Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/18/84; site cybvax0.UUCP
Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!mhuxb!houxm!whuxl!whuxlm!harpo!decvax!genrad!mit-eddie!cybvax0!mrh
From: mrh@cybvax0.UUCP (Mike Huybensz)
Newsgroups: net.politics.theory
Subject: Re: Redistribution of Wealth & the Economy -- Reply to Sevener
Message-ID: <366@cybvax0.UUCP>
Date: Wed, 20-Feb-85 15:58:20 EST
Article-I.D.: cybvax0.366
Posted: Wed Feb 20 15:58:20 1985
Date-Received: Tue, 26-Feb-85 04:27:06 EST
References: <887@ratex.UUCP>
Reply-To: mrh@cybvax0.UUCP (Mike Huybensz)
Organization: Cybermation, Inc., Cambridge, MA
Lines: 61
Summary: 

In article <887@ratex.UUCP> mck@ratex.UUCP (Daniel Kian Mc Kiernan) writes:
> 
> Tim Sevener writes:
> >It *is* possible that the rich can be better off by redistributing some of
> >their income to those less well-off.  This can happen if people no longer
> >have enough money to buy the goods produced by the factories and means of
> >production owned by the rich.
> 
> If the rich can be made better off by letting someone else spend their
> money, why don't the rich make themselves better off by buying stuff from
> themselves?  And -- hell -- since rich is a relative concept, why can't I
> make myself better off by paying myself for goods and services?

Benefit to the rich by giving money to the poor can be derived very simply.
It's a matter of how the money is applied.  If the money is applied to
bootstrapping the poor into a better class, then the rich clearly benefit
when the former poor can bear a larger portion of the burdens of the society,
such as roads, sanitation, defense, etc.  The law of diminishing marginal
returns applies very well here: X thousand dollars invested in the college
education of a poor person can result in vastly greater lifetime tax revenue,
while the purchase of a luxury vehicle won't do anything much to benefit
the group as a whole.  The reason why few individuals (except philanthropists)
want to do this, is that the benefits are divided among everyone.  It is
impractical for an individual to reap sufficient benefits from such an
investment unless everyone else makes a similar investment.  Thus, the
rationale for compulsion.  Otherwise you end up with a few rich
people who feel "it's better to reign in hell than serve in heaven."

> >The same phenomenon was illustrated with the success of the Marshall Plan.
> >The U.S. provided the allies with money to rebuild- in the process they
> >needed and were able to buy more American goods.
> 
> And if this money had been left in the hands of Americans, they would have
> been able to buy more American goods.  The Marshall Plan may have
> benefitted Europeans, but its over-all effect on the American economy was
> negative; it subsidized exports with a corresponding cost to production for
> domestic consumption.

The short-term effect may have been negative, but the long term effects have
included our new-found allies being able to support portions of their
deterrents against the east themselves, and extensive markets for our
surplus goods.  It's a matter of enlarging the pie: now that it's bigger,
are we getting a smaller slice than we would have from the old pie?

> >[...T]he punitive measures adopted by the Allies after WW I [...]
> >[...]          were bad for the overall European economy and also fostered
> >the rise of Hitler.
> 
> No argument, but the choice is not simply one of punish or subsidize; a
> third option is to keep hands off.

That wasn't really a choice: it would have been politically inviable to
try it.  If we ignored Europe, then the other victors would once again have
punished Italy and Germany to try to rebuild themselves.  They would have
to, or face popular rebellion.  The Marshall plan (partly) served as a
bribe to prevent regeneration of tensions due to demands for reparations.
I consider it a brilliant tactic to disarm time-tested sources of future
wars.
-- 

Mike Huybensz		...decvax!genrad!mit-eddie!cybvax0!mrh