Jan 22, 2008

Question of the Day: Can Wealth Be Fair? - from Brip Blap's Blog

Blogger Brip Blap poses the question "can wealth be fair?" The blogger goes on to list three different scenarios where in order for people and a country to build wealth, others might have to suffer. The blogger does not say that (s/)he agrees with these scenarios. In fact, Brip Blap goes on to explain how (s/)he is upset but each of the scenarios discussed.

#1 -- A college graduate basically decides to save nothing and spend all his money throughout his life. Is society responsible to pay for his medical expenses and basic necessities later in life when he can no longer work?

Brip Blap Says: "I detest this attitude. His attitude will take money out of my pocket when he is older.... (still) I doubt anyone is prepared to see senior citizens sleeping on the streets."

I say: I think financial education should be a required, ongoing class in public school. Each year you should have a different amount of money (income) to budget with, and the idea of the class should teach you about saving money, investing, and why credit card interest rates are the devil. After that, if someone choses to go out and spend all their money right away, especially if they've made enough to save, then I don't see why the government should have to pay anything to them when they're older. I don't think the government should be able to "force" you to save your money through taxes, but should provide a clear and easy-to-understand tax incentive for people to save money. It should be income based, maybe in match form, so those who are in a lower income bracket but manage to save 5 percent of their income get a 10 percent match, where those in the upper income bracket get a 5 percent match... or something like that. (Those in the higher income brackets would likely be investing anyway.) For rich people who don't save, I don't mind them ended up on the streets. It's their own fault.

#2: A child is born with 50+ different health problems. Keeping her alive is more expensive than treating dozens of other children. The family is in debt, the health insurance system is hurting because it can't afford to treat this kid.

Brip Blap Says: "I knew a child like this. She was a lovely, happy and intelligent child who suffered from an incurable genetic condition that meant her chances of living to be a teenager - much less an adult - were minimal. Even if the chances of her living to be an adult are slim, she deserves her chance at whatever life she can have. My higher insurance premiums that may have resulted from that? Please."

I say: If we are going to have a health insurance system at all, I think it should not be based on the concept of wealth. We should all pay equally into a universal healthcare system and receive the same quality health coverage, regardless of our pre-existing conditions. Those who are well off may wish to also purchase individual insurance for additional benefits. Yes, even a government-run healthcare system has to make some money to pay for the people who work there, but until healthcare leaves the hands of private, profit-seeking companies, it will never be fair.

#3: Is it fair that a middle class married couple pays more in taxes than someone living off their investments, even though they both may be taking in the same amount of money? Is it fair to tax the rich more, but keep taxes on lower-income families low?

Brip Blap Says: "The unfairness in the system - the loopholes, the weak taxation on rich people - may not benefit me now but it will when I am financially free. I plan to be one of the people living off my investments, earning no wage income and avoiding my fair share of taxes. So if I want to build wealth, why should I rail against this system? I intend for it to benefit me in the end."

I Say: Taxes are never going to make everyone happy. If you live in a society with no taxes and a very limited government, the rich get richer, the poor get poorer, and the middle class disappears. Then the poor start a revolution and the rich get slaughtered. This has happened in history many times. Yes, it's sounds extreme, but that's what happens if you make it impossible for the poor to have at least some opportunity to make it into the middle class. The more opportunity you give, the less likely we'll have another civil war one day. So as much as I hate knowing how much of my income gets zapped from my paycheck due to taxes, I know that at least some of those taxes benefit me (I'm glad the bridges are maintained, as to avoid falling into the East Bay). However, I'm not sure about taxing those living off interest income less than people earning the same amount. It seems taxes should be based solely off of income, regardless of where it comes from.

Brip Blap closes with a great point: "there is no fairness in a capitalistic society. Does anyone want complete fairness? Inequalities in the system are what allow wealth to be built."

That's very true. Otherwise we'd live in a communist society where we'd all (supposedly) be equal. We'd all work, get the same pay, have no reason to better ourselves or society. What kind of society would that be?

That's why I think the role of the government should be to keep wealth in check. To give opportunity to people who are born in poverty and even middle class families. If I had my way, I'd make it illegal for parents to give their children money, and instead they'd put that money into a giant pot that would be divided up evenly amongst all the children in the country. It seems fair for individuals to build wealth, but unfair for their children to profit from such wealth. Yes, I come from a family where I did profit from my parent's wealth, but at what cost? I'd probably be better off if I learned about budgeting from a young age, knowing that I would be on my own with a few hundred dollars in the back to start off with. Allowing families to pass money down from generation to generation is where unfairness begins.



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3 comments:

Miss Noodle said...

"That's why I think the role of the government should be to keep wealth in check. To give opportunity to people who are born in poverty and even middle class families. If I had my way, I'd make it illegal for parents to give their children money, and instead they'd put that money into a giant pot that would be divided up evenly amongst all the children in the country."

I'm sorry, but I totally disagree with you here. This totally undermines property rights. Wealth inequality is unfair, there's no question about it.

But to me it's even more unfair to completely abscond with a dying American's right to do with their money how they see fit. If all inheritance is appropriated by government, why even work? Why save? Why invest? It totally guts the premise of the American dream, working such that your children can have a better lot in life than the parents.

Obviously, nobody likes wants entitled, spoiled children. But a draconian, far-reaching law that essentially does away with property rights would create far more problems than it would solve.

HerEveryCentCounts said...

Miss Noodle: "Why save? Why invest?" I think you should save and invest so that you can have a better life. You can give you children presents, of course, but at the very root of the problem of wealth unfairness is that people are born into wealth or poverty. Maybe I'm taking it way too far by saying parents shouldn't be allowed to give their children money, but it just seems to be the only way to avoid such unfairness. Moreso, I'm a big advocate on making sure all public schools are filled with quality, well-paid teachers so regardless of family wealth, a child has all the opportunity in the world to improve their live for the better.

Ultimately, though, I am fond of the idea of seeing everyone in America as my family. We might be one giant dysfunctional family that can never agree on anything, but getting beyond our natural instincts to protect our blood relatives, after that comes our country, and the people in it.

This crosses over very quickly into communism, which I don't entirely agree with (because it makes progress impossible), but I do think that people need to start seeing all of the children in America as their children. That's when our country will start changing for the better.

Brip Blap said...

Thanks for the insightful analysis of my post! I guess the best summary I can make is that the definition of 'fair' is so subjective that it's almost impossible to make. I understand your point about giving everyone an equal start - yet at the same time I'd like to give my kids a head start. I don't want rich kids - but I want my kids to start out richer than I did. It's such a tough distinction to make that it's almost impossible to make.

The one that I really struggle with is the health care for terminally ill kids. You would have had to see this girl. She had cystic fibrosis. She was lovely - so cute, so smart, so nice. She was one of my students when I was teaching and I thought she was amazing. She would disappear once every 2-3 days for a trip to the emergency room. I am sure she cost the insurance company, her parents and the taxpayer huge amounts - yet at the same time she was such a wonderful person, so cheerful and fun and popular with the other kids that I couldn't imagine saying she was costing society too much. But let's be brutal - she was. The money spent on her could have provided health care to 100s or 1000s of more-or-less healthy people instead.

I really don't know the answer, honestly. But thanks very much for your further thoughts on the subject!

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