What's Left to Give when Everyone Is Broke?

"There is no misunderstanding this, except by men interested to misunderstand it." — Abraham Lincoln, The Galesburg Debate (1858)

I have never been jealous of rich people. Here's why.

Imagine you have no assets, and that your income is $2 per day. How much can you give (Christian charity) to help the poor? How much can the government tax (social justice) you to assist the poor?

Social justice is premised on the notion that those with excess wealth can be taxed to provide for the basic needs of the poor in genuine need. Social justice presupposes an upper class and a middle class, each having some degree of excess wealth, that can be redistributed to meet the genuine needs of the poor. But what happens if you have no upper or middle classes; when every citizen is poor? Penniless?

Without wealthy capitalists -- and even without the wealthy socialists -- who is there to tax? If nobody is wealthy (which I define as "having surplus wealth"), who can make meaningful charitable or social contributions?

If perfect equality is achieved, and if everybody is abjectly poor, who can you meaningfully tax?

I am not ideologically opposed to social justice. But it is predicated on taxing the people with excess wealth to assist the genuinely needy. If everybody is genuinely and equally needy, social justice income redistribution becomes impossible.

To illustrate, consider a country with a population of 10.1 million, where more than half the men, women and children live on less than $1 a day. Where about 80 percent of the people live on less than $2 per day. A country where 80 percent of the people live below the poverty line. Where 54 percent live in abject poverty.

Imagine a country where 80 percent of its college grads choose to live abroad. Where the money they send home represents 53 percent of the country's GDP. Imagine a city within a city in that country where 500,000 people literally eek out a living on a garbage dump in a place described by the U.N. as the most dangerous on Earth. A country where 225,000 children work for their existence as unpaid household servants.

Imagine Haiti.

What charitable contributions are those who are trying to survive able to make? When somebody is starving on $2 per day, how much of his income can be redistributed? How many of these 8 million Haitians, living on $2 or less per day, are able to provide jobs for fellow Haitians, so as to provide them with a living wage? Would anybody be able to start or run a business and pay salaries on $2 per day? Pay health benefits?

The poor of Haiti have very little to share -- even if they want to. In Haiti, only 20 percent of the people live above the poverty line.

The World Bank tells us that the Haitian 2012 Gross National Income was $760 per person per year. (As such the Total National Income would be $7,676,000,000: that is, 10.1 million Haitians x $760 per person.) Therefore, if the nation's entire GNI was equally redistributed, each Haitian would have $760 annually to live on. The 50 percent living on less than a dollar a day ($365 per year or less) would, after redistribution, see their incomes "jump" all the way up to a still miserable $2.08 per day. Those living on $2 per day as well as the wealthy, after redistribution, also would have incomes of $2.08 per day.

Again, I am not against social justice. But to have meaningful social justice you need prosperous and numerous upper and middle classes. If you have 99 "wealthy" people and only one in "genuine need," social justice is easy to achieve. But when you have 99 who are living in abject poverty, and 1 who is "rich," social justice is an impossibility.

In a thriving capitalist system, you can tax excess wealth, and redistribute taxes to the less fortunate -- to a point. But there comes a point when taxes are raised on the wealthy, that it no longer is worthwhile to run a business and/or take the risks to create "excess wealth." When that point is reached, businesses either shut down, or downsize.

Indeed, the main ways any business downsizes is by laying off employees, and/or by reducing their hours. While those with excess wealth can be asked to pay more, there are therefore practical limits.

The early Christians sold all they had and laid their wealth at the feet of the apostles. That system worked only briefly. But if it was the best system, why did the early Christians abandon it? Why didn't it work for the Pilgrims? And what happened during the 1920s in Germany when the middle class was destroyed?

If you want social justice and redistribution of wealth, you'd had better make sure that you have vibrant upper and middle classes with "excess wealth." The more they have, the better for income redistribution.

Posted Online: Nov. 13, 2013, 12:00 am - Quad-Cities Online
by John Donald O'Shea

Copyright 2013
John Donald O'Shea