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September 30, 2013

Killing the Goose That Lays the Golden Eggs

Robert Samuelson on the affluent society vs. the spoils society:

There are two ways to become richer. One is to provide more goods and services; that’s economic growth. The other is to snatch someone else’s wealth or income; that’s the spoils society. In a spoils society, economic success increasingly depends on who wins countless distributional contests — not who creates wealth but who controls it. This can be contentious. Winners celebrate; losers fume.

Of course, the two systems have long coexisted — and always will. All modern societies chase growth; all redistribute income and wealth. Some shuffling is visible and popular. Until now, that’s been the case with America’s largest transfer, which is from workers to retirees through Social Security and Medicare. In 2012, this exceeded $1 trillion. Still, for the nation, the relevant question is whether productive behavior (generating economic growth) is losing ground to predatory behavior (grabbing existing wealth and income). There are good reasons to think it is.

Since 1950, the U.S. economy has grown slightly more than 3 percent annually. But projections for the future are just above 2 percent. The slowdown mostly reflects an aging population, which translates into less expansion of the workforce. Indeed, overall growth of 2 percent may be unattainable if, as some economists argue, the pace of innovation is slackening. All this suggests diminishing economic gains in the productive sector.

The smaller the gains, the more people will fight over existing income and wealth, because — as has been said — that’s where the money is. The United States’ annual income (gross domestic product) now exceeds $16 trillion; the value of all fixed assets owned by businesses and individuals is roughly $50 trillion. Diverting even a small sliver of these sums can be hugely enriching.

The aspect that concerns the Editorial Staff most is that income redistribution represents a tax on marriage/two parent households and a subsidy for single parenthood and economically inefficient household formation:

We don't really object to people freely choosing living arrangements that promote poverty and dysfunction. But we really do object to being asked to subsidize those choices on the argument that it's "unfair" that we chose a more traditional lifestyle. Our current economic policies are punishing the conditions responsible for American prosperity, and yet we wonder why the 50 year old war on poverty appears to be losing ground?

Faced with overwhelming evidence that redistribution isn't reducing the number of poor Americans, clearly the answer is more redistribution. If at first you don't succeed, try... try again.

Posted by Cassandra at September 30, 2013 06:03 AM

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"Faced with overwhelming evidence that redistribution isn't reducing the number of poor Americans, clearly the answer is more redistribution."

What's that old saying about continually repeating a process exactly and expecting different results?
And people call me crazy.

Posted by: DL Sly at September 30, 2013 04:26 PM

waay tooo truuee.
I'm aghast that Dems are oblivious to the irony

Posted by: CAPT Mike at September 30, 2013 09:35 PM