Income Redistribution Directions Dwight R. Lee is the Ramsey Professor of Economics at the University of Georgia Read the article he wrote for the Library of Economics and Liberty's Concise...

Assignment 1: Distribution of income
Although there has been significant increase in % of national income transfe
ed via government
program since 1960s, we do not find much evidence that shows that distribution of income has
shifted in favor of the poor. There are many reasons why the general policy of income
edistribution cannot be supported;
1. A close examination revealed that government transfers are not from wealthy to the poor.
Instead, it is the transfer from relatively unorganized group (general tax payers,
consumers) to the relatively organized group (such as, sugar farmer, elderly and steel
producers). Moreover, most redistribution programs are guided by political influence not
y poverty. In 2000, out of total $1.07 trillion federal transfer, only about 29% or $312
illion was allocated for the poor. The other 71% - about $758 billion- was distributed
with little attention to the need.
2. It is the wealthy people who get the larger pie of such government transfers. For example;
the net worth of elderly family is about twice that of family in general. Yet, regardless of
their wealth, they received more than $406 billion under social security payments.
Similarly, in case of Medicare, more than $280 billion benefits went to the wealthier.
3. Another way of government transfer is done by restricting competition among producers,
especially in agriculture sector. These government restrictions allow farmers to capture
illions of dollars via higher food prices. But most of these dollars go to large farmers
who are much wealthier than average consumer and tax payers. In addition, they also
eceive most of the government’s subsidy pertaining to agriculture. Furthermore, the
import restriction meant for saving domestic jobs also transfers surplus from consumers
to producers. Again, those who realize these transfers are wealthier than those who are
paying for them.
4. Poor not only receive a smaller share of government transfer than non-poor realize, but
also the transfers they do get are worth less than, dollar for dollar, than transfer going to
the wealthy. The reason is that most subsidies to the poor tend to be in kind rather than in
cash.
I do not support the cu
ent U.S agriculture policy which provide subsidy to all farmers
egardless of their income. Since these subsidies benefit the large farmers most and the
smaller farmers only get smaller share of that, continuing with such universal policy is
wastage of average tax payer’s money. These large farmers are often wealthier than average
consumers and tax payers, so providing subsidy to them is no use...