And the hits just keep on coming. Most people won’t even understand why this is so comprehensively wrong. We’ve become that ignorant.
A student in the Milwaukee School of Engineering contacted Campus Reform recently to report that in an economics course, he encountered a test question that asserted “income redistribution” is one of the main functions of government. (H/t: NRO)
Says Campus Reform:
A test, administered on April 29 in Professor John Traxler’s Healthcare Economics class, told students that “[o]ne of the main functions of government is income redistribution,” then asked them to explain what the statement meant. The correct answer was C: “Taxing the wealthy and giving it to those in poverty.”
(Unsurprisingly, perhaps, the class in question was on “healthcare economics.”)
Campus Reform did a perfectly diligent job asking economics professors about the legitimacy of this question, and the answer deemed to be correct. Most readers won’t be surprised that the questioning focused on whether income redistribution really is a main function of government. The conclusion that it can be, but isn’t inherently, seemed to be the professorial consensus.
There was no real dispute about what is meant by the expression “income redistribution.” Professors were agreed that it is proper to test students on their understanding of that concept
What no one thought to ask is whether “income redistribution” is actually a logically valid concept. Is it really possible to “redistribute income”? Or is it only possible to seize the purchasing value resident in one person’s bank account at a given time, and give it to another person?
The mental concept of “redistributing” income takes for granted a very recent and highly contingent phenomenon of human organization: recurring cash income. The concept assumes, basically, that “income happens,” as if it’s the endowment of a benevolent universe and nothing will really stop it from happening. Income is assumed to be distributed in the first place, rather than earned, by individual effort, through providing goods or services to other people.
But income isn’t “distributed.” The fact that we can make statistical displays of a post hoc income distribution doesn’t mean that there was ever a systematic distributing process involved. In fact, there is no such thing as “distributing” income. There is only earning it through economic activity that is valued by other people. The concept that would-be income “redistributors” are really talking about is moving cash around, in an open-ended series of static situations. The latter is not “redistributing income.” To redistribute income, it would have to be possible to redistribute the production of economic value.
Until productive activity happens, income doesn’t. If you want to test the truth of that, just go to a subsistence economy in the Third World and try not producing anything for a while. Your lack of anything — income, food to eat, a roof over your head — will quickly teach you the lesson. Someone has to produce something that someone else wants, for there to be income.
The activity that generates income is chaotic, undirected, multivariate, and impossible to orchestrate centrally through a comprehensive system. Its nature and organization and focus are changing all the time; even from decade to decade, people don’t keep prizing the same exact things, and wanting to reward other people with cash for making them available.
Productive activity is subject to some simple laws, however. One of the most important is that taxing it — i.e., confiscating from it — results in getting less of it. That effect can be masked for long periods in advanced economies, where population growth, technological advances, complex organization, and socialized debt mislead us about whether there’s enough production going on, relative to the burdens on it from cash confiscations and political spending (including state-mandated “benefits”: cash transfers from some people to others).
But the Western world is about to come face to face with the foolish ignorance we’ve allowed ourselves to sink into on this topic. Between smothering regulation and the discouragement of confiscations from our incomes, we don’t have enough productive activity today to keep the whole creaking apparatus going.
Professors solemnly teaching college students to define “income redistribution” are a bit pathetic — caught in their narrow little time and place in history, and unable to see beyond them. Read some Thomas Sowell, if you want to understand economic reality, and prepare to explain to your fellow men what’s happening.
As basic and simple as it looks, this well-known social media “meme” is far wiser than anything they’re teaching in college economics today.