Obama's Redistribution Won't Work

A recently discovered tape in which Barak Obama said back in 1998 that he believes in wealth redistribution may serve a useful purpose – if it gets people to think about what the consequences for redistribution are.  History is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty.

The communist nations were a classic example.  In theory, confiscating the wealth of the more successful people ought to make the rest of society more prosperous.  But, when the Soviet Union confiscated the wealth of successful farmers, food became scarce.

As many people died of starvation under Stalin in the 1930s as died in Hitler’s Holocaust in the 1940s.  You can only confiscate the wealth that exists at a given moment.

You cannot confiscate future wealth – and that future wealth is less likely to be produced when people see that it is going to be confiscated.  And unlike farmers, industrialists are tied to the land in a particular country.  Financiers are even less tied down, 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 democracy.  A dictatorship can suddenly swoop down and grab whatever it wants.  But a democracy must first have public discussions and debates.

Those who are targeted for confiscation can see the handwriting on the wall, and act accordingly.

When successful people with much human capital leave the country, either voluntarily or because of hostile governments, damage can be done to the economy they leave behind.  We have all heard the old saying that giving a man a fish feeds him only for a day, while teaching him to fish feeds him for a lifetime.

Redistributionists give him a fish and leave him dependent on the government for future fish.  If redistributionists were serious, what they would want to distribute is the ability to be productive in other ways.

Knowledge is one of the few things that can be distributed to people without reducing the amount held by others.  That would better serve the interests of the poor, but it would not serve the interests of politicians who want to exercise power, and to get the votes of people who are dependent on them.