Justification for wealth redistribution rests on the presumption that resources are finite in number and, being finite, should not be horded by any one person or group. Consider the useful example of a lifeboat, with a set ration of resources aboard and a suffering manifest of starving, apprehensive passengers. Indeed, if there were a fixed quantity of resources in the world, it may be most ethical to distribute it evenly amongst the populace. If we lived in a world in which one man could only gain by another’s loss, in which one passenger’s dinner came at the exclusion of another passenger’s breakfast, then it may well be most ethical to “redistribute” resources evenly, ensuring no person enjoyed two dinners before all had enjoyed their first. Fortunately, this is not the world in which we live. Our world is not a lifeboat and it ought not to be considered as such.
Our world, most thankfully, is one in which wealth is created by man. Wealth is not finite. If one requires compelling evidence of this assertion, one may simply look at the material benefits enjoyed by man 50,000 years ago. These benefits included sticks, rocks, some meat and pelts, and the occasional cave. Fast forward to 2,000 B.C. and material goods have increased dramatically – the average human then owning pots and pans, bronze tools, musical instruments, styled garments, spices, various types of food (bread and butter!) and usually a hovel of humble standard. All these new goods were not “discovered” in the forests, they were created by man’s effort and traded amongst men, each trade benefiting both traders. All this new wealth existed for the average person, despite the fact that the human population had increased substantially. There were more goods for more people. The lifeboat analogy is thus an inadequate representation of reality.
Fast forward again, to 2000 A.D., and once again an incalculable amount of new material wealth exists for a vastly larger population. Stereos, advanced medicines, Teflon-coated cooking pots! The average family (in the freest parts of the world) owns all these things and much more. Cars, microwaves, sonic toothbrushes and the cappuccino – the material goods enjoyed by people today are unimaginably greater than those which existed only a few hundred years ago. Again, the wealth was not found in the forests… it was created by man, and not created by man as a group but by individual men and women, each working in their own self-interest; each seeking profit and plentitude. The new wealth is created and traded amongst those who combine the proper skills and resources, which in turn originated from still other producers, engineers, and organizers. Wealth is not found, and the vast majority of wealth was never consciously “distributed” in the first place. Wealth is created just as songs, poetry, and paintings are created, and it would make little sense to “redistribute” these items, though some may claim to suffer from an art deficiency. Should vast sums of art be usurped from the current owners and presented to anyone in need of a Monet? This is a preposterous question.
It should thus be apparent that goods tend to increase in number – that the “pie” (a terrible metaphor itself) expands – and that this occurs as the result of man’s efforts and industry. To deny that wealth increases is to deny the computer screen upon which this sentence is written. Understanding this concept – that wealth is created – is fundamental to any argument against “redistribution,” because by redistributing goods, one is changing the incentives which produced those very goods in the first place. Whenever goods are redistributed, it alters the mechanism by which they originate. If wealth grew on trees, it would be ill-advised to harm the tress, and it is similarly imprudent to harm productive individuals. Those people who tend to produce the most wealth are, in our society, typically labeled the “rich,” and it is these people whose incentives change when the product of their life and work are taken from them by force and given to someone else. The result, as one should expect, is for less production to occur in aggregate. When the rich have less to trade, less trade will occur, and society as a whole will suffer for it.
Society suffers because every dollar in the millionaire’s bank account represents more than one dollar of benefit gained by whoever gave him that dollar. When one sees a man with a million dollars, one should be thankful to him, because he has likely provided over a million dollars worth of gain to other people, for to obtain that money legally he is required to produce and trade. His million wasn’t “taken” from someone else; his dinner came at the expense of nobody’s breakfast. One could relatively easily audit the rich man’s bank account, highlight the deposits, call the depositors, and ask whether they received more in value than the amount of their deposit. The answer is likely to be… “yes.”
The rich man didn’t produce and trade to be generous; his sole intention was to help himself, just as the people with whom he traded were helping themselves. So long as theft and fraud are avoided, when people are permitted to help themselves, one can expect that people will tend to be helped. People will tend to be better off, because they are trying to that end; they are producing for that result. This, of course, was Adam Smith’s central argument; this was his revolutionary idea, as he famously suggested, “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” As such, it can be expected that by discouraging the self-interest of the butcher, brewer, and baker – by punishing them in the form of taxation levied upon their work – one is likely to discourage someone’s dinner, or someone’s breakfast, from appearing at the table.
When one grasps these concepts, the notion of redistribution quickly becomes preposterous. For the best way to help the poor is to allow the producers to produce, to their fullest and greatest capacity. By so doing, more wealth will come into being, and over time (though not necessarily over the time of a political term) the standard of living of people will tend to rise. Most importantly, living standards will rise justly and morally because they happened through the voluntary actions of individuals, instead of through the violent force of Government.
By engaging in redistribution, by handing Bob a welfare check, Government helps Bob at the expense of at least two other people: the unwilling wealthy man who provided the money, and the unknowing poor man with whom the former will no longer be transacting, for he has now been robbed of the wealth and the motivation to do so. Unfortunately, people see Bob smiling with his new check, and see the rich man who can certainly still afford dinner, and they rest easily believing that “the poor” have been helped by their forceful intervention and that the rich man resists only because he is selfish and uncaring. The other poor man, Bastiat’s crucial “unseen,” is the tragic victim who goes unnoticed as his business sells one fewer goods the next day. You can perhaps understand that he may be the next man in line at the welfare office – a second welfare check then required. And so it continues.
For anyone who values individual liberty (each man’s right to live his life as he sees fit so long as he respects the same right of others), the only compatible political system is one which gets out of the way so that unbridled production and trade may occur. For anyone who values charity (helping others who warrant assistance), the only compatible political system is likewise one which gets out of the way so that unbridled production and trade may occur. It is wonderfully fortunate for those who fall into both categories, like the author, that the solution to both concerns is the same. It is woefully unfortunate that society prevents the solution from occurring, believing us all to be stuck in a lifeboat with ever-dwindling rations. The irony is that the lifeboat is becoming increasingly applicable to our situation.