama’s plan Welfare?

13

Except that for many people, of course, it isn’t earned. Those who inherit wealth, or grow up in comfortable or well-connected circumstances that make it easier for them to get access to valuable opportunities in education, jobs, etc., are getting advantages they didn’t earn.

Now, I personally don’t see anything wrong with that. It’s just part of what we mean when we say “life isn’t fair”. Some folks have it easier than others, and I don’t mind that. But it is blindingly obvious that it doesn’t qualify as “fair” in the sense of a pure meritocracy.

Well, that brings us to the question of how those “trade systems” make their decisions about comparative value. For example, are executive bonuses determined strictly by a purely competitive market, or are they influenced by cronyism on boards of directors? If the latter, then is compensation really being determined fairly, solely by objective evaluation of “skills”?

Again, I’m quite content with the general idea that markets set different prices on different occupational skillsets, even if it’s possible to make a case that the most expensive skillset isn’t necessarily the most useful to society overall, or that the price of the most expensive skillset is pushed upward by non-competitive markets, and so on. But we do have to take those issues into account when we start throwing around words like “fair”.

Your definition of “fair” seems to be essentially “the way things happen to be right now, plus a reasonable amount of individual opportunity”. I think that sounds reasonable and workable, but you have to understand that it’s not the only reasonable and workable way to define “fairness”.

14

It depends on what your values and goals are.

My goal, due to my values, would be an economic system that, over the long haul, produces the greatest good for the greatest number.

That’s distinct from a system that produces the greatest good for the greatest number right now. For that, you just divide up all the wealth into N equal shares, where N = your population, and give everybody a share. But it’s kinda like ‘flying’ by jumping off the Empire State Building: everything will work great for a very short time, and then splat.

So for me, the question is, what’s the ‘sweet spot’ where the wealth your economic system produces is a widely shared as possible, without cutting noticeably into people’s incentives to improve their skills, get better jobs, start new businesses, generate new wealth?

You can argue about where the ‘sweet spot’ is, but you can only agree or disagree with my values.

One thing that is demonstrable, though, is that there’s a level of inequality past which the ability of a substantial proportion of your population to improve themselves and their economic standing is greatly hampered. To paraphrase what villa was saying, there is a degree to which equality of opportunity is dependent on at least a not-too-great inequality of outcome. If you’re one of the people in Barbara Ehrenreich’s Nickeled and Dimed, then you can’t get ahead because your full-time shitty job, and your additional part-time shitty job, between them pay you just enough to pay your basic costs of living.

This is bad for you, because you can’t get off your hamster wheel and create a better life for yourself. But it’s also bad for the rich people too, because people like you can’t buy very much stuff, and there’s no point in producing stuff that people can’t afford to buy. Our economy depends on having a whole lot of people who can afford to buy stuff, a point that Henry Ford grasped early in the last century. If the level of inequality is too great, it’s bad for ‘the economy’ in the abstract sense of GDP statistics.

15

No, I am entirely serious. My second point is pretty much what I understand Kimstu to be saying, in part, here -

And the first one refers to this sort of thing -

What? Who said anything about welfare?

Again, what? I thought Obama was the one suggesting that we should raise taxes on the wealthy so that 95% of us will get a tax cut.

That’s wealth redistribution by most people’s definition.

As to the “equality of outcome vs. equality of opportunity”, that is valid to some degree. I can see a role for government in creating opportunity, thru things like taxpayer-funded education or scholarships or suchlike. I rather doubt there is much resistance to the idea of pulling those at the bottom up. Where most objections start is when people talk about pulling those at the top down, not in order to fund the legitimate role of government, but because they can’t achieve equality of outcome any other way.

It makes sense to have a progressive tax system, in a way, as a way of minimizing the impact of taxes on the population as a whole. It does not make sense (in my view) to increase taxes on the wealthy simply because they have more than everyone else.

And many of the reasons for unequal outcomes can’t be addressed by government or taxation at all. Some people are just smarter than others, or at least better at making money. The fact that they are does not injure anyone else, and therefore they should not be taxed at a higher rate just for that reason.

16

villa, Lobohan, kimstu, and RTFirefly have all made many good points that I agree with. One thing I would just add is that the idea that our society is very interactive and it is only through this society that people are able to become as fabulously wealthy as they are. Hence, some of us believe that those who have clearly benefitted the most from the society have the most responsibility to give back to it. Sure, some of the benefits that they have obtained are through their own brilliance and/or hard work…but likely little of it would have been possible without the society. Does anyone believe Bill Gates would have become as fabulously wealthy as he is in some state of nature?

Also, I don’t think anyone (or anyone worth listening to) is arguing that any unequal wealth distribution is unfair. The question is how much inequality a society can or should tolerate. And, the fact is that since the 1970s, the wealth and income distribution in the U.S. has become way more unequal…and of course hardly that is not from a starting point of anything near equality. As a result, most of the tremendous gains in wealth of our society since that time have gone to a very few people. Some of us don’t see this as a particularly healthy state of affairs and see it as contributing quite a bit to a lot of the other problems that we have in our society.

17

Which problems in particular?

18

I don’t see it as “wealth redistribution” but plain progressive taxation. The money from the “wealthy” is not divided up for the “95%”. The wealthy 5% are expected to pay more for their privileges of citizenship.

Is that “fair”? No, it’s not fair. But it’s workable. Successful politicians and societies are those that can get to “workable” without bloodshed.

19

I mostly agree with much of what you said - but why are thinking that anything should be “fair?” I don’t understand why so many people waste time lamenting, when they could be doing something else. Anything else.

I do not believe there is a “fair” way to divvy up the pie. The act of sharing the pie is itself unfair, but we have decided that’s how we want it. Okay, fine.

But why all the bashing of the “rich”? Why the assumptions that they are crooked, evil, lying jerks? And why do people act as if it’s a zero sum game? Just because Corporate Guy has a billion dollars, it doesn’t mean that you would have more if he had less. Unless, of course, it was legally taken from him and spread around.

Here’s an example - inheirited money. Those on the “fair” side of the coin think it’s totally okay to tax much of that wealth away, for the common good. Why? Just because they are lucky? That sucks, and is “unfair”

The definition of “fair” is always the same - it just depends on who is defining it. Even though I am a prime candidate for the “fair” side, I totally think it’s wrong-headed, and encourages anger and hate.

20

Okay, but there are a lot of things coming out of the 5%…

I don’t totally agree with the idea the Moneybags benefits more from society, so he should pay more, but I’ll go with that for now. The issue is not with military, research, protection, etc., spending, but with the “social” side of spending.

A government provided social safety net is not a “privilege of citizenship”