It's Not About "Redistributing Wealth." It's About Correcting Inequities in the System.

The founder and CEO of Amazon, Jeff Bezos, is now worth more than $150 billion. Meanwhile, there are people in America who work two or three jobs and can't afford to cover their bare-bones bills.

You don't have to be a socialist or a Marxist or some kind of trenchant anti-capitalist to think that this sort of inequity is a problem, or to think that there is something amiss with a system that allows such extreme concentration of wealth in the hands of a few, while others struggle and work in vain to dig their way out of poverty.

This is the point being made in a recent line of argument--its author obscured--that recently appeared in an image passing through my Faebook newsfeed. Here's the image:

Let us grant that Amazon contributes real value to the contemporary world and that its founder and CEO has worked hard and made risky choices and investments that justify him receiving very, very healthy financial rewards. In other words, let's assume that's there's nothing wrong with a system that enables some people to become filthy, stinking rich, maybe even LeBron-James-level rich. We're talking so rich that it's hard for any ordinary human being to imagine what to do with such abundance. Rich beyond what any human being needs for health and happiness and security. So rich that, to the extent that money can contribute to happiness, the person has enough wealth to buy the material contributions to lifelong happiness many times over.

Let's take that as our starting point.

The reality is that we live in a system where some people can come to possess personal fortunes so enormous that they numerically dwarf the unimaginable wealth described above. That is, we live in a system that allows wealth to keep pouring into the personal accounts of individuals who have long, long ago exceeded that point at which more money can do them any personal good in terms of human happiness. And the money keeps pouring in while single mothers are working multiple jobs to feed their children.

Sometimes, I suppose, this happens with people who are of such extraordinary virtue and wisdom that they regard this spigot of wealth as a source of enormous personal responsibility. They research how this enormous wealth can best serve the world, and then invest their money and give it to charities and causes so wisely and well that they make the world a better place for all.

I'm not going to remark on whether Bezos is such a person, because I have no idea. Maybe he is. But the point I want to make here is not about Bezos. He's just a convenient example because, at the moment, he's the richest person alive. The important thing for my purposes here is to note that our system is not designed so that only these paragons of wisdom and virtue are the beneficiaries of such wealth. Many who become exorbitantly rich channel their excess abundance in ways that are of questionable value at best.

Nevertheless, such disparity in wealth might be justified if (1) we believe wealth should be distributing in accord with merit, and (2) some people merit a personal fortune of $150 billion, while others merit $7.25 an hour, money that is gone before the end of each month meaning that they end up with no personal wealth, only debt.

While I'm not sure about a strict meritocracy (I'm too influenced by the Christian ethic of love and the call for charity and grace), I do think that merit should be rewarded. I think we need an economic system that does that. If so, we need some idea of how to measure merit. My guess is most of us would point to two things: how hard and diligently one works, and the value of what one produces through one's work. In other words, economies should reward labor and people's contributions to society--two things that are connected in complex ways.

Here's the problem. My wife is a public school teacher. Her salary would not be sufficient to sustain her and the children. We live modestly, but my income is essential for us to make ends meet, let alone build any personal wealth. In fact, if one weighs our assets against our debts, even with my salary in the mix, I'm not sure that one could say that we have any real wealth to sustain us should our salaries disappear. And if it were my wife's salary alone, her labor would at best generate a life of paycheck-to-paycheck penny-pinching with $0 in accumulated wealth--vs. Jeff Bezo's $150 billion.

But let's be generous and treat her yearly salary as wealth. Even on that assumption, Bezos's fortune is not hundreds of times or thousands of times greater than hers, or even hundreds of thousands of times higher. It's millions of times greater.

My wife works hard and diligently. I'm sure Bezos does, too. But does he work millions of times harder, millions of times more diligently? I know how devoted my wife is to her students, so let me just say I'm skeptical.

But what about the value of their respective contributions? We can't make the mistake of comparing the value of my wife's contribution to society against the contribution of the entire Amazon corporation, because there are more than 560,000 people working for Amazon to help generate its cumulative contribution. What we need to do is compare Bezos' piece of that cumulative effort to the value of the work my wife does.

But let me reframe the question in the following way. There are about 42,000 teachers in Oklahoma, and the average teacher salary in Oklahoma is about $38,000. That means teachers in Oklahoma are, taken together, receiving about $1.6 billion a year. Again, most of this goes to making ends meet rather than accumulating wealth, but let's treat it as wealth for the sake of argument. If we do, then Bezos has about one hundred times the personal wealth of all the teachers in Oklahoma combined.

So the question is this: Is the value of this one man's contributions worth one hundred times as much as the cumulative worth of all the teachers in the state of Oklahoma, diligently working to educate the next generation and make them ready to face the world, to contribute, and to succeed?

If you're as skeptical as I am about this, then we can agree to set aside the idea that, regardless of the inequities that exist, our system is a fair one because people are rewarded in proportion to the merit of their contributions. We don't live in a world where people's wealth is proportional to the merit of the work they do.

To put it starkly, the rickshaw puller in Calcutta works harder than I have ever dreamed of working but makes the tiniest fraction of what I make--and in terms of quality of life, the difference between me and that rickshaw-puller is enormously greater than the difference between my quality of life and that of Jeff Bezos. This is because, the more money you have, the less it substantively contributes to your quality of life. Lots of middle income people are blissfully happy and could give lessons to some of the very rich. But the poor struggle, their poverty grating at their capacity to enjoy their lives, no matter how wise they are in terms of getting their priorities straight.

So where does that leave us? It leaves us with a system that does not distribute wealth in proportion to either human need or the merit of those who contribute to society through their labors. Wealth gets concentrated in ways that can't be justified by the greater merit of the wealthy. This means our system is prone towards unjust concentration of wealth in the hands of some while others who work hard and diligently and make valuable contributions get far less than they deserve--and, in many cases, far less than they need to live a decent life.

What causes this problem? There are many forces in play, and I won't claim to understand them all. Part of it, of course, is that luck sometimes rewards those who take important risks--and we need to accommodate that in our system if we want people to take those risks (although, for the same reason, we should also work to cushion the costs to those who take the risks and fail). But a non-trivial part of the problem is that those who get rich often do so at the expense of the poor, because the system is set up to exploit the labor of the poor, working them hard and paying them less than their labor is worth.

In other words, part of the reason why there exists such wealth inequity in our system is that our system is set up so that the "haves" can leverage their privilege into more privileges while the "have-nots" are left competing for scraps. And this is not a comment on Jeff Bezos as an individual. I'm not saying that he is in some unique and special way getting rich by choosing to exploit others. What I'm saying is that he is part of a system that works this way--that he doesn't need to deliberately scheme to be monstrous to his employees in order to pad his exorbitant wealth while they get paid less than the value their work adds to Amazon's success. The system is set up so that this happens, without Jeff Bezos or other corporate billionaires having to take any nefarious steps to make it happen. 

So how do we fix the system to remedy this? I don't know the answer, although I'm pretty sure it will involve the thoughtful use of such standard tools as income taxes and various regulations on business, including anti-exploitation laws like minimum wage laws. I'm pretty sure it will involve robust protections on workers' rights to collectively bargain, along with societal support for the efforts of those who work hard for a living to secure a living wage.

But my aim here is not to say that some specific combination of higher taxes on the very rich and a higher minimum wage, along with state protections of collective bargaining, is what is needed. Rather, I want to make the following more modest point: when people talk about raising taxes on the wealthy and raising the minimum wage, they are often painted as if they want to take money from the rich--money the rich have earned--and give it to others who haven't earned it. Thus, these measures are sometimes described as "wealth redistribution."

But if everything I've pointed out above is true, that's a misleading characterization of what these measures are about. The point of such policy proposals is to correct a systemic problem in wealth distribution, a problem that leads to wealth getting unfairly concentrated in the hands of people who haven't done enough to warrant getting THAT huge a piece of the pie.

Suppose there's a pie on the table, and four people around it who have worked hard to earn some of that pie. Suppose there is some machine set up to distribute pie according to what each person deserves. Imagine there's a guy who worked hard enough to earn half the pie on the table--but the machine gives him all but a sliver of the pie on the table as well as every single pie at every single Marie Callender's restaurant in the city (we're assuming the machine has supernatural powers). Meanwhile, the guy at the table who has done enough to earn a quarter of the pie gets the sliver, and the last two people at the table, who have done enough to get a slice each, get to fight over the crumbs.

Now suppose the owner of the house, seeing this happen, steps in. She sends the two hundred and ninety pies that are filling up her living room back to Marie Callender's, takes back a sliver less than half the original pie from the first guy, gives a quarter pie to the guy who earned that, and makes sure the last two each get their slice. Has she taken the first guy's pie(s) from him to redistribute to the others? No, she has corrected a glitch in a machine that unfairly heaped on him more pie than he knew what to do with while leaving others with less than their fair share.

When you're doing that sort of thing--when you are looking for ways to correct wealth concentration inequities but adjusting a system that is prone towards such inequities--that's not "wealth redistribution" in any problematic sense. It's not taking what the rich have earned to give it to the poor.

It's trying to make sure the system gives everyone what they've earned.