Wealth and redistribution thought-experiment #1
January 11, 2010 – 1:22 pmWealth can be created and destroyed.
For proof of this, imagine that you, Dave and I are stuck on a deserted island in the middle of the ocean, with nothing but the clothes on our back. We are as poor as three people can be.
Now suppose you invent a system whereby the fallen branches of a dead tree can be fashioned into a 2 bedroom home with a central heating fireplace.
After a brilliant idea and a lot of labor on your part, you have built a meager home. Wealth has been created.
Now, you “control” 100% of the wealth of the region.
Is this unfair?
In exchange for Dave and I sharing the 2nd room, you suggest we pay “rent” to you in the form of gathering food and firewood for you while you watch the sunset each evening for an hour. This sounds good, so we agree. After a few months of this, however, we begin to resent the “fat cat” who lounges while we labor…..
Would it be just for me and Dave (the majority) to “vote” that anyone with wealth must give a portion of that wealth to those with less….and failure to do so would result in forfeiture of wealth to the community and forced confinement?
If this island policy were enacted, would you be likely to create more wealth in the future? Do you think that the island would be more likely to have large standard-of-living advancements with or without this policy of redistribution?
At what point in the wealth-creation cycle does “equality of result” defeat “incentive to create”?
