Wealth redistribution is a method of spreading economic prosperity through taxation or via charity from wealthier individuals to the less wealthy. The wealth is then distributed through physical property or public services – like schools or hospitals (Business Dictionary). This sounds great – in theory. However, in reality, it doesn’t always work out like this. Recently, we had a debate on the effectiveness of redistribution, and we analysed the effect of redistributive policies on economic inequality and on poverty – which were closely related. I argued that attempts at wealth redistribution spread poverty instead of wealth (the affirmative side). While both sides agreed redistributive policies were necessary, we differed on the efficacy of current attempts. The against side argued that previous attempts at distributing the wealth were mostly successful, and the pro side argued that they were not, as there were stakeholders blocking the attempts. For example; in trickle-down economics, there are massive tax cuts on wealthy companies, which will invest and provide long term benefits to the country. These benefits will then trickle down to lower-income families. This sounds sensible if you believe growth is driven by businesses – however, in most cases, trickle-down economics is a way to block redistributive policies and to let the overly wealthy stay that way.


A central issue was the effectiveness of previous attempts at redistribution. One global perspective comes from Thomas Sowell, an esteemed American economist, who advocates for the benefits of free-market policies and discusses the “fallacy of redistribution” in addressing poverty (Sowell, 2012). Sowell frequently uses the communist government of the USSR to show that redistributive policies take away the incentive to work and decrease work productivity. For example; farmers in the USSR spent less effort farming when the government would be taking a large portion of their harvests (Sowell, 2012). Sowell’s central insight into the consequences of redistributive policies is that “You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth – and that future wealth is less likely to be produced [or earned] when people see that it is going to be confiscated” (Sowell, 2012). Sowell’s is a very significant opinion, as he is very-well known and respected. Thus, he has had a stronger impact on the wealth redistribution debate than many other stakeholders.


Sowell does not provide a solution; instead referring to the old proverb give a man a fish, and you feed him for a day. Teach him how to fish and you feed him for a lifetime. Sowell argues that redistributionists give the man a fish, thus leaving him dependent on the government for more fish in the future (Sowell, 2012). Again, Sowell mentions the incentive to work. Mark Perry notes that in addition to Sowell’s belief that redistributive policies reduce incentives, the government ends up with lower net tax revenues (Perry, 2018). Sowell explains clearly in his book “Basic Economics: A Common Sense Guide to the Economy”  that there is no reason to expect economic equality in the first place. He said “There are no factors I’ve been able to find that lead to equality. Demographics means that you cannot have income equality. For example, Japanese-Americans are more than 20 years older on average than Puerto Ricans in the US. A 40-year-old man, for example, has more than 10x as much job experience as a 20-year-old man, if you start counting from the age of 18 as adulthood. So there was never a reason to expect equality.” (Sowell, 2012).


Several local perspectives on redistribution can be found in Oxfam. Oxfam’s 2017 Commitment to Reducing Inequality Index measures 152 countries on their policies to address inequality (Ehrenfreund, 2017). South Africa ranks first with progressive tax laws in sub-Saharan Africa. (Commitment to Reducing Inequality Index 2017). In fact, Sipho Mthathi, director of Oxfam South Africa, said “[South Africa] is one of the most efficient tax systems in the world.” However, despite ranking first in the tax redistribution area, South Africa slides to 31 in the overall measure of addressing inequality in 2018. This suggests that the redistributive policies in place are not actually effective in reducing economic inequality and thus alleviating poverty. It makes sense that Mthathi’s perspective would align with Oxfam’s – as an executive director of one of their branches. Economic “inequality is the sign of a broken economy, from global to local, and lack of will from the government to change the status quo,” said Mthathi (Omarjee, 2017). Clearly, she would support progressive taxation. Oxfam’s beliefs come through clearly in their famous 2018 report Reward Work, Not Wealth frequently noting that “free public services” was one of their worldwide goals for improvement. Oxfam as an organization is strongly in favour of progressive taxation – stating that a country should “use tax to reduce extreme wealth” (Reward Work, Not Wealth, 2018). Rosa Pavanelli, the General Secretary of Public Services International said that “Urgent, radical action is needed to fund universal public services, decent work and redistribute wealth. The alternative is the continued rise of populism, racism and fear mongering of the far right.” (Reward Work, Not Wealth, 2018). Evidence from Scandinavia where low poverty rates accompany redistributive policies seem to support Pavanelli’s perspective and suggest that these are achievable solutions that are likely to be put in place.

Singaporean government holds another local perspective. Singapore has both the third largest GDP per capita in the world (Murray, 2017) and the third highest levels of income inequality (Commitment to Reducing Inequality Index, 2017). This correlation is seen in other wealthy countries too. The 2015 OECD report revealed that 73% of Singapore’s wealth is owned by the wealthiest 20% (Koh, 2016). Singapore is addressing the inequality through educational reforms – including “equalising resources, eliminating streaming, increasing curricular flexibility and minimising social segregation … to foster the innovation and entrepreneurship required for post-industrial economic growth,” (Lim 2018).

However, many Singaporeans believe that the educational reforms are not enough, and look to Nordic countries such as Sweden, Denmark, and Norway for inspiration. Linda Lim and Pang Eng Fong, two journalists at Channel News Asia say “We need to look outside the education system for policies that do work to reduce income and wealth disparities. They include higher tax rates on high income earners, levies on capital gains, estates and inheritance, and a stronger social safety net”. High-income Scandinavian countries have progressive tax systems in place – including labour market policies – and social protection budgets to reduce inequality (Lim, 2018). High taxation allows all citizens to benefit – with access to healthcare, education, insurance and retirement pensions. Historically, Singapore’s approach has been more aligned with Sowell’s perspective on the need to retain work incentives, with the fundamental ideology of a meritocracy


Despite Singapore’s commitment to finding a solution to inequality through education, Oxfam rated them last in the world in progressive taxation in their Commitment to Reducing Inequality Index. However, it’s not clear cut. There is also evidence to suggest when one measures income progressivity by richest Americans’ tax burden, the taxation becomes increasingly progressive as income inequality increases (Albright, 2012). Another perspective comes from Robert Nozick, in his 1974 influential book Anarchy, State and Utopia where he argues that redistribution is destined to fail. Assuming that people are free to make their own decisions about spending and investing, Nozick argues that wealth will automatically flow up the wealth ladder (Nozick, 1974). There seems to be multiple arguments with contradicting evidence. However – they all use a different country as a case study. Clearly, for different countries, different policies work. Context is crucial.


Initially, I disagreed with the side I was arguing for. Having grown up in a left-wing family as an atheist and going to a humanist school, redistribution seemed to be a ethical way to provide equal opportunities to the less fortunate. My idealistic – and in hindsight, rather naive – stance was that redistribution always spread wealth rather than poverty. Just the week before in class, we had looked at the effect of income disparity on the economy and wellbeing of a country – all the data suggesting that a more equal society is a wealthier, happier one (Doucouliagos, 2017). My outlook on the aims of redistribution has not changed. I am even more steadfast in believing that wealth redistribution should alleviate poverty. However, after extensive research into the topic, reading all available interviews with Thomas Sowell and on South Africa’s policies, I noticed flaws in the current methods of redistribution. Arguments for and against redistribution both seemed reasonable, and I can appreciate both sides. I therefore believe my research was a substantial contribution to the group and so during the debate, we were able to acknowledge and counter opposing arguments.


In an ideal world, wealth redistribution would benefit everyone and create an equal society. A pragmatic approach for reducing inequality has yet to be discovered, but it would likely involve a balance of redistributive policies and human capital development. It is very likely that we can create a system which fulfills the aims of redistribution and in which the people take precedence.


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