The other side of redistribution

In a conference call on behalf of the Romney campaign Thursday afternoon, Senator Pat Toomey (R-PA) said the Obama campaign???s efforts to change the subject from the President???s record were understandable, because ???he can???t run on his record: the pathetic economic growth, the abysmally high unemployment rate, the record low workforce participation, the drop in middle-class income, the hike in gasoline prices, higher health care costs??? a fiscal picture that is dominated by massive spending, unprecedented deficits, a totally unsustainable level of debt, and the threat of gigantic tax increases??? It???s no wonder we have such a miserable economy, and you know, the causes are very clear.  It???s Barack Obama???s policies.???

Toomey said these policies flow from Obama???s philosophy, which is ???to have a government-centered society, one in which the government controls the economy, the government controls resources??? and, as he has acknowledged himself, where the government decides how to allocate wealth ??? how much to take from whom, and to whom it???ll give whatever the politicians decide.???

Toomey described this philosophy as ???the complete antithesis of what American has been about since its founding.  It is the antithesis of what allowed us to build the most successful society in the history of the world.  And fortunately, Mitt Romney understands this very, very well.???

He said rather than ???a society where everyone depends on government, and we try to redistribute wealth,??? Romney wants ???a society that???s based on opportunity, where everyone???s got a chance to develop their God-given talents, and build a stronger, bigger economy that will create more jobs, create more wealth??? where people will have an opportunity to thrive.???  Toomey said this was the ???most stark contrast in vision between two presidential candidates??? that he could think of in decades, and the choice for American voters in 2012 would be between ???prosperity and decline.???

When talk turns to ???redistribution,??? which Barack Obama has repeatedly described himself as a supporter of over the years, the natural response among critics is to recoil from the input ??? the taking part.  But Toomey???s remarks are a reminder that we don???t spend enough time discussing the failure of the output.  The supposed beneficiaries of redistributive policies don???t benefit the way leftists always presume they will.

Obama has generally preferred not to talk about redistribution or ???spreading the wealth around??? since he got into office, not in such blunt terms, but if there???s one consistent principle that underlies nearly all of his policies, it???s the belief that economic ground can be made fertile by government raining money upon it.  For example, he portrays unemployment benefits as economic ???stimulus??? because tucking a few bills into the pockets of deserving Little People will cause them to rush out and engage in commerce, while jobs blossom in their wake.

The non-existent ???green energy??? marketplace would grow from nothingness once government funds were scattered across the void.  Incentives and credits dangled before employers would make them hire more people.  In his famous encounter with Joe the Plumber, Obama explained that Joe???s plumbing business would be enhanced by redistributing wealth to create more prospective customers ??? that???s what led up to Obama saying, ???I think when you spread the wealth around, it???s good for everybody.???

A great deal of what Obama proposes follows this ???trickle-up??? model.  Even the monetary policies propping up his tottering fiscal wreck with piles of shrunken dollars could be described this way.

And it never works.  All of his initiatives are failures because the output of redistributive central planning is inadequate.  Even if the money and privileges didn???t have to be forcibly taken from others first, redistribution would be a failure because it flows from a fundamental ignorance of what ???wealth??? really is, or how economic systems grow.  Redistribution can provide a basic level of sustenance in the short term, as with goods rationed among the survivors of a shipwreck, but it never leads to growth.

There are several reasons for this.  Wealth is a function of choice ??? both individuals, and society at large, are wealthier when their range of free options for consumption and investment are greater.  What good is a mountain of gold coins if you have nowhere to spend them?

Redistribution is a denial of the wisdom of individuals, whose widely distributed, highly competitive, marvelously disorganized intelligence is far better at detecting and exploiting opportunity than any distant bureau of central planners.  No one is allowed to contemplate the cost of the opportunities lost when investments are not made voluntarily ??? and evaluating what you could have done with your money, for better or worse, is an important part of accumulating financial wisdom.  Putting money in the hands of those who don???t know how to invest it, after taking it away from people who do know how, is a recipe for decline.

Redistribution dulls the economic senses necessary to accumulate valuable investment information.  Learning how to wisely spend and invest money is an inevitably painful process.  Removing the threat of consequences, from investors large and small, makes them less responsible, and therefore perceptive.  Why make the incredible sacrifices and risks necessary to win big, when the spoils of victory will be taken, and the consequences of failure ??? or, perhaps even worse, the consequences of inaction ??? are minimized?

Worst of all, redistribution downplays the importance and value of earning money.  The work and investment that create private-sector wealth have great positive value in and of themselves.  Obama???s ???shower people with money to create customers??? model leaves out the productive utility of the work that would normally have been required to earn the cash.  Taking and giving strips out half the power of earning, and it ends up working about half as well.