Wednesday, September 19, 2012

From One Pocket to Another - Redistributing Wealth

From One Pocket to Another - Redistributing Wealth

Wealth, the lack of it, and the shifting of it from one pocket to another seems to be quite the topic of conversation today.  It is also a subject I have thought about many times for many years.

There is one basic thing about income redistribution that everyone should understand. EVERY action of government shifts money from one pocket to another. We tend to think of taxes as the way money moves around, but it isn’t the only way government actions affect our individual assets. Every law moves money about.

Let me give you a personal example. My husband owned a small business supplying products for the American shoe industry.  We were able to live a comfortable middle class existence for many years.  In the early years of the Reagan administration, Congress passed and President Reagan signed a small bit of legislation that removed a tariff on shoes manufactured in China. With that act of government, our income disappeared as surely as it would have had a thief put his hand into our pockets.

My husband and I had worked hard, raised 6 wonderful children, given back to our church and our community. Yet, by no fault of our own, but by act of Congress, we would face the last of decade of our working lives suddenly terribly poor. Sadly, we weren’t alone. Most of the American shoe industry faded away at the same time.

Our money disappeared, but I recognized right away that it hadn’t disappeared totally, merely shifted to other pockets. The poor people in China suddenly had jobs. American importers saw their business options and their profits soar.  All Americans now had access to a wide variety of cheaper shoes. They could spend the money they saved on products of other companies.

While I was shivering in my cold house, I had to face the fact that the government action that was so devastating to us might actually have produced more benefit than loss. I was willing to accept that. But I also thought that the government had an obligation to notice that what they had done was very painful for us and many other long term workers in the American shoe industry. Fortunately for many workers there was unemployment to help ease a transition to other work, a government helping hand. Since my husband owned his own small business which had failed, he wasn’t entitled to such assistance. We were almost entirely on our own.

Still, the government funded other small projects, one of which actually did help us. It subsidized a program that gave money to small private companies to provide services to homebound senior citizens. So I was able to get a job cleaning homes and apartments for the needy elderly in my area. It was the only job I could get quickly, a government supported job, and I was grateful to have it.  But I didn’t make enough to restore us to the middle class.

So what did I learn from this painful experience? Government actions always transfer money from one pocket to another, they always have, and they always will. This principle applies as well to general legislation as it does to tax laws.

The key issue isn’t that government does this. Nothing we do can affect this reality. The key issue is who or what any law benefits and whether or not government actions help more citizens than they harm.  Surely, as a country, we should have some sympathy, and perhaps a helping hand for those the government decided to damage. 

For decades, government has been ignoring this vital principle in most of their actions. Leaders have listened to the interests of the few who are rich and powerful and ignored their obligations to the majority of Americans who are neither rich nor powerful.

This November, we can actually make  government listen to us. We must vote in overwhelming numbers, and we must vote only for candidates who understand their obligations to those without wealth or power. We must ensure that when government reaches into our pockets, they act only for the greater good.

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