Karl E. Case, Ray C. Fair

The debate over income redistribution is a very old one that raises the passion of many people. By definition, income redistribution means that some people will be made worse off in order to make others better off.
The central argument against the redistribution of income relies on efficiency. Labor, like any resource, is paid its marginal product. Some people have skills and talents that yield a high marginal product, and others do not. This is considered the cruel fate of the marketplace. A person’s marginal product can always be improved by learning a new skill that has a higher marginal revenue product than their current skill. However, in the end, it is the revenue that people bring to firms that determines their compensation. If people were no longer being rewarded for their productivity, there would then be no incentive to get an education or invest in new goods. If the government were to redistribute income, there would be no incentive for people to take dangerous jobs or difficult jobs or even jobs that require more effort than other jobs.
The philosophical argument in favor of income redistribution relies on the fundamental premise that a society that is wealthy is morally obligated to help those who are not as fortunate. This belief has been exposited in different forms from the Old Testament to recent political campaign speeches. Some forms of this argument are: utilitarian justice; social contract theory—rawlsian justice; the works of Karl Marx; and income distribution as a public good.

2 thoughts on “Karl E. Case, Ray C. Fair

  1. shinichi Post author

    Principles of Economics

    by Karl E. Case and Ray C. Fair

    http://wps.prenhall.com/bp_casefair_econf_7e/15/3953/1012152.cw/index.html

    Income Distribution and Poverty

    The Redistribution Debate: Arguments Against Redistribution

    The debate over income redistribution is a very old one that raises the passion of many people. By definition, income redistribution means that some people will be (in a sense) made worse off in order to make others better off.

    The central argument against the redistribution of income relies on efficiency. Labor, like any resource, is paid its marginal product. Some people have skills and talents that yield a high marginal product, and others do not. This is considered the cruel fate of the marketplace. A person’s marginal product can always be improved by learning a new skill that has a higher marginal revenue product than their current skill. However, in the end, it is the revenue that people bring to firms that determines their compensation. If people were no longer being rewarded for their productivity, there would then be no incentive to get an education or invest in new goods. If the government were to redistribute income, there would be no incentive for people to take dangerous jobs or difficult jobs or even jobs that require more effort than other jobs.

    Those who are opposed to income redistribution also see it as unfair taxation. When the government taxes some people and then gives the money to other people, some see this act as the unlawful taking of property. There is also opposition to income redistribution as the wrong means to a good end. Even though income inequality is not a good thing, simply taking money from one end of the income spectrum and giving it to the other is not a solution to the cause of inequality. It is a mask for the symptoms. The key, it is felt, to eliminating income inequality is through long-term solutions. One such proposition is that government should spend money on education and retraining. Lastly, there is opposition to redistribution on the basis that the government is physically incapable of redistributing effectively and efficiently. There are many stories of fraud, waste, and bureaucratic hassles with regard to income redistribution programs.

    The Redistribution Debate: Arguments In Favor of Redistribution

    The philosophical argument in favor of income redistribution relies on the fundamental premise that a society that is wealthy is morally obligated to help those who are not as fortunate. This belief has been exposited in different forms from the Old Testament to recent political campaign speeches. Some forms of this argument are provided below.

    Utilitarian Justice

    Utilitarian Justice says that the argument is that the marginal utility of spending one dollar for a wealthy person is much less than the marginal utility of spending one dollar for a poor person. Thus, taking the dollar from the wealthy person and giving it to the poor person can raise the overall utility of society.

    Social Contract Theory—Rawlsian Justice

    Social Contract Theory, also called Rawlsian Justice, says that the argument is that a society behaves as if they make the rules before anybody knows if they are rich or poor. Therefore, since no one knows, then people want to make sure there is a safety net for the poor, just in case they are poor.

    The Works of Karl Marx

    Marxist Theory was the creation of Karl Marx. He argued that it is misleading to say that labor, land, and capital are all resources, as if they are equal in weight. He felt that when one examines the production of any good at all, and they get down to the true resources, eventually it will be seen that labor is the only resource that adds value to production. This idea is called the labor theory of value. Those who own capital are able to pay labor a minimal wage and get the returns from production that are not returns to capital but, in actuality, are returns to labor.

    Income Distribution as a Public Good

    Public Good Theory states that when the income distribution is unequal, there are social ills, such as crime and illiteracy, which must be borne by others. There is also some evidence that countries with very unequal distributions of income are politically unstable (the Russian revolution is an extreme case) and experience low growth rates in productivity.

    Reply
  2. shinichi Post author

    (sk)

    所得の再分配については、何千、何万、いや、何十万、何百万の人たちが、何千年にも亘って意見を述べてきた。

    徳一と最澄の宗教論争も、その元にあるものは、所得の再分配の論議と同じだし、孔子を読んでいても、似たようなやりとりが見てとれる。

    いつになっても、全員がどちらかの意見に賛成することはない。こういう論争が生まれる理由は、社会心理学や医学のなかで見つかるのかもしれない。

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *