I'm going to go very in-depth on everything, but I'll try to write a nice, succinct bit at the end of every post that should be easy for everyone to read and follow.
What Is Wealth Redistribution?
As do all searches for knowledge, let us begin with Wikipedia.
For those uninterested in following the link and doing some additional reading, here is the simple definition given at the top of the page: 'Redistribution of wealth is the transfer of income, wealth or property from some individuals to others caused by a social mechanism such as taxation, monetary policies,welfare, charity, divorce or tort law.'
From this, you might come to a simpler definition along the lines of, say, this: 'Wealth redistribution is any non-market process that transfers value from one individual to another.'
While this is undoubtedly a useful method of description for something, for this discussion I desire a more specific definition of wealth redistribution - one that covers a specific subset of the above definition, and is defined rigorously.
Rather than going through the thought process behind constructing an adequate definition, I shall instead give one and then describe why it suits the upcoming discussion so well...
Wealth Redistribution: any arbitrary non-market process through which income, wealth, or property is transferred from one individual to another with a primary intended purpose of increasing the overall utility of the recipients.
Some of this may seem very straightforward. Some or all of it may not. Regardless, a rigorous definition is required for any serious discussion, so a thorough examination of the definition is needed.
For the purposes of our definition, the arbitrary portion of the process refers to the one who causes the wealth redistribution to occur - later, the arbitrator. For something to be considered a wealth redistribution, the arbitrator must make the decision arbitrarily, by the strict definition - that is, based solely upon the arbitrator's opinion or discretion.
In addition to the arbitrator, the one who gives up something in the redistribution will be the loser, while the person who gains something will be the winner. Should be fairly easy to keep straight, I hope.
A non-market process is any process that occurs without incidence of a purchase. While this removes some economic properties from the process, many others remain - that is, important concepts such as gaining and losing utility still fully apply to a non-market process.
Income, wealth, and property is straightforward, and should require no explanation.
The transfer is a general concept that can refer to many things. For this discussion, it refers simply to the movement of any thing from one person's ownership to that of another person.
Utility is a complex concept, but eventually boils down to how much value is attached to something. This changes from person to person. For a transaction to be considered a redistribution of wealth, the arbitrator must cause the transaction to occur with the primary goal of increasing the winner's overall utility.
And there we have it. A definition of questionable merit that will, hopefully, hold up under scrutiny as we move forward.
From this, you might come to a simpler definition along the lines of, say, this: 'Wealth redistribution is any non-market process that transfers value from one individual to another.'
While this is undoubtedly a useful method of description for something, for this discussion I desire a more specific definition of wealth redistribution - one that covers a specific subset of the above definition, and is defined rigorously.
Rather than going through the thought process behind constructing an adequate definition, I shall instead give one and then describe why it suits the upcoming discussion so well...
Wealth Redistribution: any arbitrary non-market process through which income, wealth, or property is transferred from one individual to another with a primary intended purpose of increasing the overall utility of the recipients.
Some of this may seem very straightforward. Some or all of it may not. Regardless, a rigorous definition is required for any serious discussion, so a thorough examination of the definition is needed.
For the purposes of our definition, the arbitrary portion of the process refers to the one who causes the wealth redistribution to occur - later, the arbitrator. For something to be considered a wealth redistribution, the arbitrator must make the decision arbitrarily, by the strict definition - that is, based solely upon the arbitrator's opinion or discretion.
In addition to the arbitrator, the one who gives up something in the redistribution will be the loser, while the person who gains something will be the winner. Should be fairly easy to keep straight, I hope.
A non-market process is any process that occurs without incidence of a purchase. While this removes some economic properties from the process, many others remain - that is, important concepts such as gaining and losing utility still fully apply to a non-market process.
Income, wealth, and property is straightforward, and should require no explanation.
The transfer is a general concept that can refer to many things. For this discussion, it refers simply to the movement of any thing from one person's ownership to that of another person.
Utility is a complex concept, but eventually boils down to how much value is attached to something. This changes from person to person. For a transaction to be considered a redistribution of wealth, the arbitrator must cause the transaction to occur with the primary goal of increasing the winner's overall utility.
And there we have it. A definition of questionable merit that will, hopefully, hold up under scrutiny as we move forward.
Examples of Wealth Redistribution
To more further understand our definition, here I will give three completely different examples of wealth redistribution - and, in my opinion, three of the most important examples. I will not be as rigorous here, but I would advise going through and checking the examples with each part of our definition if you didn't follow it particularly well, as this will be essential to your understanding of the rest of the discussion.
I'm sure you're all familiar with the concept of being taxed more the higher your income is. This practice is referred to as progressive taxation. Ideally, government expenditures are increased at the expense of the rich, while the poor reap benefits equivalent to the rich as a result of the expenditures. In the end, the goal is to take from the rich to give to the poor, albeit largely indirectly.
In this example, the government is the arbitrator which causes the wealth redistribution to occur. Assuming the theory behind the practice is correct and both taxation and expenditures are in order, the poor should be the winners in the redistribution while the rich are the losers.
Our second example is charity - where those with additional income give some of it to a cause they believe in, usually via an organization dedicated to receiving such donations and making good use of them. Here, those who give are the losers, while those who are assisted by the charity are the winners. Oddly enough, the charity is not the arbitrator in this example - that title also belongs to the giver. So, what exactly is the charity here?
The charity is an agent of the arbitrator - a third-party that is separate and exists only to facilitate the wealth redistribution. Perhaps an important concept for later - I'm honestly not sure as of the moment.
Robbery is our third example. This might seem a little odd, but it often - although certainly not always - fits the entirety of our definition. Treating the robber as both arbitrator and winner, things fall neatly into place. Assuming that the robber performs his act with the primary intent of increasing his own personal utility, there isn't a requirement of the definition the act does not meet.
This example is very important, because we now have three different examples of arbitration - by the winner, by the loser, and by a third party. We also introduced the idea of agency, the importance of which I'm not entirely convinced as of the moment.
Perhaps more important, robbery and charity are currently the two easily measurable statistics I may be using in the future for some comparative statistics and whatnot.
I'm sure you're all familiar with the concept of being taxed more the higher your income is. This practice is referred to as progressive taxation. Ideally, government expenditures are increased at the expense of the rich, while the poor reap benefits equivalent to the rich as a result of the expenditures. In the end, the goal is to take from the rich to give to the poor, albeit largely indirectly.
In this example, the government is the arbitrator which causes the wealth redistribution to occur. Assuming the theory behind the practice is correct and both taxation and expenditures are in order, the poor should be the winners in the redistribution while the rich are the losers.
Our second example is charity - where those with additional income give some of it to a cause they believe in, usually via an organization dedicated to receiving such donations and making good use of them. Here, those who give are the losers, while those who are assisted by the charity are the winners. Oddly enough, the charity is not the arbitrator in this example - that title also belongs to the giver. So, what exactly is the charity here?
The charity is an agent of the arbitrator - a third-party that is separate and exists only to facilitate the wealth redistribution. Perhaps an important concept for later - I'm honestly not sure as of the moment.
Robbery is our third example. This might seem a little odd, but it often - although certainly not always - fits the entirety of our definition. Treating the robber as both arbitrator and winner, things fall neatly into place. Assuming that the robber performs his act with the primary intent of increasing his own personal utility, there isn't a requirement of the definition the act does not meet.
This example is very important, because we now have three different examples of arbitration - by the winner, by the loser, and by a third party. We also introduced the idea of agency, the importance of which I'm not entirely convinced as of the moment.
Perhaps more important, robbery and charity are currently the two easily measurable statistics I may be using in the future for some comparative statistics and whatnot.
Summary, Continuation, and Assistance
This post essentially sums up the definition of wealth redistribution we will use in the future and laid out a few examples. If you understand the definition, the rest of it shouldn't be of particular importance for the rest of the discussion.
Tomorrow or the next day, I will be continuing on into defining the optimal amount of wealth redistribution, as well as showing why deciding on the amount is non-trivial.
Later on, I may make some requests for assistance from you all - especially when looking for reliable sources of certain types of data - but for now this all hinges on me writing and not being stupid. Hopefully I'm capable of both of those things.
Pun of the Day: A man walks into a psychiatrist's office without pants. Psychiatrist's response? 'Well, I can clearly see you're nuts.'
Tomorrow or the next day, I will be continuing on into defining the optimal amount of wealth redistribution, as well as showing why deciding on the amount is non-trivial.
Later on, I may make some requests for assistance from you all - especially when looking for reliable sources of certain types of data - but for now this all hinges on me writing and not being stupid. Hopefully I'm capable of both of those things.
Pun of the Day: A man walks into a psychiatrist's office without pants. Psychiatrist's response? 'Well, I can clearly see you're nuts.'
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