Atta Ikede

July 9, 2008

Wealth

Filed under: Uncategorized — attaikede @ 2:25 am

I read this article a couple days ago. Why did it bother me?

It is an inspiring story. This kid saw poverty, had a realization that she had a lot more than other people did and her family supported her and decided to do something about it in a major way.

That being said, there’s something a little unsettling about this story. The girl saw a homeless guy sitting next to a mercedes and figured “if the mercedes owner didn’t have such a nice car, the homeless guy could have had dinner.” That viewpoint is wrong! Wrong wrong wrong wrong wrong! The fact that this observation and this idea underpinned the family’s decision to support charity makes me feel rather uncomfortable, and the fact that CNN printed this story and thereby gave credence to this ridiculous viewpoint makes me feel even more uncomfortable.

This family are obviously advocates of wealth redistribution. The family sold their house and donated half the proceeds to charity means that they’re out x and the charity is up x. Their wealth has been redistributed to other people.

I find the idea of wealth redistribution to be a little nuts.

Some degree of wealth distribution is obviously beneficial to society. If we agree that taking care of basic necessities is an important service the government should provide then it’s clear that some degree of wealth redistribution is required to make it happen. For example, the government offers tax supported services such as healthcare and universal education. Many of the people who take advantage of such services could not have been able to afford to pay for them had they not been offered for free by the government. Not everybody can afford private school! I’d say that’s a positive example of wealth redistribution in action.

The problem is, it doesn’t make sense beyond a certain point because wealth is not a fixed asset. There isn’t a fixed amount of money that can be distributed over the population. (Even if wealth WAS a fixed asset, what is it that these wealth redistribution advocates want? Is the ideal utopia a world where everybody wears grey jumpsuits and drives Fords and nobody has anything better or worse than anybody else? Nobody has a mercedes but nobody is homeless either? If that’s where we’re headed then please, somebody sedate me now.) In other words, if the mercedes owner didn’t have a nice car, but instead had a crappy car, then it’s possible that the delta in wealth it took to go from a crappy car to a mercedes would never have been generated. That mercedes owner probably worked hard on purpose to get the mercedes. In doing so he created wealth that would not have been created otherwise.

Understanding why poor are poor and rich are rich is much more complicated than the simplistic idea that the rich people took all the money leaving none for the poor. While I definitely admire the resolve of the family described in the article, I think that presenting and commending their total cluelessness of basic economics is a disservice to the news reading population.

I can’t believe I found this article in CNN, of all places… what is the world coming to?

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3 Comments »

  1. Nice Site layout for your blog. I am looking forward to reading more from you.

    Tom Humes

    Comment by Tom Humes — July 9, 2008 @ 3:03 am

  2. I totally agree!

    I don’t see how someone’s hard work to be rich is the cause of someone elses misery. There’s no evidence that shows that if we all lived poorly or shared all of our resources then no one else would be worse off then another. In that case then wealth would be something that everyone has equal access to, but in reality it’s not. I think that’s what the main objective of what a communist government tries to achieve, to have equal distribution of resources and to have a classless society. But as we can see that only exists in theory, because even in society where it’s based on a communist government there’s an even more uneven distribution of wealth.

    Comment by rabbitdownunder — July 13, 2008 @ 9:30 pm

  3. I agree that the redistribution of wealth can never work. If this was the case then we would have to have all of our spending habits checked and approved in order to keep everyone in the same bracket. Say everyone has $100 for the month. Cindy spends $60 and I only spend $20. Do I then have to give her $20 to compensate for the fact that she decided to spend more than I did??? Or if you look at all assets… say Cindy actually gambled the money away… what then? I believe that if you want that Mercdedes then you have to work for it and plan for it. Yes, it is difficult for the homeless to plan for that Mercedes and one may think that it would be helpful to give that person a whole bunch of money, but did anyone look at the reason that person is now homeless? Maybe that person had a great job, lots of money and spent it all away… maybe a drug addiction. One has to look at the whole picture not just the idealistic thought of wealth redistribution. I think that is my 2 cents worth… or maybe it was a loonie!

    Comment by Lisa — July 22, 2008 @ 3:39 pm


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