John Stossel looks at the extent of cash transfers in the US today. He calls his column, "Transfer Machine". Ironically if he had called it American Transfer Machine the abbreviation would be ATM, which reminds me of the protest banner at a recent Obama rally, Do I Look Like An ATM To You? ;
"The government who robs Peter to pay Paul can always depend on the support of Paul," George Bernard Shaw once said.
For a socialist, Shaw demonstrated good sense with that quotation. Unfortunately, America has become a laboratory in which his hypothesis is being tested...
...Frederic Bastiat, the great 19th-century French economist, defined the state as "that great fiction by which everyone tries to live at the expense of everyone else." I don't know if he envisioned one half of the population living off the other half.
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But it's not "Half" by any means, Lindsay.
It's much much worse than that. It's 90% living off 10%.
Income distribution is not a normal distribution: there are not half the population below the mean wage (or even the median wage) and half above it. That's what you get with height, or weight, or IQ - but income is not anything like this,
Income is a Pareto distribution. Basically for every person earning $1 there is 1 person earning $10. For every 10 people earning $10 there is one person earning $100. And so on: for every 10 people earning $100 there is one person earning $1000.
This is why "most people earn less than the average wage". That's not a stupid comment: it is true. Funnily enough: most people are better than average drivers too - because there are a few really really bad drivers that bring the average right down. The average is say - one accident per driver per year - but most drivers have only once accident in 50 years of driving! Those bad drivers pull everyone down.
In income its the same: the few productive individuals, in NZ say those earning over $1M per year, are dragged down by everybody else. Even moderately productive individuals, say earning $100,000 - not a big salary, certainly not enough to be anywhere near rich - are dragged down by taxes and bludgers of all kids are raised up.
Result, crap productivity, crap economy, and already the top third of productive NZers have already left permanently
NZ doesn't need a flat tax.
it sure has hell doesn't need the first $10,000 exempted from tax (hell, most Kiwis don't even earn $10,000 per year).
It needs a tax at say 30c in the dollar for the first 50,000 - then ZERO thereafter. if you earn more than say $1 Million, you should get your $15,000 tax paid back as a bonus. And zero all benefits, from WFF to dole to DBP to sickness to ACC to super while you're at it.
Then - and only then - NZ's economic performance might improve. Then - and only then - the rich will finally not have to pay for the rest who have made pathetic choices in life.
On - and of course - the Pareto distribution of income shows why any form of universal suffrage will quite quickly destroy a democracy via the welfare state.
Everyones vote counts the same, even though some contribute a hundred thousand or a million or ten million more than most other people.
This is why what the lefties call the 'Corruption' of the US electoral system is a good thing for their economy and the country --- because basically politicians have to listen to the productive people (who can afford to sponsor their campaigns) rather than the vast mass of unproductive voters.
Just another reason in NZ why it is very important that all campaign finance laws are repealed expect those that permit unions and other low-level groups to campaign. Following Key's lead and stopping all state funding of politicians - stop all allowances and salaries and airfares, make them pay rent for their beehive offices! - would also increase the government's effectiveness in supporting the economy, for the same reason
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