An Empowering System of Redistribution

In a free-market system, you are accorded a greater share of your society’s productive efforts, the better you succeed at giving the society’s consumers what they want. You could access a good share of the production by being a successful businessperson; which means taking charge of a portion of society’s production effort and directing it in a way that the consumers approve of. Or, you could sell your labor to such businesspeople, or to the consumers directly. The rarer and more in demand (valuable to the consumers) your skills are, the more money you will be able to earn with them.

The problem with this, when it comes to maximizing individual power levels (my political end goal), is that in order to make a good income on the free-market, one has to submit, to a certain extent, to the dictates of the consuming public. The free-market doesn’t reward you for doing what you want to do, it rewards you for doing what the consumers want you to do (whether you are a businessperson or a seller of labor). It is true that sometimes, by a happy coincidence, the two will line up. Most successful musicians, architects, or authors, for instance, would probably wish to practice their craft regardless of whether they were being paid for it or not; although the fact that they are catering to a consuming public will probably result in some differences to how specifically they practice it.

Unfortunately, many people’s passions will simply not coincide with practical ways for them to make money. The unadulterated, free-market system of distribution poses some problems for such people. They are faced with the choice of either pursuing their passion but foregoing access to a great deal of purchasing power as a result, or of doing something which they are not passionate about for the purposes of acquiring more purchasing power. Either way, these individuals are taking a power level hit: whether by losing some purchasing power or by losing some power over the expenditure of their own time and effort.

Is there anything that can be done about this that doesn’t involve overly compromising the free-market system of production? I believe there is. I call it pure redistribution. It involves taking a fixed portion of every citizen’s market income via taxation, and then dividing the proceeds up evenly amongst every citizen in the country. For example, Canada has a gross national income of about $1.6 trillion. Assuming that all of this could be taxed at a rate of 15%, and 30 million citizens to distribute amongst; it would come out to $8000 a year for every citizen (including children).

So, at the cost of imposing a tax at a level which should not harm production incentives too much, every citizen gets $8000 worth of free money every year. Although it would be difficult to live exclusively on such an income, it would certainly help a great deal in reducing the amount of work necessary to reach a living income. It could also serve as a nice top-up on any relatively low-paying job, helping to enhance the lifestyles of people working at these jobs.

Basically, this kind of redistribution provides a much-appreciated boost in purchasing power to those who have the most trouble acquiring it on the free-market, while doing little to impair the free-market system of production that imbues money with its purchasing power in the first place. Although the increased purchasing power of the poorer folks does come at the expense of reduced purchasing power for richer ones, one can say that the sum total of individual power in this society has increased. This is because people who struggle to make money on the free-market (poorer people) generally have to give up more power over their time/effort expenditure in exchange for each unit of additional purchasing power acquired on the market. Richer people, due to their superior skills and/or resources, generally get more purchasing power bang for their time/effort buck than poorer people. The pure redistribution thus results in a reallocation of purchasing power towards those for whom it tends to have a higher value (poorer people). For this reason, the policy must be considered a positive for individual power levels in the society where it is applied, and therefore is to be recommended.

Some might ask: ‘Why stop at a 15% income tax rate? Why not carry this lovely policy further by making it a higher rate? The rich can afford to pay more than 15%!’ Diminishing returns. Although the rich could afford to pay a higher rate, it is actually advantageous to let them keep most of their earnings for themselves. The more they get to keep, the less diluted their incentive to serve the consumers well. Also, more importantly, people who have become rich on the free-market tend to save and invest more of their income, and to do so more skillfully, than poorer people. And the more capital invested skillfully in this country, the higher the real wages for the average worker, and the lower the prices for consumer goods. Such investment is good for just about everybody, including relatively low wage workers and those who just want the free money that they already receive to command more purchasing power on the market. If the redistribution is carried too far, the harm to the economy that results from any forced redistribution will begin to exceed the benefits from the reallocation of power.

Although I of course don’t know that 15% specifically is the optimal rate, about 10% on top of the redistribution rate should be reserved to fund the other useful activities of government (such as defense and law/order). And it seems reasonable to suppose that a quarter is a clear and reasonable limit for governments’ share of people’s free-market incomes, one that if blown past, could eventually result in the imposing of counterproductively high rates.

Other kinds of redistribution?

The system of redistribution discussed above is very different from the system of ‘redistribution’ that governments and leftists of the present day tend to favour. In this system, purchasing power is disproportionately taken from rich people (as in my system, but more so), but rather than being reallocated to poorer people directly, it is used by the government to fund various ‘programs’ and ‘services’. These ‘free’ services, such as welfare, public education, and public healthcare, are intended to disproportionately benefit poorer people, and thus to affect a redistribution of resources in this manner.

This system has two main problems. Firstly, it is not as empowering to be given access to free services, as it is to be given the money necessary to purchase services of a similar quality on the market. The latter allows the recipient to allocate their purchasing power in the manner that they see fit; the former gives government bureaucrats this prerogative. Except that it doesn’t really, because the bureaucrats are answerable to their political masters, who in turn are answerable to the voting public, who in turn feel powerless because their individual votes often seem inconsequential. All this ‘power leakage’ results in a great deal of it being lost to ‘friction’, a result that could have been avoided had the purchasing power simply been allocated to the poorer person directly.

A second problem is that these government-operated ‘services’ are generally not as efficient (in terms of consumer satisfaction) as their free-market equivalents. This is because of the lack of monetary incentives and competition inherent in government service provision, which results in a far lower degree of responsiveness to consumer demand. 

For these reasons, the currently favored system of ‘redistribution’ is far less empowering to poorer people than the system of pure redistribution that I propose. Why, then, do leftists, who claim to love redistribution and poor people so much, not favour my far superior system? It is because most leftists actually love increasing the power of the government more than they love redistribution. They say they want to help poorer people, but they don’t actually trust these poorer people to help themselves if given the resources. They would rather have government use the resources to ‘help’ poorer people according to the government’s own plans. Their idea of helping poor people is the paternalistic one of forcing things upon them ‘for their own good’. It is in marked contrast to the idea of help via individual empowerment that the system of pure redistribution is grounded upon. Therefore, as someone whose ultimate political objective is individual empowerment, I must categorically reject the left’s notion of redistribution via government-provided service.