Pure Redistribution: The 'Share of Spoils' System

Leftists always say that they want to redistribute wealth from the rich to the poor. Thus you’d think that they would want the government to take money from richer people and give it to poorer people. And yet, what invariably ends up happening is that when the rich are taxed in the name of ‘redistribution’, the proceeds go to the government, which then spends it on some program or other. Some of these programs, such as public education and universal healthcare, are supposedly designed to benefit poorer people especially. But in order to conclude that funding these programs is a good idea, making the case for redistribution alone is not sufficient. One must also make the case that funding these programs is better than just transferring the money directly to poorer people, who could then spend it as they chose, something I would call ‘pure redistribution’.

What might an intelligent system of pure redistribution look like? In this article, I will propose an example of such a system.

I would call my system the ‘share of spoils’ system. The system has two components: the input, which I would call ‘the loot’, and the output, which I would call ‘the spoils’. Every citizen in the country with an income is to be looted by the government, while every citizen, including children, whether they have an income or not, is to share in the spoils. The looting is to be done by taking a fixed proportion of everyone’s annual income, let’s say 10% for now. But when distributing the spoils, each citizen is to receive the exact same monetary amount as one another, determined by dividing the amount of money loot by the number of citizens. For example, if the annual 10% income levy resulted in $150 billion of loot, and there were 30 million citizens in the country, than each citizen would receive $5000 for that year as their share of the spoils.

One of the main merits of this system is its simplicity. Relatively little bureaucracy is needed to make it work. The flat proportional looting rate keeps assessment relatively simple, the only thing that must be determined is the person’s income for that year, no messing around with income brackets or credits. For spoils distribution, no ‘needs test’ is necessary, and the same, standardized payment can just be sent to everyone in the country.

Besides simplicity, the flatness and universality of the looting rate and the spoils distribution amount also reduces, as much as possible, the negative effect on production incentives that any system of redistribution will necessarily have. With my system, there is no special disincentive to move up from one set income bracket to the next, as there is in most countries’ current ‘needs based welfare’ and ‘progressive taxation’ systems. The general production disincentive will of course remain, as the higher people’s income, the more monetary units will be looted from them. But as long as the flat proportional looting rate is not set too high, this shouldn’t be a major problem.

Why do I insist on calling the collection ‘looting’, and the distribution the ‘sharing of spoils’, rather than the more accepted labels ‘taxation’ and ‘transfer’? It is because I hate obfuscatory euphemisms. We already have a perfectly good word to describe the coercive seizure of people’s resources: looting. We also already have a perfectly good phrase to describe the act of distributing the proceeds of the coercive seizure of people’s resources among the accomplices to the seizure: sharing of the spoils. Arbitrarily using different words to describe these things when the government is doing the looting and distribution is designed to mislead, not enlighten. If you want nothing to do with a system of looting and sharing the spoils, then logically you should also want nothing to do with a system of ‘taxation’ and ‘transfer’, because they are in fact the same thing.

Now for the million dollar question: would I personally support such a system? Certainly I think it would be much better than the harmful, socialistic nonsense that is currently done in the name of ‘redistribution’. But would I include it in my ideal policy world? I’m going to break from libertarian orthodoxy here and say that, as long as I could be assured that the looting rate would never exceed 20% of annual income, I would support this system.  I appreciate the great things that richer people do for us as consumers, and thus I do sympathize with them, but I also sympathize with poorer people and, most of all, with myself. I would probably benefit from the system for the near future at least because I am just getting started with my career, and once I am established and well-paid, I probably won’t mind terribly much losing 20% or less of my annual income. As mentioned, if the looting rate is kept under 20%, the negative effects on production incentives and capital accumulation should not be too severe, and thus the general economy shouldn’t be harmed too much by this measure.

Returning to the issue I discussed at the start: why don’t leftists, who supposedly love redistribution so much, advocate such a system or one similar? 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. This lack of respect for poor people is combined with an unwarranted distrust of free-market forces as coordinators of production and an unwarranted trust in governments as coordinators of production; that is, a belief in socialism.

Thus, don’t just swallow the whole package of mainstream leftist statism because you believe in redistribution. There are purer and less harmful ways of engaging in redistribution that don’t also involve statist paternalism and socialist economic management. I have outlined just such a method in this article.