Pooling vs. Redistribution
September 7th, 2013
Conservatives today have a favorite bugaboo: “redistribution of wealth." By itself rather innocuous-sounding, it is clear code for a variety of evils: taxes, stealing, and downright, outright communism. It has now commonly been replaced with the term "confiscation." What is strange is that redistribution, in its conventional form, is mostly admired, including by the very people who demonize it. Most people favor a progressive tax system, for example. Those who loathe redistribution nevertheless claim that the free market will redistribute, imagining that the wealth will circulate with wealthy people paying handsome wages in exchange for labor—as false a myth as you can find, of course. They approve of redistribution, they just naively and foolishly believe that wealthy people will do it unbidden—many even credulously believe that that is what is happening right now. What is not usually spoken of is the only alternative to redistribution: pooling of wealth. Most of the wealth in a society being drawn to one place and staying there. Not funding jobs or infrastructure, not moving through the economic engine. Just sitting there, its only purpose to draw more money to the pool. If you think that redistribution is distasteful, then the effects of pooling are downright catastrophic. We're seeing many of those effects right now, and they are going to get worse. And as wealth pools more and more, the usual corrective measure of higher tax rates will affect it less and less, because tax only reaches wealth that moves. To reach pooled wealth, you need the estate tax, which takes generations to reenter the economic cycle—and which wealthy people are clamoring to eliminate. The economy is an engine; capital is the fuel. Should wealth pool, the engine will stall. Redistribute, and the engine runs with efficiency. Even Romney understood the basic principle, he just believed, like so many conservatives, that the fuel runs between capital investors and corporations—from one part of the top to another part of the top—with money to workers being a by-product, if anything—instead of the actual path it must take for an economy to be dynamic, which is from bottom to top and top to bottom. A necessary observation is that while the bottom is forced to spend upward to live, the top has no such built-in force, and unless forced to redistribute downward, the top naturally tends to collect wealth and remove it from circulation. Conservatives have been systematically dismantling the forces we had created to accomplish this, including taxes and unions, thus making downward redistribution voluntary—which, in real terms, means the minimum necessary and no more. And the minimum is too slow a trickle to make our economy run. At the gut level, most people seem to know this. But too many people now have bought in to the scam that somehow managed redistribution is evil and destructive.