Friday, October 17, 2008

Spreading the Wealth IS Good

Hold on to your hats loyal Modern Economic Freedom readers, this post might perplex at first.
A few days ago, Obama said, "When you spread the wealth around, it's good for everybody."

So here's the shocker: He was absolutely correct.

Yes, you are at the correct site. There has been no fundamental shift to socialism here.

The key word in the statement is "YOU". Of course, Obama meant the big G (government). But what we all know is that "you" means "you the people". If Joe the Plumber, with his knew found fame, spreads the wealth around, of his own volition, it is good for everyone.

Spreading the wealth is simply the backbone of any economy. In many ways, it actually defines an economy. It is the exchange of goods and services amongst a population. Spreading the wealth is a necessity. It is the prerequisite for economic growth, and thus job creation and rising incomes.

Again, that is based on the incredibly important assumption that "you" means "you the people". There are numerous ways that wealth can be spread around. One person can buy something from another person. One person might also hire another person to perform a service. That would be "you the people" spreading the wealth and helping the economy.

The big G that Obama meant can also spread the wealth. That is when government taxes one person and distributes it to another person. Certainly there are some cases where this is desirable. But those aren't the cases that are "good for everybody" - those are the cases where necessity compels collective action, and we aspire for those to be rare.

Of course, there is a good way that the big G can spread the wealth. Since it already accounts for a major portion of the wealth of the country, it can actually give it back to the people to do the spreading. Clearly spreading the wealth by "you the people" is the best way to spur economic growth. If government feels the need to get involved and assist the process, the one time-tested method that is empirically and logically proven to work is the reduction of taxes on income and investment. Now THAT would be good for everybody.

2 comments:

Ken Kurson said...

So true. It's as if all these thoughtful econ people have lost their minds in a collective panic.

Anonymous said...

As always, well said... i am in morocco right now and there are Souqs (markets) everywhere in Marrakech. As always, the efficiency of goods in the local Souqs is perfect, anything you desire is reading to be sold to you - while the govt mandated infrastructure is a mess (electricity, roads, etc...) Another case of the free market working to perfection.