Wednesday, February 24, 2016

Thought Provoking, Though Possibly Not In The Way You Think It Would Be

Added: (And placed at the top) The use of land area is, I believe, a deliberate mis-framinging of the issue. Land, by its nature is limited--there is only so much of it and other than small exceptions, they are not making more of it. Wealth is primarily created and there is no limit to how much can exist.

The rich got that way by keeping some portion of the wealth they created.

Take a high paid actor like Tom Cruise, he makes a ton of money for making a movie. Lots of other people work on the movie too and make a nice living at it. Finally, people willingly plunk-down their money to see the film. They think that the entertainment value they get is worth the price they pay for it, otherwise they would not willingly trade money to a theater to see the movie. Who in this scenario is getting robbed? No one. Everybody participates of their own free will and benefits from their participation.

Now back to the original blog post...

I came across this picture on Facebook, with the poster opining: "Great graphic, and powerful message".

I can guess what the "intended" message is, but my reaction to the graphic is in two parts:

Duh! Everyone knows that wealth is highly concentrated.


So what?

The wealthy did not get that way by robbing me or anyone else. They either earned a lot or spent far less than they earned or some combination of these two. Neither of these things are the sort of behavior that one should rationally discourage.

Other Thoughts:

Why limit redistribution to the USA?

The intended take-home may be that all the wealth in our country should be evenly distributed. Lets say you could do that without the total going drastically down. One would have to assume that people would work just as hard, take as many risks and save as prudently--even though there would be no reward whatsoever from doing that. Even if we assume that, why are we limiting ourselves to the USA? Why not world-wide redistribution of wealth? The USA has around 5% of the world's population and (depending on how you account for the wealth) 1/4 to 1/3 of the wealth. To equalize things out, 4/5ths of the wealth we have, would have to be given away.

There is a large temporal distribution of wealth. And would you wish it otherwise?

In the normal economic life cycle of a Human: You spend about 20 years growing up and getting educated. Unless you have inherited wealth, your net worth in this time is essentially zero. Then you work for the next 40 years or so and accumulate wealth in the form of savings, home equity, 401k and become vested in retirements or Social Security. Then you retire and either somewhat or completely deplete these savings. Would we really want children, who are taken care of by parents, to have the same level of wealth as people at the end of their working lives? That would be nuts!

Places dedicated to the idea of wealth redistribution tend to be unfree and poor.

Look at Taiwan and Hong Cong V. the PRC--The PRC has quadrupled its output in the last 15 years due to market based reform and is still only 1/10th as wealthy as Taiwan, which has been market-based all along.

North Korea v. South Korea: Impoverished slave state/ free and affluent society

East Germany v. West Germany: Same as above except reunited now.

The above two are especially apt since both have the same people, language, culture, geography and starting points: Devastation at the end of a war. It is obvious which system produces a high standard of living and freedom, and which one does neither.