7. Take From the Rich and Give to the Poor?
Some will answer this by arguing that the purpose of government is to tax the affluent in order to help the poor, a recurrent theme in electoral contests. While this policy can prove sensible in some cases, and its merits are discussed further below, we do well to consider its possible pitfalls. Government might take a dollar from Peter in taxation and give it to Paul, especially if Paul voted for the newly elected government leader. The other party might then retaliate in kind. It would waste much of our National energy for us to take turns doing this to each other, and wealth does not predict political party affiliation very well.
Fortunately, policies that are baldly re-distributive often do not pass muster with Americans. To pass muster, politicians need to conceal it from easy critique with complexity that makes public debate exhausting. For example, subsidies for very specific elements of corporate agriculture or for universal pre-kindergarten government schooling both become proxy mechanisms for income re-distribution, and sharing the spoils of political loyalty.
Concerning the issue of redistribution, former Presidential economic advisor, Arthur Laffer, recently warned that, “in this world there is no tooth fairy … whenever the government bails someone out of trouble, they always put someone into trouble.” Government might seek to create the impression of a tooth fairy, however, by assisting the poor with government money that is acquired by borrowing and avoiding taxing. Putting a dollar in Paul’s hand today requires raising taxes on Peter tomorrow, who is not of age today to protect himself and vote against this scheme. Or the foreign sector uses its dollar reserves to buy government securities instead of our exports.
So can government ever help people economically? If not, then perhaps the libertarian ideal of shrinking government toward zero seems sensible? Government can in fact help, but only with policies that require so much finesse that truly helpful government policy becomes infrequent. This was a genuine insight of America’s Founders’ as they established America’s constitutionally limited government. But for them, limited government was not zero government.
