The Dismal Economics of Utopia

money drainImagine a point in our bright future — a glorious time! — when all incomes will be equal. Perhaps this wonderment shall be accomplished by a new global Enlightenment, perhaps it will arrive by fiat: all incomes, the narrowly passed legislation will read, shall henceforth be equal. …

The mean household income will be about $116 thousand. About 40% of households will make that much or less, and 60% will make more. Now, $116 thousand makes the people who only pull in $50K look poor: that is, equality will force about 16% of the population to be “poor.”

What about the rich? Depends on what “rich” means, of course, but take $200K as a starting point. That is, after all, four times as much as the “poor” make. About 37% of households will be “rich.” The really wealthy household incomes start around $500K. Just less than 1% of all households will make at least that much.

What about the households of the Bill Gateses and Carlos Slims of the future? Those households which make more than $700K? As now, they will be a rarity: just over 1 out of every million households will be obscenely rich.

What’s going on? Everybody is equal by law! How can there be rich and poor when everybody receives the equality-salary of $50 thousand?

Easy: households are not comprised of equal numbers of people. Some households have just one person, more have two or three, fewer have four, and fewer still have five or more. The exact distribution isn’t important; I picked one in common use by demographers. –PJM

Here is one of the various problems with socially imposed equality defined in a nutshell. You can cry ‘social justice’ all day long, saying that everyone should have the same things regardless of what they do. That because of the intrinsic value of human life (an idea borrowed from the dire enemies of socialism, Christianity and Judaism), every person deserves to be treated the same (ignoring unborn children, of course, and the elderly, and those who don’t agree with the socialist state, and the religious, and…). And the only way to achieve this goal is to enforce equality of outcomes.

Now, ignore for the moment that you can’t force people to be a doctor when the pay is the same as a street sweeper. Ignore that those in power will always take a bit of a larger slice for themselves. Ignore that people are sinful, and will game any system to their own advantage.

Focus on the one question: precisely how do you intend to measure equal outcomes? What, precisely, does equality in outcomes actually look like? That’s the point of the article over at PJM—there simply is no reasonable definition.

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