An Article from Capitalism Magazine (www.CapMag.com)
by Jaana Woiceshyn
I was listening to the radio on the weekend and heard a leading Canadian socialist, Stephen Lewis, lament about the big income gap between the rich and the poor as one of the worst ills in society today. Reflecting on that and on the exodus of millionaires from France in the wake of President Hollande’s proposed 75% income tax for them and on President Obama’s planned tax increases for the wealthy in the United States, made me wonder why so many people take it for granted that income equality is good. It isn’t—in societies based on voluntary trade and when people’s productivity varies. Why?
Redistributing income from the more productive to the less productive is immoral: it undermines our ability to survive and flourish and is therefore anti-human life. It takes away the producer’s incentive and ability to innovate and create—activities that benefit not only the producer but all those with whom he trades, even indirectly, in the form of better, cheaper products, more job opportunities, and a higher standard of living. Observe that highly productive people tend to flee not only France but also other (mostly European) countries with punishing progressive income tax rates. Ingvar Kamprad, the founder of IKEA and one the wealthiest men in the world, is just one example: he left Sweden for Switzerland more than 30 years ago.
The producers in the income-equalizing Europe and Scandinavia who have accepted income equity as an ideal and stay put, produce less. Unless whole-heartedly embracing altruism, the morality of self-sacrifice, they have less incentive to produce because any extra income they would earn would be taken away and redistributed to uses not chosen by them. Forcible income equalization also undermines the producers’ ability to produce: the wealth that they have created and would have invested in further production is redistributed to say, government social programs, diminishing the producers’ productive capability. In other words, equalizing people’s income is in no-one’s self-interest. It harms the…(Read more)
Dr. Jaana Woiceshyn, lecturer in business ethics and competitive strategy at the Haskayne School of Business at the Univ of Calgary explains why income equality attempts by government’s use of force are immoral and income inequality is moral.