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Some Things Work Great In Theory But Not In Reality
Recently, I was reading an email that someone had sent to me about a customer at a restaurant who had just finished eating and the waiter had left the bill and was expecting a tip from his customer for about $10 because he had worked very hard for his customer bringing drinks back and forth and waiting on him hand a foot.
When the waiter came back for the bill the customer explained to the waiter that he was not going to leave a tip for him but instead leave it to the homeless man outside the restaurant. The waiter went into a rage and explained that he worked very hard for that tip and deserved it. As the customer got up to leave he said to the waiter, not to be upset it’s just redistribution of wealth.
My goal in this post is to show that in theory spreading wealth seems like a good option but reality will never work.
The Theory Part Of It.
With all of this talk lately about spreading the wealth around in today’s economy I realize how we could say this would be fair in theory. With CEOs making millions with government bailouts and buyouts form other financial organizations who wouldn’t be upset. Millions of Americans have worked hard for there money to only have it dwindle away in the stock market to others who already have enough money.
In theory this sounds like a great plan. Just like Robin Hood use to say:
Take from the rich and give to the poor.
Though is this the right way to go about things. When you talk about CEOs making millions I can see where there coming from but lets look at it from a different angle.
Recently, I heard of a man down in Florida who was in talks with his Real Estate agent to buy some land to open up a second grocery store. Before he decided to buy the land he decide to talk to his accountant first and see what kind of tax he would be paying on this new store if the tax code would change.
As a result his accountant urged him not to build a new store because he will end up having to pay so much in new taxes because he will have to help with spreading the wealth. The business owner who employees 27 people at his current store decide to hold off on building a new store because his taxes on his store would increase to drastically.
The Reality Part Of It.
The reality is if you work hard and others don’t you still get the same as everyone else. Just like the waiter in the beginning of the post he worked very hard for what he wanted but yet didn’t get it due to others who decided his money should go to the homeless man.
The true question you really have to ask yourself here is do you want a freedom of choice in life for what you earn and keep or would you rather have someone decide that for you?
What do you prefer? Leave me a comment and let me know.
How This Will Effect Are Economy?
People in this country work hard for what they want but with wealth redistribution people won’t have to. Working hard and reaping the benefit of it will fade away. For those that don’t work so hard will get more.
Does this sound like a problem to you?
Yes this will eliminate those that make millions from bailouts and buyout but what about the average Joe who owns the grocery store or the small restaurant or any other small business. They will have to pay too.
Because small business owners will have to pay also they won’t be so eager to expand, increase profits, and create new jobs. The same will be for the working class. They won’t strive to make more in fear of getting taxed more. The economy will slow to a crawl because of a severe reaction that will echo through the economy not make to much money.
How This Will Effect You?
This will effect you in a few different ways.
- You either make less money so you don’t get taxed more.
- Or you make more money and let someone else decide where your money will go.
Working hard and achieving success won’t have the same feel to it anymore. The success you achieve will go to others who are less fortunate but not by your choice but by someone else’s. In a sense you will be punished for working to hard and rewarded for hardly working at all.
What are Your Thoughts?
Would spreading the wealth and redistributing it to others who are less fortunate solve the problem or will it create new ones. When you reply on this post don’t just think about yourself think about what other will have to give up as well.
It will cause more problems. We don’t have to guess at what will happen, we have plenty of examples of socialist nations that have collapsed.
Interesting post, Chris. Stimulus checks were a bad idea, sponsored by idiot Bush, and that was clearly a case of redistribution. Here are some thoughts to ponder:
For every $1 spent on early childhood development (head start, government subsidized daycare, after school programs, childrens’ sections of libraries, immunization, etc.), approximately $300 of future law enforcement & health care costs (juvenile detention, attorneys, prison costs, law enforcement, homeless shelters, emergency room visits etc.) are avoided. This is based on a study done by the United Way of King County.
For every $1 paid in bus fare (in most major cities) the government picks up an additional $3 to cover the rest of the cost of operation. BUT, for every bus on the road, between 10 and 40 cars are taken off the road, which delays the time that multi-billion dollar roadway projects have to be built, because the road can continue to serve an increased number of people with the same number of lanes.
A consortorium of service providers in a particular neighborhood in Seattle which provides shelter beds, food, health care, and job training to homeless youth, aged 18 to 25 years old, has a success rate of over 90%. Their success is defined as somebody who was previously homeless and/or unemployed and was in a permanent residence and employed continuously for a full year after rehabilitation.
Did you know that one emergency room visit for a homeless person at Harborview Medical Center costs over $3,500. By comparison, permanent housing in a subsidized project costs less than $20 per night, and in many cases under $10 per night.
Redistribution is not the answer, but we do need to provide essential services, such as rehab, health care, education, and job training to keep people out of prison and out of emergency rooms, which costs taxpayers a pretty penny. We need to find programs that work, like the one in University District, and model other programs on that. (Pay a little now - with your taxes - save a whole lot later.)
As far as the tax burden goes, I am a firm believer in putting the burden on the wealthy. After all, we have thousands of tax deductions in our country, most of which a poor person will never see. So, if you can’t provide the burger flipper with a tax deduction for his ‘91 Escort which he needs to have to get to and from work and his black shoes, which he wouldn’t need to buy without the job, then at least put him in a lower tax bracket. The other piece that you forget to mention is that a poor person will always have to pay rent. A wealthier person stops paying rent as soon as the house gets paid off. This wealthier person can, generally, afford to lose more of his or her income to taxes. Also worth mentioning is that places where the divide between rich and poor tend to have much higher rates of violent crime, whereas places with a broader middle class tend to be more peaceful. I lived in a city with “rich” and “poor” neighborhoods, and it was hell. I’m now in a much more integrated place, with a higher minimum wage, and it is noticeably safer. I want to raise my kids in a world where ghettos don’t exist.
Let’s keep in mind that the difference in income between a wall street exec (WSE) making $500,000/year and somebody making $8/hour at Burger King (BK) is 3,000%. That’s nearly two orders of magnitude. Then there’s everybody in between. It is hardly fair to compare WSE’s 50% tax burden to BK’s 3% tax burden. WSE gets to keep $250,000, and BK gets to keep $16,141 per year. Seriously, BK has no incentive to work his way up to being a WSE, or at least a BK Regional Manager? I think that even AFTER TAXES, we all have an incentive to work our way up.
[...] Stumble Forward: Christopher Holdheide pointedly asks — is spreading your wealth around a terrible idea? He then provides an engrossing argument against wealth redistribution and discusses its effects on the economy and our money. [...]
I’m against ’spreading the wealth around’ for one very simple reason. I believe in free will.
Taxing us to take care of others takes away my choices. I prefer to support programs that help people help themselves rather than free handout type charities. I like to support education and the arts and small businesses. Why do I have to support all these government programs that I believe are wrong, useless, wasteful, or even hurtful.
As far as ‘pet projects’ and pork or whatever you want to call it goes, these projects should be paid for by the largest group that gets a benefit from it. For example, roads should be fixed by the cities because there is little to no benefit for those outside that city. Defense of our country should be handled by federal because it benefits all of the country’s citizens. The entire country should not be paying for something that only benefits people in California for instance.
[...] Stumble Forward: Christopher Holdheide pointedly asks — is spreading your wealth around a terrible idea? He then provides an engrossing argument against wealth redistribution and discusses its effects on the economy and our money. [...]
It is an interesting question really.
I think we spread the wealth more widely when we use it to expand our businesses with new products, services and hiring more employees. This is certainly more “wealth producing” than to horde the money and certainly spreads the wealth more than buying out banks and financial institutions.
The Government is least likely to know who to give the money too. Those who earn the money are the most qualified to know how and where to spend it spread the wealth and generate more abundance for everyone. The tendency of the government is to drop the money into the “biggest hands”, like the war machinery contracts, failing banks etc. Actually only a very small percentage of our tax dollars go to social programs to help people.
Governments should take a much smaller percentage of our earned income. And the small amount they take should continue to go to social programs to help the poor.
@Credit Card Creator
Are you not considering Social Security, Welfare, Unemployment, Medicare, and Medicaid to be social programs? These programs make up just over half the budget. I’d say that’s a rather substantial chunk. If you do not consider them social programs, how would you classify them? They are all programs that help the ‘less fortunate’ and paid for by the taxpayers. If anyone else ran them, they’d be charities. Sounds like social programs to me.
Adam,
You stated: “As far as the tax burden goes, I am a firm believer in putting the burden on the wealthy. After all, we have thousands of tax deductions in our country, most of which a poor person will never see.”
You are right on the money. Poor folks do not see the tax deductions because they are POOR. Most poor do not pay taxes, at all. They are exempt to tax deductions, and taxes as well.
All very well, but all of these arguments take the same form. Let’s punish the little guy by taking money from him to give to another little guy. In the example above, the rich guy loses nothing so there is no redistribution except to take something from the small poor guy and give it to the poorer man in the street. The analogy stinks.
In the case of the business owner in Florida who has to suddenly pay higher taxes. Isn’t the problem a defective tax code that allows him to not pay taxes and then catches up with him, not a problem with redistribution per se.
Furthermore, none of these arguments address the fundamental issue of How did the rich guy get rich? Most of the exhorbitant wealth in this country doesn’t come from hard work, it comes from having excess market power by which you screw the smaller guys out of business and then charge excessive prices from the same poor guys all these examples like to use. The 1% of this country don’t work any harder for a living than the guy holding three minimum wage jobs trying to put food on his table.
I may be a bleeding heart liberal in the view of most of the readers of this column, but if you’re going to write about social injustice then at least do it realistically.
PS. My apologies to the first sisyphus. I’m a completely different person
[...] Is Spreading Your Wealth Around a Terrible Idea? [...]
I think the redistribution would come full circle another generation or two if it gets worse. We already have alot of people born into welfare and expect it, not to work out of it. If govt continues down this path even hard working people will simply take a hike from the hard work and stick their hands out as well. Where will our productivity come from at that point?
Arizona,
I agree totally, I just took over my families welding business two months ago have definatly felt the heavy burden of taxes. The things is the people who are doing nothing are getting rewarded better than those that are working hard to keeping this country from falling into a full blown depression. Don’t get me wrong I think we need to help some of these people from poverty but we don’t need to give them everything. Also thanks for the comment I appreciate your input.