How to distribute money fairly

Brett Stevens
Guest Writer

One thing any government or culture is going to do is determine how it distributes wealth, because any successful society will generate wealth that doesn’t originate in a single person.
There are two basic theories:
* Divide the spoils. If we have money, spend it on us. Make sure everyone gets a cut, and don’t let anyone get more than others. That’s fair.
* Spend like a business. Put the money where it will make more money: with those who will buy high-end goods, stimulating the economy, and those who will invest in research and development.
Like most things political, this is a hard one because that which “appears” fair, just, and best is in fact an unmitigated disaster.
When you give money equally to all people, it goes to the bottom of the economic pyramid: into groceries, luxury items, rent and car payments. In other words, it goes to expenditures where the value has already been added.
But when you drop money into the top of your economic hierarchy, giving it to corporations, the wealthy and R&D-heavy government agencies, you prime the pump. Value has not already been added in these areas, so there’s a chance to generate value:
* Corporations buy raw materials and make them into products;
* the wealthy buy high-end goods and raise up new brands;
* R&D-heavy government agencies invent new technologies.
An analogue in a small town would be giving money to the farmers instead of the town bums. The town bums will use it to buy food and booze; the farmers will buy new equipment, new land and new seed, so everyone eats even better the next year.
Earmarks are a way of distributing income not at the national level, but directly to states. These often have little to do with priming the economy at the national level, but in subsidizing local economies. The result? Happy people at the local level, but a loss of value at the national level, which is where the income spent on these earmarks is collected.
Since 1950, the fastest rising segment of government expenditure has been on social costs; instead of aiming to provide a stable place for people to live, government has been trying to subsidize those people. It’s kind of like paying off the barn door after the horse is gone.
Earmarks are part of this culture not of building stability from the top-down, but subsidizing where convenient.
Since the 1970s, economists have argued that we need national health care and national job insurance but that instead of making these federal programs, we should privatize them and use the vast purchasing power of the federal government to achieve competitive costs and benefits.
Job insurance, like all insurance, doesn’t magically make problems go away. It spreads out the impact over time by storing wealth during good years, and spending it when bad things happen.
Health insurance will be the same way; for people with chronic and expensive conditions, no system seems to work except a bankrupt one, because such people are a massive draw. There are death panels now and there always will be, otherwise we can’t staunch the bleeding — in the health system itself.
Why do people distrust government bureaucracies?
1. They are one level removed from oversight. In private business, you have a client and you satisfy them. In government, you have clients and if enough of them get dissatisfied enough to launch a petition, political campaign and catch slogan, they vote our your protector and then seven years later your funding ends. You aren’t responsible to anyone but the regulations on paper, which are vaguely worded to avoid being unfair, and so easy to circumnavigate. In addition, government specializes in hiring every disabled person, ethnic minority, homosexual and other discriminated group without checking to see if they are also competent.
2. They have no self-regulation. When a government bureaucracy is out of control, the only solution is to create another bureaucracy to oversee it. Eventually you have layers upon layers of people pushing paper around under the guise of watching each other, but at that point, they’re just trying to get the paperwork right.
When we say we want limited government, this is what we’re talking about.
The solution is to have fewer regulations and to focus more on the real capital here: the people. Get rid of all regulations except that our care-givers must be competent. Don’t let people hide behind paperwork or protected job classes. Encourage the free market motivation to reward good health care providers, and so channel smart, alert people into being doctors, nurses and other caregivers.
The more paperwork and bureaucracy you pile on your medical caregivers, the fewer competent people you attract. Why put up with that boredom and frustration? Go be a lawyer instead — there’s less paperwork than being a doctor. Or, even better, pick a really easy job like being a psychiatrist, chiropractor or homeopathic health expert. The money’s there without the regulation.
Our society is neurotic because we assume that more rules and restrictions will solve what is really a problem of people: we need to reward those who will spread the money downward through our economy, and we need to stop trying to regulate mediocre people into being excellent, and instead simply select for excellence.