Thursday, September 20, 2012

"The Fallacy of Redistribution"


Have I mentioned recently that I love Thomas Sowell?
In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler’s Holocaust in the 1940s.

How can that be? It is not complicated. You can confiscate only the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated. Farmers in the Soviet Union cut back on how much time and effort they invested in growing their crops when they realized that the government was going to take a big part of the harvest. They slaughtered and ate young farm animals that they would normally have kept tending and feeding while raising them to maturity.

People in industry are not inert objects either. Moreover, unlike farmers, industrialists are not tied to the land in a particular country.
Exactly. "You can confiscate only the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated."

I love Sowell's ability to express important truths in a concise and understandable manner. Read it all...

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