Sunday, February 13, 2011

Which wealth transfers?

Underbelly distinguishes between group purchases and wealth transfers in a discussion of welfare systems. Scandinavians don't mind a little wealth transfer as long as the system is dominated by group purchases.

The optimum group purchases happen under optimum emergence of minimal government. When government structures are out of balance, then the wealth transfers become a snaking set of sparsity across many elements of society.  A transfer from funding states to non-funding states, transfers from states with less senate representation to states with more.  Transfers from private sector workers to pubic sector workers, transfers from far Congressional districts to Eric Cantor's Virgina district. But often, our welfare is a transfer from the poor to the wealthy.

Under unbalanced government, the next bulge in government inventory appears as low hanging fruit to the people in the front of the line, and disappears as the people in the back of the line move forward. The result is the so called Power Law Distribution, massive wealth acquisition at the center of Washington DC.

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