How to distribute money fairly

One thing any government or culture is going to do is determine how it distributes wealth, because any successful society will generate wealth that doesn’t originate in a single person.

There are two basic theories:

  • Divide the spoils. If we have money, spend it on us. Make sure everyone gets a cut, and don’t let anyone get more than others. That’s fair.
  • Spend like a business. Put the money where it will make more money: with those who will buy high-end goods, stimulating the economy, and those who will invest in research and development.

Like most things political, this is a hard one because that which “appears” fair, just and best is in fact an unmitigated disaster.

When you give money equally to all people, it goes to the bottom of the economic pyramid: into groceries, luxury items, rent and car payments. In other words, it goes to expenditures where the value has already been added.

But when you drop money into the top of your economic hierarchy, giving it to corporations, the wealthy and R&D-heavy government agencies, you prime the pump. Value has not already been added in these areas, so there’s a chance to generate value:

  • Corporations buy raw materials and make them into products;
  • the wealthy buy high-end goods and raise up new brands;
  • R&D-heavy government agencies invent new technologies.

An analogue in a small town would be giving money to the farmers instead of the town bums. The town bums will use it to buy food and booze; the farmers will buy new equipment, new land and new seed, so everyone eats even better the next year.

Earmarking allows lawmakers to steer federal spending to pet projects in their states and districts. Earmarks take many forms. They can be road projects, improvements to home district military bases, sewer projects, economic development projects and even those Predator drone aircraft that are used to kill terrorists in Afghanistan and Pakistan.

They can also include tax breaks for a handful of specific companies, like a tax cut proposed years ago for manufacturers of hunting arrows.

The reason Capitol Hill’s favor factory has churned out so many pork-barrel projects so successfully for so long is pretty simple: Everybody did it, Democrats and Republicans, liberals and conservatives.

Not anymore.

Critics like Sen. John McCain, R-Ariz., and incoming House Speaker John Boehner, R-Ohio, have railed against earmarks for years, even as they proliferated when Republicans controlled Congress. Slowly, the tide has turned in their favor. – AP

Earmarks are a way of distributing income not at the national level, but directly to states. These often have little to do with priming the economy at the national level, but in subsidizing local economies. The result? Happy people at the local level, but a loss of value at the national level, which is where the income spent on these earmarks is collected.

Since 1950, the fastest rising segment of government expenditure has been on social costs; instead of aiming to provide a stable place for people to live, government has been trying to subsidize those people. It’s kind of like paying off the barn door after the horse is gone.

Earmarks are part of this culture not of building stability from the top-down, but subsidizing where convenient. Here’s another:

Unemployed Americans have collected $319 billion in jobless benefits over the past three years due to the federal government’s unprecedented response to the Great Recession, according to a CNNMoney analysis of federal records. – CNN

Since the 1970s, economists have argued that we need national health care and national job insurance but that instead of making these federal programs, we should privatize them and use the vast purchasing power of the federal government to achieve competitive costs and benefits.

Job insurance, like all insurance, doesn’t magically make problems go away. It spreads out the impact over time by storing wealth during good years, and spending it when bad things happen.

Health insurance will be the same way; for people with chronic and expensive conditions, no system seems to work except a bankrupt one, because such people are a massive draw. There are death panels now and there always will be, otherwise we can’t staunch the bleeding — in the health system itself.

Why do people distrust government bureaucracies?

  1. They are one level removed from oversight. In private business, you have a client and you satisfy them. In government, you have clients and if enough of them get dissatisfied enough to launch a petition, political campaign and catch slogan, they vote our your protector and then seven years later your funding ends. You aren’t responsible to anyone but the regulations on paper, which are vaguely worded to avoid being unfair, and so easy to circumnavigate. In addition, government specializes in hiring every disabled person, ethnic minority, homosexual and other discriminated group without checking to see if they are also competent.
  2. They have no self-regulation. When a government bureaucracy is out of control, the only solution is to create another bureaucracy to oversee it. Eventually you have layers upon layers of people pushing paper around under the guise of watching each other, but at that point, they’re just trying to get the paperwork right.

When we say we want limited governmentTM, this is what we’re talking about.

One in every seven hospitalized Medicare patients are harmed by treatment mistakes, according to new analysis by the Department of Health & Human Services released Tuesday.

The report cites a variety of “adverse events” or causes for treatment errors, including excessive bleeding after surgery, urinary tract infections linked to catheters and incorrect medications. Researchers estimate that these types of adverse events contribute to 15,000 deaths per month or 180,000 deaths each year, according to the report.

“The country is in a patient safety crisis,” said David Arkush, the director of Public Citizen’s Congress Watch Division in a statement. “The only workable solution to preventing unnecessary deaths and injuries is to combine much more patient-protective hospital protocols with much better scrutiny by hospitals of physicians and other health care providers, and to appropriately discipline those whose performance results in preventable patient harm.” – CNN

No, David, the solution is not “patient-protective protocols” and “better scrutiny,” because that translates into more paperwork and more bureaucracy. That in turn eats up more of doctor’s time, such that they’re skimping on patient care.

The solution is to have fewer regulations and to focus more on the real capital here: the people. Get rid of all regulations except that our care-givers must be competent. Don’t let people hide behind paperwork or protected job classes. Encourage the free market motivation to reward good health care providers, and so channel smart, alert people into being doctors, nurses and other caregivers.

The more paperwork and bureaucracy you pile on your medical caregivers, the fewer competent people you attract. Why put up with that boredom and frustration? Go be a lawyer instead — there’s less paperwork than being a doctor. Or, even better, pick a really easy job like being a psychiatrist, chiropractor or homeopathic health expert. The money’s there without the regulation.

Our society is neurotic because we assume that more rules and restrictions will solve what is really a problem of people: we need to reward those who will spread the money downward through our economy, and we need to stop trying to regulate mediocre people into being excellent, and instead simply select for excellence.

3 Comments

  1. Jesus Christ says:

    Money is a piece of paper that the Federal Reserve makes that serves as a medium of exchange, it used to be redeemable in gold, but not any more, now it’s purely a government creation. The only real instrument of power in any degenerate society is popularity.

    The problem is, even if you spend 100 times more money of R&D, the majority of the people who will be doing that R&D will be Indian or Chinese immigrants. This is because there are very few “white” people who want to study things like engineering or math, because these are not easy ways to make money and they require a ton of effort and ability. Chinese and Indians are actually becoming smarter and evolving, while the Western civilizations are in the process of counter-evolution. Very soon, the Indians and Chinese will actually be a higher caste of society than the white people, because they are the ones that actually create new technology, while the rest just discuss things.

    Health care is counter-evolutionary as well, only basic health care should be made available and only to people of high IQ, to prevent the propagation of inferior genetics in the population.

    1. C Ricky says:

      Eugenics. The fascinating yet controversial study of preventing “the propagation of inferior genetics in the population”. While noble in its aim, there remains a possibility of raising the intellectual standard of a population without having to deny reproductive rights or health care to those perceived as having contributed little to the growth of a society.

      While the parent may be intellectually lackluster, they could give rise to offspring of astounding potential. Whether or not a society chooses to provided the educational and cultural resources to facilitate and nurture such a mind determines what level of IQ will be produced within future generations.

  2. nope says:

    You should probably think this through a little more. “An analogue (sic) in a small town would be giving money to the farmers instead of the town bums. The town bums will use it to buy food and booze” And from whom do they buy the food and booze? From what were those products made. You have been fooled into the ‘supply side’ economic theory. Regardless of how wonderful the farmers equipment etc, is, if no one buys his produce then he doesn’t do very well. The consumer drives the market not the other way around.

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