Posted by
voice_of_reason on Monday, March 01, 2010 8:38:05 PM
It is my contention that the fundamental Left/Right divide when it comes to economics is that Leftists believe that wealth is a static commodity - a zero-sum game therefore exists in all transactions. In such a world-view, one person's success must derive from another's misfortune. In such a world-view, America's affluence must have come at the expense of ... someone. If not the Native Americans whose lands were stolen, then it must be some poor person, either in America, or in some forsaken part of the planet.
The ideological divide (as related to economics, Health Care etc) stems from two prevailing world-views:
1) Leftist view: Wealth is a zero-sum game - requiring Govt in the role of 'Robin Hood' to create a level playing field
2) Wealth grows constantly, from the mostly voluntary actions of buyers and sellers. Except for a few aberrations, a person's share of Wealth depends upon his/her capital [personal attributes: physical, mental -OR- property].
If you believe #1, then REDISTRIBUTION by Govt fiat is not just the only tool in your hands, it is also fair.
But, if you've ever been witness to the creation of wealth - by free, and voluntary actions of the participants of an endeavor - then you would not be so quick to re-distribute.
The reality is that wealth creation comes from value creation:
Consider an island of, perhaps 1000 people, and a few natural resources in the form of trees, rivers, beachfront etc. If a person A pays person B $100 for B's labor in creating planks of wood from trees. Person A then puts together a house that he sells person C a house for $1000.
A: earned $900, and created $1000 of value. Used some capital ($100) and his brain-capital (design skills) and some muscle capital (labor) and time. Presumably he also hired persons X, Y and Z to help him, which cut into his income, but allowed him to build 10x more houses.
B: earned $100, by investing his muscle capital (labor) and time.
C: bought a $1000 house, perhaps as an investment that could appreciate in value to $5000 a few yrs later. Also, in a productive & free economy, C presumably has valuable things to do with his time, earning much more than $1000 (and creating his own value) in the time that house-building-specialist B could build a house for him.
The best thing is that no one loses - although enviromentalists might bemoan the loss of trees.
Apply a similar logic to the guy who takes a $0.10 worth of glass and wire, making a $2 lightbulb. Voila ... $1.90 of value was just created.
On a slightly different (but related) subject, a frequent complaint heard from Leftists is that Capitalism leads to huge disparities between the haves and the have-nots. Therefore, it is unfair and ... frankly, there must be something dirty goin' on.
Regarding the obvious inequities in wealth distribution: one could argue that there was a more equitable distribution during the 1930s depression era. Since then, there has been a surge in wealth creation. While the income multiples have gone up, it is also true that the entire distribution has gone up. When used in a vacuum, income equity is a false metric, but one that taps into populist angst and dovetails neatly into the rhetoric of Class Warfare. Observe that it is often used by Leftist economists (Nobel Laureate Paul Krugman being a leading exponent) to point to the failure of free market economic policies.
The sad truth is that Leftist policies which promise to redistribute wealth, are effective -- but they redistribute poverty, not wealth. In spite of their good intentions, Leftist policies damage the value-creating incentive/environment. By setting limits (via taxation, for example) on the activities that persons A and C perform out of self-interest, they also put person B out of work.