Saturday, November 17, 2012

The Price of Redistribution

Progressive taxation, income maintenance schemes, food stamps, public housing, and other redistribution schemes determine priorities.  Given the level of redistribution in the US and Europe, there is no room left to provide for infrastructure rebuilding.  Uwe Reinhardt's article in today's NY Times is another example, as if anymore were needed, of an economist off the rails.

Reinhardt laments the fact, undeniable, that US infrastructure is crumbling.  Guess what, Uwe, there is no money available for infrastructure.  Current tax revenues are mostly transfer payments going from one part of the US population to another.  There is no room left to provide for basic needs like infrastructure, national defense, the court system, the schools, etc.  Instead we need our tax revenues to provide things for people that they should be providing for themselves -- lunches for their own children is just one example.

The price of redistribution is that you will not have money available for basic services.  Watch Greece.  The Greeks can no longer even provide police protection for their citizens or deliver the mail.  The Greeks perfected the Obama system -- massive redistribution and strangling government regulation.  It worked.  Capitalism and free markets were snuffed out in Greece and tax revenues were devoted to public employees and transfer payments to favored groups.  Uwe Reinhardt, a Princeton professor, supports all of the anti-free market agenda and extols the virtue of the redistribution entitlement programs.  He wonders why we have no money left for infrastructure.

Like a lot of things, the answer to our crumbling infrastructure, is not, as Uwe thinks, a matter of having the will.  It is a matter of having the funds.  You don't need a Princeton professor to do the math.  It's pretty simple arithmetic.  There is no money left for infrastructure.  Forget about it.  The road to Greece will have a lot of potholes.