Income Redistribution Is Not in the Interest of the Poor; Imposing Equal Incomes Will Make Everyone's Income Extremely Low

Forcibly imposing equal incomes on people might make everyone's income the same; however, it will also make everyone's income extremely low. Even poor people will have lower incomes when income equality is imposed on an economic system. Their incomes may be higher relative to that of rich people (because now there are no rich people); however, poor people's incomes, in terms of the goods and services they can purchase, will be lower relative to what their incomes would have been had the rich been able to keep the incomes they earn. Why is this so?

Here, one must, again, keep in mind how someone becomes rich in a capitalist society. One does so by being more productive; i.e., by inventing new products, improving upon old ones, using better methods of production, and producing those goods for which people have a demand. This means when income is taken from the rich and given to the poor, it is being taken from the most productive members of society and given to the least productive members of society. This means the productive capability of the economic system will be lower and the rate of economic progress will be lower. Over time, any one-time gain by poor people from income redistribution will be erased by the loss in purchasing power of their additional money income due to the lower rate of economic progress and thus the slower year-to-year increase in the standard of living. In other words, the poor may have more money to spend with income redistribution but because of the decreased incentive to produce, and because money is being taken from the more productive members of society, very little will be produced and thus there will be very little for the poor to buy with their additional money income. In a society with complete income redistribution, where everyone has the exact same income, everyone will be--equally--miserably poor.

So income redistribution is not in the interest of the poor, as many so-called humanitarians believe. In fact, income redistribution is positively against the self-interest of the rich and the poor. It is in the interest of everyone to have each individual's right to keep the income he earns protected, no matter how large or small that income. This is what is required to provide people with the incentive to produce and thus make possible a high and rising standard of living for everyone, rich and poor alike.

--Brian P. Simpson, Markets Don't Fail! (Lanham, MD: Lexington Books, 2005), Adobe Digital Editions, 174.