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Friday, November 4, 2011

Let's Redistribute The Wealth, But How?

John Heubusch is the executive director of the Ronald Reagan Presidential Foundation and Library. Here he uncovers one method of wealth redistribution that has not yet been discussed.

If one can find a central theme of the Occupy Wall Street movement, and its offshoots scattered around the country, it would be this: American capitalism is working for 1% of the people, but the other 99% are out of luck. While the OWS crowd might imagine that this is a novel criticism, blaming the rich isn’t exactly new. In fact, President Obama’s famous line to Joe the Plumber from the 2008 campaign perfectly encapsulates the OWS argument: “I think when you spread the wealth around, it’s good for everybody.”

But the idea that wealth in society ought to be balanced obviously goes back a lot further than that. In 1848, Karl Marx wrote, “From each according to his ability, To each according to his need.” A “From – To” statement of principle, like a mathematical formula, demands at its root a distributive, or in this case, “redistributive” property. The OWS crowd and Obama might differ from Marx on the means of the redistribution, but not on the logic behind it.

In any case, the Occu-Party, as its name suggests, has no intention of leaving Wall Street and the downtown areas of dozens of cities until the wealth distribution they are calling for actually occurs. So let’s indulge them for a moment and imagine how this, in practice, would happen. Under one scenario, one can imagine hedge fund managers, brokers, and bond traders – the One Percenters – giving in and throwing their bonuses and shareholder dividends out the windows onto Zuccotti Park to the gathered throngs clamoring below.

How much money would be redistributed if the Occu-Partiers shook the proverbial money trees at Goldman Sachs, Citigroup, and the like? At the height of the OWS movement on the weekend of October 15, as many as 70,000 occupiers came out across America to demonstrate in support of the redistribution cause. If one presumes, say, $100,000 for each occupier — good work if you can get it — was sufficient redistribution and would satisfy the gathered crowds on that day, then $7 billion would need to be loaded in buckets to rain down upon the Occu-Partiers on a peak redistribution day.

Unfortunately, this Wall Street version of Mardi Gras – but with money instead of beads — would be the most inefficient way to redistribute the wealth. Heaving that much money from all the windows across all the cities involved would take all day – and there’s no guarantee that all would get their “fair share.” There must be a more efficient way to redistribute such a massive amount of wealth. There would need to be. Once Wall Street literally begins to shower people with cash from skyscrapers, and word is out that $100,000 is available to every Occu-Partier on hand, the crowd will surely grow.

It turns out there is. The federal government is now spending at a rate of $3.5 trillion per year on thousands of redistribution programs, which equates to $9.8 billion per day. That is almost $3 billion per day more than what the One Percenters would be pouring on the heads of the protesters. And, if history is any guide, there’s no real limit to how much money Washington bureaucrats can throw out the window on any given day. In fact, it’s increasing all the time.

Obviously, employing Washington to get the redistribution job done is much more efficient. But is it the most efficient?

Turns out, no, not by a long shot. One idea would be to ask all the Occu-Partiers to gather their hemp tents and bongo drums and move to the lawns outside the Bureau of Engraving and Printing in either Washington, D.C., or Ft. Worth, Texas, – so that the redistribution can take place directly where the money is actually printed, cutting out the bureaucrat middlemen altogether. The lines might be long, but when one factors in the inefficiencies of the U.S. Postal Service, there is no doubt the Occu-Partiers would get their money faster.

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