The Effect of Self Interest Motivation on Income Redistribution
There is a transitional gain that occurs when self-interested individuals secure a flow of benefits to be redistributed their way. The flow of benefits gets capitalized into assets with the transfer. Recipients receive only a normal rate of return on their now more highly valued assets. But that gives them a strong incentive to maintain the flow of transfers. If the transfers stop, their asset values will fall. That will cause the recipients of the transfers to suffer a transitional loss.
Let’s look at the example of farm subsidies.
Farm subsidies increase the flow of income to farmers. Recipients of the subsidies must own farm land to receive the subsidies. Therefore, the price of farm land goes up. This is to capitalize the present value of the future flow of subsidies. Farmers earn a normal rate of return on the now appreciated value of their farmland. If the subsidy were removed the value of the farm land would decline. The owners would suffer a transitional loss.
The motivation for Depression era farm programs nominally was help for the struggling farmer. They ramped up in the 1920’s prior to the Depression. They were part of the Progressive agenda. Farm programs did find some support in the motivation of helping the poor. These days however most support goes to large corporate farming interests.
Individuals struggling to make a living by farming their own land get a very small amount comparatively. There is little doubt the political motivations for farm programs finds its origins in farmers’ demands for programs benefitting themselves. Despite a possible charitable angle on farm programs, self-benefit was likely the motivation for the programs in the 1920’s and that surely is true today.
If I were a farmer, I might favor redistribution because I expect benefits from it. I would be much poorer if I must sell my products in an ordinary competitive market. Therefore, joining with a number of fellow farmers, we get from the government a program that raises my income. My basic motive is to help myself.
Most humans are to a large extent interested in fairly narrow selfish goals. Some people outside the agricultural industry may have some sympathy with farm programs. But farm programs are the result of farmers using their political clout to force the government to transfer benefits to them.
Does farm subsidy translate into philanthropy more broadly?
If we measure the strength of people’s charitable impulses, their devotion to higher goals, by what they say we would believe we live among a selfless civilization. If we investigate how much people actually sacrifice for egalitarian goals the amount is small. The aid the poor obtain is the result of the fact they can vote and they do vote selfishly for aid for themselves.
Karl Marx on voting self interest.
Do people support redistribution to help the poor or do they support redistribution to help themselves? Common sense tells us people vote for self-benefit. “Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation.” Karl Marx…
Be careful what you vote for. We have been on a Marxist path for a very long time. The Marxist path has not led to a good place in Venezuela or anywhere else it has been taken. It will not end well here. The U.S. Constitution is the articulation of a set of principles and values. We have strayed from the wisdom of those who founded the nation. We are well advised to return to the system which has raised more people, more quickly, to higher standards of living than any other in the history of the world. Do you really think Alexandria Ocasio Cortez is as wise as James Madison?