Stop Thinking Like Robin Hood

It seems there is a growing trend of do gooders who want to give resources away to people. Like Robin Hood, they want to take the wealth from the rich and give it to the poor. Let’s say they succeed in appropriating all the wealth. How would you distribute it?

Would you prioritize those who need it most, regardless of their contribution to society, to create equality? Sounds like a good plan, except that it creates an imbalance in the creation of wealth, eventually diminishing all wealth and creating equality of the poor.

Would you prioritize those who contribute the most, so that wealth continues to grow and eventually, over time, support services are established for those in need so that no person goes hungry, or homeless, or deprived of any basic goods?

Sounds like a more sensible option… but how is that different from what already exists?

Capitalism creates wealth and benefits all society over time.

Socialism depletes wealth and destroys society over time.

I grew up in Cuba during the 1980s and 1990s, a country where capitalism was painted as evil and communism as the necessary evolution to reach a more balanced society. News focused on showing Cubans all the failures of capitalism and all the glory of communism, yet by the time I was able to understand the world that surrounded me two things happened: one, the “amazing” communist world collapsed; and two, the differences between the ruling class and the people became far more stark as scarcity became the norm for the latter.

Thirty years after the massive collapse of communism, it seems we are back to the age of psychological warfare and are being fed propaganda that capitalism is evil and that our societies need, once again, to “evolve”. Somehow most people have either forgotten or never known that the experiment of socialism failed in the past for very simple reasons: without drive, there is no progress; without reward, there is no risk; without risk takers, there is no enterprise.

The very same people this “socialist” propaganda paints as evil are the risk-taking entrepreneurs who have endeavored to create businesses that employ the vast majority of people, pay the vast majority of taxes, and donate the vast majority of contributions to non-profit organizations.

Socialism not only means depletion of resources; it also means a shift in the balance of power to a new class: the ruling class. If you are angry at capitalists living large on their hard-earned dollars, imagine how you’ll feel when it is those in government living large on their incompetence.

There will always be haves and have-nots. It is for you to decide whether those who have do because of risk and reward, or because they displayed affinity to a ruling system and figured how to profit from social misery. I saw ministers and generals living lavishly while our family struggled to put food on the table, in spite of their education and hard work.

Consider this… the historical migration balance between socialist countries and capitalist countries has always demonstrated a flow of humans escaping from oppressive regimes or excessive taxation. Democratic socialist countries tend to have extremely prohibitive immigration laws to prevent people from coming in to reap the social benefits of their system. And don’t be mistaken, those benefits are derived from taxation as a means of wealth redistribution, not from appropriation of the means of production.

The result of high taxation is tax avoidance and capital migration. It is an imbalance between a rewards system and wealth redistribution gone awry. If the rewards for risk face punitive taxation, then either the numbers of risk takers are diminished, or the risk takers use every available means to reduce their exposure.

When you think about low corporate taxes, factor all the other taxes that are derived from employment. For every dollar organizations pay their employees, between $0.30 to $0.40 are paid to the government in payroll taxes, income taxes, sales taxes, etc. Then think about what would work best for governments: to increase corporate tax rates, taking more money from organizations and limiting their ability to grow their businesses; or taking in a bit less in corporate taxes, empowering organizations to grow and hire more people who will ultimately generate more revenues in taxes, with the added benefit of increased spending power therefore creating additional jobs elsewhere and more tax revenue.

Economy is more complex than you might think. And all Robin Hood philosophies accomplish is a very short period of complacency followed by a very large period of scarcity. Remember two things: Robin probably always got the better cut of meat and; he was nothing but a thief.