Why Redistribution Results in a Weak Economy

The problem is incentives. I work hard and make an A in class. You are lazy and make a D+. The class average is a B. The professor says, “To be fair, next test everyone will simply earn the average. It’s equal that way.”

Now I expect to earn a B even if I work hard enough to make an A. Why should I work hard for nothing in return? I do well enough to earn a B. You don’t have to do anything to earn a B so you work even less hard. The whole class reduces work incentive like this and as a consequence the average is now not a B it is a C.

Sure, some people are better off, but on average everyone is now “poor.”

Inequality = some poor, equality = everyone poor. Which is better?

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