Redistribution: Helping the Poor - Granite Grok

Redistribution: Helping the Poor

Why do Redistribution?

A substantial amount of redistribution goes to the average Americans rather than the poor. Government redistribution programs are generally ineffective ways to provide benefits to the poor. They are designed to produce political support for the interest groups receiving the benefits from the programs. Think about Planned Parenthood.

How does redistribution work?

Redistribution is a Mayor Curly approach, a spin on political patronage. Any help recognized by the poor is secondary. Helping the poor is a convenient rationalization incidental to support for redistribution more broadly. People support and protect programs and policies that benefit themselves.

Think of it using Yandle’s bootleggers and Baptists story. In the story both groups supported prohibition, though for different reasons. The Baptists favored redistribution as a furtherance of the public interest. The bootleggers supported it because it benefited them personally. The bootleggers used the Baptist’s public interest arguments to advance their own case for private benefits to themselves. Prohibition was the Planned Parenthood of its day.

Hayek would argue that socialism, the ultimate redistribution system, is the road to serfdom. It is interesting to observe institutional differences among nations make poverty a persistent problem in some countries. It is intuitively obvious that some institutional structures are better at moving people out of poverty than others.

Where does redistribution take us?

Redistribution, as a policy, is a component of the motivation; envy. Transfers of wealth can be justified as aiding the poor. There is no evidence that greater equality has ever been or will ever be achieved by redistribution. Equal opportunity motivates everyone to achieve in the hope of monetizing the outcome. Equal outcome assures participants a generalized decline in standard of living. Should we be about equal opportunity or equal outcome?

F. A. Hayek, The Road to Serfdom. University of Chicago Press

Gordon Tullock, The Welfare Cost of Tariffs, Monopolies, and Theft. Western Economic Journal;
Private Wants, Public Means: An Economic Analysis of the desirable Scope of Government. Basic Books;
Charity of the Uncharitable, Economic Inquiry; The Transitional Gains Trap. Bell Journal of Economics;
Economics of Income Redistribution. Springer.

Bruce Yandle, Bootleggers and Baptists: The Education of a Regulatory Economist. Regulation 7