Tuesday, May 1, 2012

Caplan's Experiment

Bryan Caplan gives us a thought experiment designed to make everyone re-think redistribution. Given just the four points, I think that most people would view anything that forced Able Abel to do anything as unfair. What if we looked at WHY Able Abel was able to produce more. If it is because the society granted Abel private property with which only he is able to create a surplus, then it changes everything.

Here is Greg Mankiw on why property rights justify higher taxation of the wealthy and redistribution:
Surely, those with higher income and greater property benefit more from a governmental system that protects property rights.
and:
What about transfer payments to the poor? These can be justified along similar lines. As long as people care about others to some degree, antipoverty programs are a type of public good. [Thurow 1971] That is, under this view, the government provides for the poor not simply because their marginal utility is high but because we have interdependent utility functions. Put differently, we would all like to alleviate poverty. But because we would prefer to have someone else pick up the tab, private charity can’t do the job. Government-run antipoverty programs solve the free-rider problem among the altruistic well-to-do. 
To be clear: Mankiw is not advocating progressive income taxes here which my out of context quotes might indicate.
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