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economics, economy, politics, Uncategorized

Obama believes in redistribution…and so do I

As Romney recovers from his remarks about the “47% of Americans”, republicans deflect attention back to the democrats after the release of a video of Obama saying that he “actually believe[s] in redistribution.”  As if they found a secret weapon, Romney and the GOP are using that phrase to paint the President as a socialist.  The video below shows how conservatives are framing the President’s statement.

Mitt Romney has even gone as far to say that “redistribution has never been a characteristic of America.”  This is a remarkable comment because it completely ignores the fundamental structure of America’s progressive tax code.  It ignores the basic function that government plays in providing necessary services like veteran’s benefits, food stamps, medical services, and so on.  Things that we may take for granted like education, police, infrastructure, and health all require basic levels of redistribution…and that’s the heart of what the President was saying.  Below is the quotation in its entirety.

I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because I actually believe in redistribution, at least at a certain level to make sure that everybody’s got a shot. How do we pool resources at the same time as we decentralize delivery systems in ways that both foster competition, can work in the marketplace, and can foster innovation at the local level and can be tailored to particular communities.

Read in full, his belief in redistribution sounds a lot less like socialism and more like basic governance, especially when he mentions working with the marketplace and fostering competition and innovation.

On another note, conservatives may have picked a losing battle as their views of redistribution are out of sync with the average American.  Below are the results of Gallup poll asking respondents if the current distribution of wealth is fair or if they feel that wealth in this country should be more evenly distributed.

1984-2011 Trend: Views on Distribution of Wealth in the U.S.

On average, less than 35% of Americans feel that the current distribution of wealth is fair while 60% of the population generally believes that there should be a more even distribution.  These 60% of Americans don’t feel this way because they are looking for a handout.  As I’ve written before, America’s labor force is working harder than ever despite stagnating wages.

Meanwhile, the majority of America’s wealth has been concentrating at the top income brackets.

It’s clear that our economy doesn’t distribute wealth evenly and that the invisible hand is neither fair nor efficient.  Americans works hard, yet many can’t make ends meet.  Given the inequality in economic reward, it makes economic and political sense that some should pay extra for their success.  However, ignoring the imbalance in economic distribution, conservatives are attacking government’s re-distributive policies that create balance.

People forget that capitalism is a source of distribution itself, but one of asymmetry.  Look at nurse’s pay compared to the average pay of corporate executives.  They both perform essential jobs in our society, yet one is rewarded ten, or even a hundred, time more than the other in terms of income.  The purpose of government re-distribution is to ensure that those income inequalities don’t prevent hard working Americans from receiving public goods they otherwise wouldn’t be able to afford.  This is basic governance, not socialism.

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