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The Robin Hood Plan

by Willy Chaplin

One of the "problems" that Karl Marx (among many others) noted about capitalism is that it inevitably shifts wealth from the wage earning class to the property owning class. In fact, it is a necessary property of capitalism which makes it work. To see this, imagine a perfectly economically egalitarian society, in which government intervention makes sure that each and every citizen had an equal share of the wealth of society. Besides the obvious problems such a society would have trying to reach this goal (check out Orwell for a good take on this), it creates an immediate capital shortage. That is, where do entrepreneurs get the money to make the investments that lead to jobs, material well being and a generally rising standard of living? Individuals CAN save their and invest their money and if enough of them do, it is possible to derive startup capital from these savings. But, there are many, many temptations and distractions in the modern world that keep individuals from doing this. Besides, who exactly will decide where this money will be invested? A committee?

The solution that "liberal" capitalism has come up with might be called the Robin Hood Plan. That is, take from the rich and give to the poor. On the surface, this seems fair and equitable. Since wealth accumulation is as much a matter of luck as hard work...despite libertarian purists' claims to the contrary...why not spread it around a bit?

The problems with this approach are twofold. No matter how much one might look askance at the enormous accumulation of wealth that accrues in the hands of the few, the success of capitalism depends VITALLY upon this very mechanism. Take Bill Gates, for example. It is difficult to imagine what any individual could possibly have done to "deserve" being as wealthy as most small countries. Yet, his fortune is intimately tied to that of his company, Microsoft. Leaving aside, for the moment, MS's monopoly difficulties, consider for the moment what might happen if Gate's (and thus MS's) assets were significantly reduced through confiscatory taxation or other affluence equalization schemes. An innovative company like MS has its success closely tied to keeping up with technological change in society. The cost of keeping abreast is enormous. Consider all the companies with multi-million dollar assets that saw their riches vanish...almost overnight...because their owners were not as clever as Mr. Gates at reinvesting in the continual advancement of their products. In short, "Here today, gone tomorrow..." nags over the head of MS just like all the rest.

The second problem is more subtle. As media pundits are wont to point out (ad nauseum, I might add), the general public worries much less about government malfeasance...whether due to waste, inefficiency, graft or executive blow jobs...in times of plenty than in less bountiful eras. There is much less clamor for government inspired "solutions" to need during boom times, such as right now (at least in the US). Yet, now is precisely when there exists plenty to go around. During recessions and depressions, when the needs of the many get pressing and the cries for socialism get louder, is just when capital...monetary wealth...is at a premium. When the stock markets crash, that money does not move from one pot into another. It effectively vanishes. So, just when the safety net gets stretched to the max, the golden goose...the producer of all wealth...the capitalist system itself...also direly needs the money to recapitalize and survive.

Does this mean that the Robin Hood Plan is fatally flawed in a free market system? Certainly free market purists would have you believe so. They reason that every nickel removed from the capital pool removes a dime from the eventual productive capacity of the system, thus harming everyone. I would agree with this conclusion totally, except for one thing. Money and wealth are NOT the same thing, although we often treat them as though they were. Money is an artificial construct used to facilitate commerce, no more no less. If it were real...tangible...it could not vanish with downward spirals of the stock market.

And "harm" is not just about production. People are not property. We are living breathing organisms. We have both joy and pain in the relatively short spans of our lifetimes. We certainly experience more of the latter when the necessities of life are in short supply or when illness descends upon us. To tell us during those times, that the long term needs of capitalism overweigh our immediate needs is heartless, cruel and VERY short sighted. (Remember the Marxist "lesson.")

Fortunately, monetarists long ago realized what could be done about this problem. Since money is an artificial form of wealth anyway, just create more of it whenever necessary! Capitalists need more capital? Just "lend" them some. How? Well, if people need food, shelter and goods they can not afford, just print up a bunch more money and GIVE it to them. They will spend it and put it back into the system almost immediately. Who does the lending and the giving? Unfortunately...and this is the sticker...the government...or at least that part of the government that handles money.

Also, printing more money decreases the unit value of the money. That is, it creates inflation. Usually, so do big rises in the stock market. However, inflation spreads the pain around...evenly. Or, at least it would if there were a worldwide monetary system. As it is, however, currency speculation is just another form of "commodity" trading. One country's entrepreneurs gain from other country's problems.

So what is to be made of all this concerning the Robin Hood Plan?

• It hurts the free market.
• Its absence invites short term misery or worse.
• Only the government can carry it out.
• There is a monetary solution, but it only works worldwide.

Seems we need a world government, or at least a world monetary system. Hey, libertarians, others...both liberal and conservative...have already come to this conclusion. Why don't we? Then we can move on to our REAL battle, the fight for freedom.

Talk to you later...

Willy Chaplin is a man who calls himself a libertarian and thinks he has something to say to us all. Previously published on How Can You Laugh at a Time Like This?