Photo credit: Cartoon from Robert Reich: Inequality for All, A Film
Roles of wealthy people are significant for they influence the society. Therefore, they are likely to affect redistribution and inequality. According to SSRN (2019), for instance, the CEO of a company, Dan Price, eliminated his money of $1.1million USD to fund a minimum wage for his workers. His act was a result from the rage of employees about the widen income gap between them and high rank executives. The sudden implementation illustrates that wealthy individuals have great impact on income distribution. Apart from this, well-off people could shape political matters as well. For example, most of U.S. Congress participants are wealthy, and they have power to manage taxation, labour market and education finance thoroughly. In fact, when the preferences are different, they tend to respond to theirs, which is wealthy people opinions, rather than the whole population’s.
Findings state that wealthy people oppose redistribution due to claims from several authors. Regarding Cohn, A., Jessen, L., Klašnja, M. and Smeets, P. (2019), Americans in large sample size are given an online survey, YouGov, of how supportive are they to redistribution. The survey states that the top 5% (wealthy people) are less supportive compared to the 95% (general population). The result might be from attitudes of well-off people. Attitudes come from different roles of beliefs about the role of luck and efforts in accomplishments. If a wealthy individual believes that his wealth is acquired by his own efforts, he would likely be less supportive for he believes more in hard work ethics. Moreover, wealthy people are ‘self-attribution bias’ because they fail to think that the role of luck has also helped them to become successful. It is possible that different attitudes may be from different ‘distributional preferences’, which describe people’s taste for a certain allocation of income when the self is not involved (Fisman et al., 2007). Well-off individuals who have raised in wealthy families may have resemble distributional preferences as general population because they do not earn that wealth themselves. However, people who put their own efforts and climb the income ladder are likely to oppose redistribution because they feel that it it unfair to them.
According to The Economist (2019), redistribution is not supported as much as it should be due to increasing inequality among upper classes. The author uses the past evidence that could apply in today’s situation. Poor law, the welfare system in Victorian England aimed to relieve poor condition in the society, in different areas are compared in terms of harshness and generosity. Findings show that inequality between rich and poor are less harsh compared to that of inequality among upper classes. Consequently, the past claims above reflect the present’s issue. Simply well-off individuals are reluctant to inheritance tax. They claimed that whereas they have to pay for the costs, the top wealthy individuals would use their power to avoid that tax. This can be concluded that some of rich people still do not support redistribution.
Smith (2019) states that redistribution will not end inequality anyway even though wealthy people do not oppose it. The evidence is drawn from the time of slavery of southern white people after civil war. After the war, slave owners lost their wealth by 15%, which was extreme. However, when moved to the next generation, their sons tend to bounce back the wealth quickly as they maintained their social status with well-off people like them. In the present, if U.S government apply redistribution for compensation to African-Americans, wealthy people still be able to recover using human networks and social connection. All of these evidence show that the inequality still exists since upper classes do not lose their wealth for too long.
I do understand the perspectives of rich people to redistribution and inequality and consider them as factual. However, I would disagree as we should not leave people behind in the essence of moral sense. It is just that it is difficult to achieve since several well-off people who influence the whole system would disagree to redistribution and inequality is hard to solve. To lessen issues, we could fix at the root causes by either implementing new policies or changing perspectives and attitude of the wealthy kids, who would become wealthy adults someday (Smith, 2019). These are long-term processes: if people do not implement them now, the society would still bear this burden.
References
Cohn, A. Jessen, L. Klašnja, M. Smeets, P. (2019, June 21). Why do the rich oppose redistribution? An experiment with America’s top 5%. SSRN. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3395213
Smith, N. (2019, April 8). Redistribution won’t end wealth inequality. Bloomberg. Retrieved from https://www.bloomberg.com/opinion/articles/2019-04-08/u-s-economy-redistribution-doesn-t-reduce-wealth-inequality
The Economist. (2019, April 4). Rising inequality could explain tepid support for redistribution. Retrieved from https://www.economist.com/finance-and-economics/2019/04/04/rising-inequality-could-explain-tepid-support-for-redistribution
I really enjoy your article! But I disagree on your conclusion. I think. you should not completely disagree on redistribution. As you say we should implement something now, fixing the roots cause by teaching the wealthy children would takes a long time to do and as we will achieve or not, the inequality gap would increase bigger. From my perspective, I would suggest taxation and redistribution. This is because these fiscal policies are fast to propose and these can be implement immediately when the government approve. While taking the education and moral senses on one hand, the easiest way to implement is redistribution. The government should encourage good attitude to every children and family, advertisement, for example is easy to be done. Printed ads or media ads on the BTS encouraging morality, sense of civic duty and being a good taxpayer, would be an interesting campaign, while on the other hand, governments can implement the progressive taxation like tax private jet/ sport car at 3-400%. From this, I think the society would reduce the gap easier and faster.
It is a well informed and very interesting article. I think it is not surprised that the rich tends to oppose the redistribution and I understand where they come from. However, as the author mentioned, I agree that we should not leave the poor behind. The reason is obviously because we are human being. Human is a social animal that live together and require interaction with each other. Take environment issues as example, studies suggest that the rich values more on environment while the poor only concern about making a living. Since we live in the same planet, if the inequality still exists, it would be hard to achieve the goal of sustaining environment. The negative externalities that incurred by the poor are also apply to the rich.
Although the article point out that the redistribution policy is not actually effective, we shouldn’t abandon it altogether. Doing so might worsen the inequality gap. Instead, I think it reflects that policies are lacking in some other area. The government should provide them more access to education and skills. It should ensure that those who receive the benefit are able to invest and earn money, not just spend that money on consumer goods.
To tackle with inequality problems is indeed not an easy thing. I agree that changing the attitude of younger generation is necessary, not only the wealthy kids but also the poor kids. The rich children should have more awareness about moral. The poor, on the other hand, should have their mindset that they can change and can improve their life. In my opinion, when people have their perception of the possibility and receive the opportunity, they can be successful in any area of life. The government needs to provide them access to education, skills, and financial inclusion.
I would like to give my comment on the following lines:
“In the present, if U.S government apply redistribution for compensation to African-Americans, wealthy people still be able to recover using human networks and social connection. All of these evidence show that the inequality still exists since upper classes do not lose their wealth for too long.”
With the argument above, it is very bold to say that redistribution will not solve inequality. Of course, the rich with plenty of resources would still be able to accumulate their money back. But it does not mean that redistribution will not benefit the poor. The argument makes it sounds like it is holding the income of the poor constant, while the rich is still earning money. Then, the inequality still exists. Bingo! Redistribution does not solve inequality! To me, a more thought-out argument is needed when touching upon a highly controversial issue.
In moral senses, I do strongly agree with you.
However, assuming that you are top-wealthy individual who put your own efforts and climb the income ladder by yourself, you might face another aspect of inequality. If you spend your whole life working hard and figure out that some of your earnings would be distributed to others, you would, of course, feel unfair. This might also discourage those people to work harder as they will just wait for the distributions. Also, the amount of the distribution they get might not be sufficient for them to make a living,so , in my opinion, the key for them is to work harder. You will never know what those succeeded people had gone through before they became successful. Even though, you do not have luck, you still can choose what you want to become in the future.
Therefore, inequality issues are still hard-to-solve problems which have to fix the roots as you mentioned, but, I think changing attitudes of children should also focus on the poor ones too.