Obama’s Zero Sum Game and the coming Redistribution bubble

As a presidential candidate in 2008, Barack Obama stated to Joe the plumber that the primary goal of government should be income redistribution. And in reality, Obama has made great strides with regard to income redistribution, having enlarged the food stamp recipient list, for example.

At the heart of income redistribution rhetoric is a principle called the “zero-sum” theory. This theory assumes that the amount of money in the economy is fixed, and therefore, a wealthy person gains wealth only if another person loses it. The amounts are equal, thus the total is a “zero sum.” It is only by exploiting the working class, Obama believes, that the rich have unfairly become rich. The role of government, then, is to achieve a more “just” and “fair” distribution of wealth — a “re-distribution” of the fixed amount of wealth in the economy.

Since rich individuals will not part with their money voluntarily, the federal government, through its taxing authority, is the only institution equipped to achieve this goal. The zero-sum perspective then mandates that only the federal government, through taxation, can produce the desired zero-sum equality by applying standards of fairness. So those running for national office are most likely to place income redistribution in their platform.

The idea that the wealthiest individuals should pay their “fair share” has been repeatedly stated by the president — not just during campaigns, but all during his first term. But a review of the president’s actions, however, shows that the zero-sum theory cannot accurately describe what he has done. Continue reading

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