Monday, October 27, 2008

Redistributing the Wealth

There is new audio of Barack Obama discussing redistribution on a Chicago PBS radio program in 2001. BILL DYER gives it thoughtful attention. Here is what Dyer learns:
"Even back in 2001, Barack Obama was already focused on building a 'coalition of power' in the executive and legislative branches that could indeed bring about a national redistribution of wealth which even the most activist courts couldn't achieve on their own."
"The reason for conservatives and moderates to be concerned about Barack Obama is not simply that he's a hard-left liberal — it's that he's an ambitious and talented hard-left liberal. He's seen where the Warren Court fell short. Barack Obama is now literally only days away from, in his words from this radio program, possibly "put[ting] together the actual coalitions of power through which you bring about redistributive change." Of that, we ought to all be duly terrified."
Mr. Dyer does an excellent job exploring the audio. You really should read the whole thing.

One point from the audio that I think is very important is that the Senator takes note that, as written and ratified, our constitution does not allow government to redistribute wealth. The implication of this, for me, is that in order to give the federal government the power to redistribute wealth it should first be necessary to amend the Constitution to grant this enumerated power to Congress. Amending the Constitution requires a super majority to agree, and I do not think a super majority in this country would approve of such an amendment. I would find this a comforting safeguard.

In contrast, it seems that Senator Obama believes "redistributive change" can be accomplished legislatively. As a practical matter, given the nature of our national tax system whereby pretty close to the lowest 40% - 50% of households by income do not pay federal income taxes and receive checks from the federal government instead, the Senator may be correct. I suspect, if elected, President Obama will try to find out if it is possible to accomplish "redistributive change."

After seeing the Joe the Plumber video in which Senator Obama said he thought that spreading the wealth around was a good thing, I tried to explain why it would diminish our prosperity. I would like to add a bit too my earlier explanation.

Mancur Olson explains that the necessary conditions for prosperity are (1) strict enforcement of private property rights, which includes the strict enforcement of voluntary contracts, and (2) a minimum of predation. A government that redistributes wealth will violate both of these necessary conditions. Such a government will fail to strictly enforce private property rights because it takes income and wealth from Peter to give to Paul. And, by taking from Peter to give to Paul the government itself becomes a predator, and most likely the largest predator in the economy.

In my course Power and Prosperity, I suggest to my students that the key point of the course is to understand the difference between good government and bad government. Of course, I mean to help my students understand that good government supports and sustains the necessary conditions for prosperity as described by Mancur Olson. Bad government then, is government that is the predator. It seems that the policies of Senator Obama would seek to give us bad government.

1 comment:

Anonymous said...


Are you kidding me? Do you really have a Ph.D. from an accredited university? A little understanding of American history and the Constitution (ever hear of the 16th Amendment?) would go a long way to wake you up from your fantasy world. Down here on earth Larry, we know that just about all tax policies are intended to redistribute wealth from one group to another. Ever hear of Adam Smith? Why not try actually reading his work rather than mimicing what you think was his thoughts. Given your rather simplistic dichotomy between "good" and "bad" government (how about some definition of your normative terms pal?) Ronald Reagan, the iconic figure of the right would be the king of predator, and therefore bad governments, as he facilitated the largest increase in perhaps the most redistributivist tax program of the government: Earned Income Tax Credit--first passed by another marxist republican Gerald Ford. Nice try on your scare tactics Larry. I hope your students are smarter than that.