How Should Wealth Be Distributed Between People?

This article has no intention of supporting one side over the other. Anti-tax advocates and redistribution advocates each have valid points. This article simply aims to educate you about the history of distribution. That way you'll know more on the subject and can better argue your side.

I know many of you have strong opinions on taxes and/or redistribution. I ask you to please put those opinions on hold just for a few minutes.

Hypothetical Wealth Distribution

Let's start with a hypothetical. You are setting up a planet. You're going to be one of the planet's inhabitants, but you don't know which one. Academically, this is generally considered the most fair way to pick a distribution plan. Since most people are biased by their own situation, you instead imagine a new planet where you could begin poor, disadvantaged, skilled, or wealthy.

Your planet has lots of food, trees, oil, fresh water, jewels, etc. Your planet also has lots of people. How would you divvy it up? Most likely, you'd give relatively equal amounts to each person.

Some people might be able to get more use out of trees, while others can do more with oil. So the completely equal concept doesn't work well for long (sorry Communism). I happen to not know what to do with oil, so it essentially goes to waste. Everybody loses out by this waste.

So we let people trade with each other. I learn how to make homes with wood, so I trade my oil for more wood. The trades are fair. I have to give a fair amount of oil to get my wood.

At the beginning, I can turn my lumber into a house, then trade the house for 5 food & 2 jewels. Soon, people realize that I'm an exceptional homebuilder. People like my homes so much that I'm can now build a home and trade it for 10 food & 4 jewels. I can trade my extra food and jewels for just about anything else. I become wealthy.

All of my trades have been fair; I haven't taken advantage of anybody. But the original equality is now gone. I now have much more than my share of the planet's resource. Consequently, although only indirectly, certain others now have less of their share of the resources. Some of them could not trade for enough food, and they died of starvation.

As I reach old age, I pass my wealth on to my child. He cannot make homes as well as I can, but I have amassed so many jewels and wealth, that he won't need to build homes. He uses the wealth to attain more and more wealth.

Personal Property/Anti-Tax Stance

Some say I deserve to keep my share of the wealth. I am a better homebuilder than others, and I earned my advantage fair and square. Furthermore, my exceptional homebuilding helps others too, since they get to live in better homes. Everybody wins. And these people have a good point.

Equality/Redistribution Stance

Others say I shouldn't get my extra share because that means I get more of the planet's resources than others. Since I have more than my share, others have a small share, and many of them die of starvation. They may not even call for equality, but they say that some of my extra resources should be taken from me to make sure that nobody dies of starvation. They too have a good point.

Our Planet

This hypothetical is essentially what happened on Earth. The only difference is that we didn't have anybody to divvy up the resources equally in the beginning. If somebody stole resources (theft and/or war), they simply kept them. Not all transactions were fair. Although we see from the hypothetical, inequality will occur even if all the trades were fair.

Our inequality started in prehistory. People grouped into bands of hunter-gatherers. The best hunters were rewarded with status and wealth. This sort of inequality continues today. Bill Gates and Warren Buffett just happen to be the top "hunter-gatherers" today.

Interestingly, since men were better hunters than women, this also seems to be when male-female inequality began.

Fair Solution?

So what's the solution? Sadly, there is no ideal solution. We're stuck.

The world's yearly per capita (per person) income is close to $7,000. That means if we took the world's resources and split them equally, each person would start with close to $7,000. $7,000 a year is more than enough to eat and live a good life. But we also know that people would make trades, and that the inequality would come back. This doesn't even consider war and theft, which pose even larger problems. The complete redistribution idea is flawed.

However, if we don't tax people and take away some of their wealth, plenty of people's shares will be so small that they starve. This happens even in the United States, which has taken or earned far more than its share of the planet's resources. A system where people die of starvation is also flawed.

Analysis

People cling so strongly to their anti-tax views or their socialist redistribution ideas, but this article should show that things aren't nearly that simple. The best solution has to be somewhere in between.

There needs to be:

1) Enough taxation and redistribution to ensure some basic level of living that everybody deserves, while

2) Allowing people to keep a fair share of the wealth they've earned by being exceptional hunter-gatherers.