Greedy Goblin

Thursday, May 25, 2017

Why wealth redistribution for fairness is impossible

I spent almost a decade on the blog to show with in-game examples why redistribution of wealth to increase "fairness" is wrong: it rewards morons and slackers who just waste the resources that others earned hard. But I never questioned that it would be - while disadvantageous - possible. Probably, because I assumed that systems works as they should and you can set up any parameters and they would run with them, for better or worse. My recent experiences with rigged games made me able to see the real issue: redistribution for fairness is impossible to implement. But ability is not equal to performance. To actually see what's going on, I needed a commenter with a simple enough analogy for everything to fall into place:
Adam is born into a family of millionaires. Bob is born to a drug-addicted single mother and is quickly moved into foster care. Bob grows up in a succession of broken homes. He's subjected to emotional abuse, neglect, irregular nutrition, and inadequate health care. He has a brilliant mind, but he's unable to properly cultivate or exploit his talents (no books at home, no personal computer, no mentorship, lousy role models, etc). Adam grows up with every possible advantage. He's not especially bright, but he has private tutors. His parents fill his life with interesting opportunities - programmable robotic toys, musical instruments, sports equipment, etc. His parents carefully vet his friends, ensuring that he builds connections with the sons of millionaires while avoiding bad influences.

Both boys sit down to write the SAT. Bob hasn't eaten today, so he finds it hard to focus and he scores only 1500. Adam has undergone 10 months of exhaustive test preparation; he manages a 1520. Naive meritocracy says that Adam is a better worker. So the boss gives Adam a corner office, and sends Bob down to work in the mailroom. That's silly. It's obvious that Bob would have done much better if he had been given a better upbringing. It's obvious that Bob could do much better than Adam if you put both of them into the same job.
The implication is clearly that we should help BoB reach his potential. My answer was the dime-a-dozen conservative "Bob must just work hard with the cards dealt to him and make a decent middle-class life". But after that - literally waking up in the middle of the night - I have this answer: Who else could do the redistribution than Adam's parents?! I mean the policies are made by politicians who belong to the elite class - represented by Adam in the example. Congressmen, governors, mayors are all capable to provide the life of Adam to their children. And we can say without doubt that they won't give up their wealth to help Bob. How? Because if they would, they had! Nothing stops rich people from donating to charity. Some do, but most don't as evidenced by the expensive cars, yachts and jewelry not far from "Bob" struggling. What madman would assume that Adam's parents who don't donate to Bob will draft a law that taxes them for Bob?!

Enters Cindy and her parents. She isn't growing up in luxury like Adam, nor she suffers like Bob. She lives a decent middle class life: public school in a decent part of a town, a few extra-school activities, access to computer and some books, healthy food, decent but not "trendy" clothing and items, modest vacations. In absence of redistribution at least. But when crying eye leftists start demanding for Bob, Adam's parents have to do something. They won't give up a single cent from their wealth (otherwise they had done it already), but tax Cindy's parents taking away her opportunities in the name of "equality". Some of the taxed money will indeed reach Bob's family (not likely Bob himself, since his parents are irresponsible and addicts), but most money will be just wasted on bureaucracy or flat out stolen to feed the endless greed of Adam's parents.

So here is the final nail in the coffin for socialism:
  • if the people with money and power had compassion, we wouldn't need redistribution because they would donate for the poor freely;
  • if the people with money and power have no compassion, they will steal the taxed money aimed at the poor.
This also explains why the power-hungry oligarchs are behind leftist causes: because leftism supports high taxation "for equality" which they can all steal. A right-wing small government system leaves them with less money to steal.

Bob is screwed either way. But by voting right-wing, we can at least save Cindy!


Azuriel said...

A right-wing small government system leaves them with less money to steal. [...] But by voting right-wing, we can at least save Cindy!

There's only "less money" to steal because right-wing governments allow corporations to steal it from the workers. Less protections, more exploitation, in a "privatize the gains, socialize the losses manner." Then these same corporations pay these politicians exorbitant contractor fees for services rendered after they get out of politics.

The saddest part though, is that it never occurred to you that Bob could have gotten something to eat that day at school through a School Meal welfare program. Which, surprise surprise, the right-wing tries to cut at every opportunity.

Hanura H'arasch said...

"And we can say without doubt that they won't give up their wealth to help Bob."

They won't willingly give up a portion of their wealth, sure. But a democracy is no aristocracy. If the majority decides that the money from Adam's parents is better spent on paying for Bob's education than for yet another yacht, they can redistribute that money.

Of course it turns out that that's irrelevant - Bobs parents will simply spent any welfare they get on booze or other drugs. And worse yet, Bob is likely to make poor decisions in life as well, as he was never taught anything else, making financial aid infeasible.

Steel H. said...

"Bob is screwed either way"

Actually in the long run everybody is screwed. Right wingers like to point out that an egalitarian system has a prisoner's dilemma: why should I try harder when I can just do nothing and have a guaranteed lifestyle level. So nobody tries and then there isn't anything produced to distribute, everything falls to sith, like in the old communist bloc. However, what they all miss is that on the other end, extreme inequality also has a prisoner dilemma: why should Bob accept his lot in life, when he can join a gang, a mad-max like warband, the nazi/communist party, and then take Adam's stuff by force. So maybe this is why 99% of human history is all wars/empires/conquests/uprisings/repeat. RL PVP is always there as an alternative form of content, which leads to chaos and entropy. To not have that shitty Nash equilibrium, a system must be created to offer better rewards and outbid chaos (which we call civilization): bread and circuses like in the roman empire, a feudal system of fortified castles and hierarchy of militarism, or maybe a modern society with a basic level of public services and infrastructure that tries to hover in a band between the two dilemmas (hint: the latter seems to be the best world-design).

Whichever it is, it always comes down to the Adams of the age paying one way or another, whether it is for feudal armies or roads&education. What cannot happen is for Adam to keep all his castles and piles of money and Bob to be screwed, and everyone to be happy with the way this are forever - no matter how many justifications for Adam you can pull of of Ayn Rand's tomes. There are only 3 certain things in this universe: death, taxes, and the 2nd law of thermodynamics.

Jim L said...

Power-hungry oligarchs are behind leftist causes? I wonder what data you base this opinion on since it isn't true in the U.S.

Anonymous said...

I quickly looked at the list of countries with high quality of life, and compared them to the amount of tax collected as percentage of GDP. It looks like the countries with high standard of living tend to have fairly high taxes and countries at the bottom of the list don't collect that much. This seems to contradict your assertion where you would expect tax money to be waster leaving the country's citizens worse off.

Not sure if the table is going to show up but the columns are (Rank, Country, QLI, Tax Percentage of GDP).

Top 10
1 Switzerland 8.22 29.4
2 Australia 8.12 43.4
3 Norway 8.09 43.6
4 Sweden 8.02 45.8
5 Denmark 8.01 50.8
6 Singapore 8 14.2
7 New Zealand 7.95 34.5
8 Netherlands 7.94 39.8
9 Canada 7.81 32.2
10 Hong Kong 7.8 13
Average 34.67

Bottom 10
70 Azerbaijan 5.6 17.8
71 Indonesia 5.54 12
72 Russia 5.31 19.5
73 Syria 5.29 10.7
74 Kazakhstan 5.2 26.8
75 Pakistan 5.17 16.8
76 Angola 5.09 5.7
77 Bangladesh 5.07 8.5
78 Ukraine 4.98 28.1
79 Kenya 4.91 18.4
80 Nigeria 4.74 11
Average 15.93636364

bg. said...

There is a correlation between efficient taxation and smaller population sizes... The larger the population is, the more corrupt statist politicians will be, and the less they want to hear about small government, casting out the libertarian message that threaten their golden goose eggs...

For large countries, right wing or left wing statists are as corrupt, they just use different propaganda memes to justify their corruptions and hide their personal inefficiencies in the mass of large self-perpetuating government inefficiencies...

tweell said...

Taxes vary widely country to country, this is true. However, those bottom countries more than make up for their lower taxes in the bribes required by various governmental entities, gangs, etc.

In those countries, Adam's parents are hooked into the system, it's more than likely how they have accumulated their wealth. They don't pay bribes, they take them. Bob's parents pay what bribes they must in order to survive, putting them even lower. Cindy's parents get a major hurting on bribes, putting them almost down to where Bob's folks would be in a first world country.

Remember to include the required bribes and assorted corruption costs for doing business. They may not be an official tax, but if those palms aren't greased, it can cost everything.

Smokeman said...

Well. This should be entertaining.

And... the leftists do not disappoint!

Sure, you feel bad for Bob. But for every Bob that straightens up and flies right, there are at least 10 that don't. Investing in all of them is straight up malinvestment.

You can't fix Bob. Bob has to fix himself. That's how the human race works. Sorry, Snowflakes, but that's how it is.

maxim said...

When Bob is screwed either way, Bob needs to flip the tables and move the goalposts. And keeping flipping and moving until he is no longer screwed.

Ultimately, people who back socialism do so not because of any economic considerations, but because of a hope that it offers for a system where sociopathy is not rewarded. Thus hoping to escape the trap of outcome #2 and actually create outcome #1.

maxim said...

There is "first they came for the jews" argument to be made here.
Once all the Bob's in the world are bled try, nothing will save Cindies.

Gevlon said...

@Azuriel: a worker has the right to just quit, move to another employer or change profession. I'm fully aware that this right is mostly theoretical, since they are too dumb or lazy to actually use it, but it's there for those who are not. Tax can only be evaded by risking prison.

@Hanura: the majority of the USA voted for a wall. There is no wall. The majority of Greece voted for rejecting the EU/IMF ultimate. Their government accepted it anyway. Your "freedom" is limited to elect the guy who signs the same papers, unless some of the "aristocrats" are willing to go against their personal interest to keep their election promises.

@Steel: actually it's always Cindy who pays

@Jim L: Soros, Zuckerberg and EVERY SINGLE media owner (except Murdock/Ailes) somehow eluded you?

@Anon: your list is merely inherited wealth. How could former colonies be as rich as former colonizers?

@bg. I would rather say, the correlation is between cultural homogenity (which is easier for small countries) and corruption. Most people wouldn't steal from their families. A Swede has more similarity to his countryman than an American. Or rather had, before the oligarchs flooded them with Islamists who turned them the rape capital of the World.

@Smokeman: true, but offtopic. The point is that even if every single Bob would use the help well, it wouldn't matter because most of the help money would be stolen by Adams anyway.

@Maxim: Bob NEVER flips the table because he is a moron and slacker. Intellectuels flip it in his name (hint: Lenin and Stalin were NOT workers, Hitler was NOT a tall, blonde aryan, Pol Pot wasn't a peasant and most of the anti-racist lefties are white).


Anonymous said...

1 Switzerland 8.22 29.4
2 Australia 8.12 43.4 <- colony
3 Norway 8.09 43.6
4 Sweden 8.02 45.8
5 Denmark 8.01 50.8
6 Singapore 8 14.2 <- colony
7 New Zealand 7.95 34.5 <- colony
8 Netherlands 7.94 39.8
9 Canada 7.81 32.2 <- colony
10 Hong Kong 7.8 13 <- colony
5/10 colonies

Bottom 10
70 Azerbaijan 5.6 17.8
71 Indonesia 5.54 12 <- colony
72 Russia 5.31 19.5
73 Syria 5.29 10.7
74 Kazakhstan 5.2 26.8
75 Pakistan 5.17 16.8 <- colony
76 Angola 5.09 5.7 <- colony
77 Bangladesh 5.07 8.5 <- colony
78 Ukraine 4.98 28.1
79 Kenya 4.91 18.4 <- colony
80 Nigeria 4.74 11 <- colony
Average 15.93636364
6/10 are colonies

Both lists include similar number of former colonies and non-colony countries.

Anonymous said...


Azerbaijan, Kazakhstan & Ukraine are all post-soviet states ruined by communism. Could be easily treated as 'colonized' by USSR.

Gevlon said...

@Maxim: absolutely not. Bob does not contribute to the World, Cindy does. A society of only Bobs would starve in a week, a society of Cindys would thrive.The difference between a welfare leech and a minimal wage worker is smaller than between the minimal wage worker and a top 0.1% earner.

@Anon: not really. Australia, New Zealand and Canada has minimal native population. The population is descendants of settlers who came from the colonizer countries. They weren't enslaved or kept in illiteracy. (the small native population in these countries is mostly impoverished). Comparing New Zealand to Nigeria is like comparing a white South African person to a black one.

luobote kong said...

This is a very old fashioned 19th century debate. Educating and providing services for poor people Was useful because they populated labour intensive factories, offices and armies. Automation has zapped that paradigm. Filling the resulting wages gap with credit fell apart in 2008 and destroyed the neo liberal myths. Now it is about the extent Bob consents to Adam's good fortune or the extent to which Adam can contain Bob's dissent. Cindy's of this world are becoming a dying breed and are being subsumed into Bob's world. Stick to the economic story if you truly want some political insight.

Anonymous said...

54 Serbia 5.86 34.1
56 Romania 5.85 27.7
57 Lithuania 5.82 20.9
58 Iran 5.78 6.1
61 Bulgaria 5.73 27.8
69 Jordan 5.63 21.1
70 Azerbaijan 5.6 17.8
72 Russia 5.31 19.5
73 Syria 5.29 10.7
78 Ukraine 4.98 28.1
Average 21.38

Removing the colonies from the bottom countries list does not make much difference. Tax rates still considerably lower than the top 10.

Anonymous said...

>I quickly looked at the list of countries with high quality of life, and compared them to the >amount of tax collected as percentage of GDP. It looks like the countries with high standard >of living tend to have fairly high taxes and countries at the bottom of the list don't >collect that much. This seems to contradict your assertion where you would expect tax money >to be waster leaving the country's citizens worse off.

First, the provided data on tax burden is not correct, original source is more accurate on numbers.

Second, there's a small flaw in the statement itself. The the method of calculation of tax rate listed in the cited article doesn't factor other obligatory payments for the end-user like social securities or healthcare, (which are for example obligatory in Russia for officially employed). Thus, those two combined with the income tax score 37% of person's total income even before the money reaches the wallet (there are details here, since the social security payment % depend on the income, but I'm considering an income under 1k$ per month). After that VAT and all other payments should be factored in as well, so the actual numbers for cost-of-living are a bit higher compared to the ones listed (at least for the case of one given country - Russia).

Gevlon said...

@Lubote Kong: Adam can always hire Cindy to kill Bob!

Sorry, I couldn't miss it. Anyway, you are wrong. While factory jobs are gone, there are awful lot of services jobs for the middle class.

As long as there are needs of the people, there will be recruitment of workers.

Slawomir Chmielewski said...

@Anon with the list of countries:
The real correlation in that list is the fact that all the most productive and rich countries of the world were created in the ethics of Protestant Christianity.

Besides, correlation of high taxes and riches may imply the inverse causation: ONLY the rich countries (wealth caused by the underlying cultural attitude to work) can afford such a wasteful system in their pursuit of social stability.
Every ruler in the world wishes he could give some money to the poorest just to keep them quiet. Yet, they can't as usually there simply isn't enough money in the coffers to do it. It's cheaper to pay a half-decent wage to 1% of the population employed in the army and secret police.

Equality is impossible to achieve (simply because there are too many dimensions that equality should be applied to) but there is a point of providing at least the very basic minimum (like free basic education and free school meal). As long as leftists don't put their hands on those institutions they could be run effectively and for very little cost compared to the cost of social instability. The real problem with free schools and free lunches is that the bleeding hearts leftists turn them from basic services into grossly overbudgeted monstrosities.
Let's see how much a school should cost (UK numbers). A teacher earns about £27k on average, which happens to be national average pay. Say, his class is 20 kids. That brings the cost of the teacher to £1350 per child. How much for the building the classes are taking place? Well, I can hire a conference room suitable for 20 people in my city for £100 per day, cost per child would be £900 annually, bringing the total to £2250.
The actual cost of UK high schools? £8463 per child. 4 times as much.

Jim L said...

LOL that you consider your cherry-picked examples to be data. I could give you conservative CEOs names but that doesn't prove anything other than we each can cherry pick data.

Jim L said...

Also, a majority of Americans did not vote for a wall. America has this thing called the Electoral College. Read about it.

Anonymous said...

Adams parents have networks. they try to be "in the game" by virtue signalling wealth so like minded so they can easily identify each other and go to business or wed of their offspring to each other.
A good portion of business is build on who knows who, who pays who and who has blackmail worthy info on who.
Bob or Bobs parents don't have influence, power and knowledge of how to play in that game. neither does Cindy, her parents work their ass of in shitty jobs like service jobs or middle management if lucky.

There are only 3 certain things in this universe: death, taxes, and the 2nd law of thermodynamics.
pain. I would add pain to the list and on top of the list. Its quality and property is very true for many species. baseline human existence is build to avoid it and limit our suffering.

You can't fix Bob. Bob has to fix himself. That's how the human race works. Sorry, Snowflakes, but that's how it is.
1. clean your room
2. sort yourself out
3. rescue your dead father
4. slay dragons
for more, jordan peterson lectures or interviews.

need for people
That will change soon enough, AI is a rush. they can't wait to replace for example drivers with AI. What do all the Bobs and Cindys do then? If they could do better jobs they would. So where are the sub 90IQ group "needed"? And they already know that their jobs have absolutely no meaning at all besides getting the pay check.

Gevlon said...

@Slawomir: my point is that this is a fundamentally unsolvable problem: the institutions that are responsible for equalizing are ran by very unequal people, the politicians who are dependent on campaign support from literally the most unequal people: the billionaire donors.

@Jim L: let me help cherry picking conservatives from this otherwise equal data,_2016

Also, the electoral college means that we DON'T KNOW the popularity vote, since we have no idea what would be the California or Texas vote if voting in these states would do anything else but getting you jury duty.

@Anonymous: Bob can fix himself into becoming Cindy class. Cindy is the living evidence that you can do it.

Nielas said...

"Bob NEVER flips the table because he is a moron and slacker. Intellectuels flip it in his name (hint: Lenin and Stalin were NOT workers, Hitler was NOT a tall, blonde aryan, Pol Pot wasn't a peasant and most of the anti-racist lefties are white)."

That really depends on how badly Bob is treated. The Adams of this world have a problem where they start to believe their own bullshit. Instead trying to placate or manage the Bobs, they start to insult and directly oppress them. This creates anger which explodes in riots. The Adams will use the Cindys to suppress the Bobs but that has its limit as well. When the Cindys start identifying more with the Bobs then the Adams then a revolution is just around the corner. It's how the French and Russian revolutions started. The US was nearing that during the Great Depression but Roosevelt managed to deflate it.

Trees said...

I disagree with your reasoning for Adam's parent's lack of compassion. The act of humanitarian charity is ALWAYS self interested.

People give food/money to starving Africans because they believe they are "saving lives", but food produces more Africans to feed at best, and warlords at worse. People give to cancer charities because they believe they are "Curing cancer", but cancer charities are massive businesses with employees to pay before a small fraction of donations gets to scientists. People build homeless shelters believing they are providing stability, but stability provides comfort in a situation where discomfort is the only motivation to get out.

To ignore these charities would be called "greed" or "lack of compassion", but that thinking is put in place by the marketing of such charitable organizations.

Redistribution to help bob does not occur on its own because "adams parents lack compassion", it doesn't happen because helping bob (and jane, and fred, and chris, and tom, and sally, and chad, and dan, and...ECT) would be a great endeavor and ultimately a high stakes gamble for little gain. And Adam's parents did not get wealthy by gambling.

maxim said...

You are saying that everyone who is born into poverty (as you described Bob) is automatically a moron and a slacker?
If you are not saying that, then your replies do not hold.

Gevlon said...

@Maxim: I'm not saying "everyone". I say "90% are and the 10% will climb out of poverty no matter what and needs no help (though could use some)"

Anonymous said...

Gevlon, your viewpoints as always are refreshingly different and easy to read,

but your optimism for Cindy's future relies on the assumption that there will be jobs and opportunities for Cindies in the future. Automation will eat Cindy's economic opportunities, and even the cindies of the world will need welfare to survive. Unfortunately...

Military operations are already being automated (drone strikes, automatic snipers), and soon someone will have the golden idea to attach nonlethal weapons to swarms of drones. Once policing gets automated and the price of mass control starts to follow exponential decay, it will be cheaper to attack the masses than to please the masses. The Cindies of the world have maybe ten years to figure out a way to hold off the inevitable.