“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean – neither more nor less.” </p>
I have a lot of sympathy for CATO’s philosophical bent. Occasionally they jump track and go crashing into the trees. Maybe this is simply their way of paying the bills, and making their sponsors happy?
What exactly is “social capital”?
Cato-at-liberty » Undermining America’s Social Capital with Redistribution America’s lowest-earning one-fifth of households received roughly $8.21 in government spending for each dollar of taxes paid in 2004. Households with middle-incomes received $1.30 per tax dollar, and America’s highest-earning households received $0.41. Government spending targeted at the lowest-earning 60 percent of U.S. households is larger than what they paid in federal, state and local taxes. In 2004, between $1.03 trillion and $1.53 trillion was redistributed downward from the two highest income quintiles to the three lowest income quintiles through government taxes and spending policy.
I am having trouble with the use of “received” here. On one side, each of us benefits - to a greater or lesser degree - from living in this country. On the other side, the country incurs expenses that must be paid. Is the benefit derived independent of income, or proportional to income? Probably a bit of both. This duality leaves lots of room to “spin” the numbers so you can make an argument (whatever the argument).
The use of “redistributed” also seems rather dubious. Money is disappearing into the black hole of government spending. Money is not transferred between households (with minor exceptions).
This huge shift of resources punishes those who produce and rewards those who do not. This hurts economic performance by distorting incentives.
First, there is not an exact map between “those who produce” and income levels. Income level measures how much you are rewarded, not how much you produce. Do you really believe income is exactly proportional to how much you “produce”? Second, the above statement seems to imply the most-rewarded folk will be discouraged from producing. Is there any evidence of this? So what would they do, stop producing? Leave the country? Commit suicide? Somehow this seems unlikely.
An even more interesting measure is your “reward” after taxes, cost of living, kids, retirement savings (etc.) … another topic, though closely related.