Wealth Redistribution Policies

1. Wealth Redistribution Policies Shahid Beheshti University of Medical Sciences School of Medical Education Strategic Policy Sessions: 05

2. “It’s Your money, not the government’s”Ronald Reagan

3. “As long as there existed a business owning, class oppression would continue. Private property is illegal.Karl Marx

4. What is an Ideology? • Generally speaking, it is a value system through which we perceive, explain and accept the world. • According to the political theorist Robert Dahl, all individuals are ideologues in the sense that we all map out our own interpretations of what the world is and how it should be.

5. The Major Components of Ideologies • The state of human nature • The role of the individual in society • The role of the state • The sources and limits of political authority • The preferred economic and social order

6. Ideologies: The Preferred Economic and Social Order • Ideologies have to deal with the fundamental question of who controls the wealth in society. Should wealth be equally shared, or should some individuals be allowed to possess more wealth than others? • For communists, private ownership is not allowed. They are committed to providing an equitable distribution of wealth • For capitalists, people need to compete with one another in order to have an incentive for material gain. Economic and social inequities are allowed to exist

7. “The Economy” • How politics and economics interact, and how they balance conflicting values of freedom and equality

8. Components of Political Economy • Markets – interaction between supply and demand that functions to allocate resources • Freely allow individuals to buy, sell, and trade what they produce for what they will consume • Sets values, or “prices” for these goods and services • Markets arise spontaneously, and are difficult for the state to control

9. Components of Political Economy • Property – ownership of goods and services • State can choose to play a role in protecting property rights – the right to sell property freely, or to not have it taken away • In LDCs, frequently property exists without a fundamental protection of property rights, due to the state’s inability to monitor instances of fraud

10. Components of Political Economy • Public Goods – goods provided and/or secured by the state • Examples (universal): Roads, lighthouses, the military • Examples (in some cases) • Health care in Britain, Canada • Oil in Nigeria and Saudi Arabia • Most businesses in Cuba

11. Components of Political Economy • Taxation • Means to provide for public goods and social expenditures • Subject of political battles, determined partially by ideology toward the role of the state

12. Components of Political Economy • Social Expenditures • Commonly called “The Welfare State” – redistribution of wealth through government taxing some, and paying others • Typically provided to the elderly, the unemployed, the poor, and the disabled • Often a subject of political battle, due to the question of who benefits from expenditures

13. Components of Political Economy • Money, Inflation, and Unemployment • States create and manage the money supply through a central bank • Creation of too much money in effort to stimulate the economy and reduce unemployment can cause inflation • Slowing the growth of money to control inflation can slow economic growth and cause unemployment to rise

14. Components of Political Economy • Regulation – rules or orders to set the boundaries of given procedures • States can ban production or sale of goods, set safety requirements, outlaw monopoly control, etc. • Trade – access to goods and services from foreign states • States can allow open trade, or restrict it through tariffs, quotas, and other non-tariff barriers

15. Sweden: 54.2 % Denmark: 48.8 %  Finland: 46.9 %   Belgium: 45.6 % France: 45.3 %   Austria: 43.7 %   Italy: 42 %   Netherlands: 41.4 % Norway: 40.3 %   Germany: 37.9 % United Kingdom: 37.4 % Russia: 36.9 % Canada: 35.8 % Switzerland: 35.7 % New Zealand: 35.1 % Australia: 31.5 % Ireland: 31.1 %   United States: 29.6 % Japan: 27.1 %   China: 17% Mexico: 9.7% Iran: 7.3% Nigeria: 6.1% Tax Rates as % of GDP (2008)

16. Gini Coefficient for the 6 Countries • Sweden – 23.1 • Germany – 28.3 • U.S. – 40.8 • China – 44.7 • United Kingdom – 36.0 • Russia – 31.0 • Mexico – 54.6 • Iran – 43.0 • Nigeria – 50.6

17. Success is one percent inspiration and ninety-nine percent perspiration Priori Experience = Posteriori + Where I was born Inspiration Who am I now Who are my parents = + Perspiration What have I now How I was developed What is my IQ

18. Wealth Redistribution • Revenue Model • Logarithmic (Regressive) • Full Range Increasing (Proportional) • Increasing (Proportional) with Threshold • Exponential (Progressive) • Payback Model • Full Range Flat Rate • Flat Rate with Threshold • Full Range Decreasing • Decreasing with Threshold • Inverse Exponential

19. Income Redistributive Policies Full-Range Flat Rate Flat Rate with Threshold Inverse Exponential Full-Range Decreasing Decreasing with Threshold Full Range Increasing Increasing with Threshold Exponential

20. Income Redistributive Policies Tax Reduced Allowance Added Income Income

21. Income Redistributive Policies Tax Reduced Allowance Added Income Income

22. Income Redistributive Policies Tax Reduced Allowance Added Income Income

23. Income Redistributive Policies Tax Reduced Allowance Added Income Income

24. Income Redistributive Policies Tax Reduced Allowance Added Income Income

25. Income Redistributive Policies Tax Reduced Allowance Added Income Income

26. Income Redistributive Policies Tax Reduced Allowance Added Income Income

27. Income Redistributive Policies Tax Reduced Allowance Added Income Income

28. Income Redistributive Policies Tax Reduced Allowance Added Income Income

29. Income Redistributive Policies Tax Reduced Allowance Added Income Income

30. Income Redistributive Policies Tax Reduced Allowance Added Income Income

31. Income Redistributive Policies Tax Reduced Allowance Added Income Income

32. Income Redistributive Policies Tax Reduced Allowance Added Income Income

33. Income Redistributive Policies Tax Reduced Allowance Added Income Income

34. Income Redistributive Policies Tax Reduced Allowance Added Income Income

35. Thank You ! Any Question ?