The Fallacy of Redistribution

By Thomas Sowell

The recently discovered 1998 tape on which Obama said  that he believes in redistribution is not really news.  He said the same thing during his 2008 campaign to Joe the Plumber.  But the surfacing of this tape may serve a useful purpose, that is if it gets people to think about consequences of redistribution.

Those who talk glibly about redistribution often act as if people are just inert objects, like pieces on a chess board,  that can be placed here and there to carry out some grand design.  But if human beings have their own responses to government policies, then we cannot blindly assume that government policies will have the intended effect.

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty.  The communist nations were classic examples but, by no means the only example.  Yet, to many people in America who cannot be bothered to stop and think, redistribution sounds good.

In theory, confiscating wealth of the most successful should make the rest of society more prosperous.  But when the Soviet Union confiscated the wealth of successful farmers, food became a scarcity.  Almost as many died of starvation under Stalin in the 1930s as died in the Holocaust under Hitler.

You can only confiscate the wealth that exists at any given moment.  You cannot confiscate future wealth and it is that future wealth that is less likely to be produced when people see that it is going to stolen by the government.  Farmers in the Soviet Union cut back on the time and effort invested in growing their crops when they realized that the government was going to take a very large part of the harvest.   Farmers also slaughtered and ate young farm animals that they would have normally raised to maturity for food rather than let the government take them.

People are not inert objects.  Unlike farmers, industrialists are not tied to the land in any particular country.  Russian aviation pioneer Igor Sikorsky took his expertise to America and produced his plans and helicopters.  Financiers are even less tied down to a particular country  when vast sums of money can be dispatched electronically to any part of the world.

If confiscatory policies can produce counterproductive repercussions in a dictatorship, they are even harder to carry out in a Republic.   A dictatorship can swoop down and grab whatever it wants.  But in a Republic  he must first have public discussions and debates.  Those who are targeted for confiscation can see the handwriting on the wall and act accordingly.

Among the most valuable assets in any nation are the knowledge, skills and productive experience that economists call “human capital.”  When human capital flee the country, either voluntarily or because of hostile governments, lasting damage is done to the economy they leave behind.

Fidel Castro’s confiscatory policies drove successful Cubans to America, often leaving their wealth behind, but  rose to prosperity again in America.  The wealth they left behind in Cuba did little good to prevent poverty for those that could not or would not flee.

We’ve all heard the old saying: give a man a fish and he’ll eat for a day, teach a man to fish and he wille at for the rest of his life.   Redistributionist give him a fish and leave him dependent upon the government for future fish.

If redistributionist were serious about providing for the success of the masses, they would teach the masses to fish for themselves.  Knowledge is one of the few things that can be distributed to people without reducing the amount held by others.  Would that not better serve the interest of the poor?  It would not however, serve the interest of those politicians who want power and control of the masses.

Obama can endlessly proclaim his slogan of “Forward,” but what he is actually proposing is going  “backwards” to policies that have failed repeatedly in countries around the world.


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