Is taxation the only way to "spread the wealth"?

A leftish friend recently remarked about how people are inherently selfish, and if we don’t have Big Government social programs and healthcare to take money from some people and give it to others, poor people will start dropping like flies. Or something like that. I hear this sort of thing a lot. I think the reason people think this way is because they haven’t given enough thought to alternatives – softer, less forceful ways of encouraging people to help each other. So I’m going to throw out a few ideas to challenge the conventional wisdom that if Government doesn’t do it, nobody will.

First, we have to understand something about the history of mankind. Thousands of years ago when we were all living in small tribes, everyone knew everyone else. Everyone knew if you hunted a big animal or cultivated a large field. Everyone knew if you were attacked by a cheetah, or got sick because of bad juju. They knew if you were a hard worker or a lazy slacker. They knew if you were careful and forward-thinking, or sloppy and short-sighted. If you were sick or hurt, someone would help you out (if you deserved it). People did not live in relative anonymity as they do today. And because they knew each others' business, the more successful felt some obligation to help the less successful. And the less successful felt an obligation to minimize their drain on the others by acting responsibly and working harder to pull their own weight.

Fast-forward to today, where each of us is surrounded by millions of others. We can’t possibly know them, or what they’re up to, or if they need help, and why, and if they deserve it. So most people’s reaction is to use the force of government – robbery at gunpoint – to take money from some people and spread it around. But there are problems with this. The people who are robbed feel resentful – they don’t know where their money is going, and they know a lot of it is wasted, a lot of it goes to pork projects, and a lot of it goes to leeches. The people who get the money don’t feel grateful or even obligated to pull their own weight – they’re just gaming the system. And Government in the middle has no real incentive to use your money wisely or efficiently, or in ways that you agree with.

It seems to me that the solution, or part of it, is to bring back the personal connections and peer pressure that encourage people to do what’s right in smaller communities. Here are some ideas to that effect. I’m not necessarily in favor of all of them, just throwing out ideas to get people thinking and to challenge assumptions.

1. Give people a choice of either paying their taxes, or publishing a detailed statement of their income, wealth, expenditures and charitable donations on the internet.

2. Require everyone to publish a detailed statement of their income, taxes, wealth, expenditures and charitable donations on the internet.

3. Let people decide how their tax money is spent. The overall level of taxes would be fixed. Government departments would put in requests, but the actual allocation of money would be determined by the taxpayers. If people don’t like subsidizing corn farmers or overseas wars, then corn farmers won’t get subsidized and wars won't get funded.

4. Increase the tax deduction for charitable contributions to nearly 100%. If you don’t like giving your money to government beaurocracy, you can give it to charity instead, and not be penalized (or not much).

5. Change welfare from a many-to-many system to a one-to-one system. Tell a rich guy that he is personally responsible for this poor person, and see if he ignores them. Allow (or require) both of them to publish comments about each other on a web site. I wrote about something like this a while ago.

6. Social networking is in its infancy. If you think Facebook is cool now, just wait 10 years. The Internet and social networking will shrink the world in many ways, and allow us to keep closer tabs on each other. Reputation-based networking is barely more than an idea now, but soon it will enable us to extend our reputations that are built on personal interaction to people who don’t even know us. Right now your personal acquaintances may know if you’re generous or trustworthy or lazy or a cheater; but when that knowledge is available to everyone, the world will be more like it was 10,000 years ago.

7. In Down and Out in The Magic Kingdom, Cory Doctorow wrote about a future in which everyone has a net-connected brain implant which enables them to instantly identify everyone they see and to know that person’s wealth in “whuffie”, a sort of social currency. The wealthy are greatly respected, because they earned their social currency by doing things that others found admirable or useful. Whuffie can be exchanged with a few mental “clicks”. This may be a bit futuristic, but in a world where everyone has an Internet connected smartphone, it’s not that unrealistic. I think that the combination of mobile internet and social networking can and will play a role in shrinking the world, and bringing back personal connections and responsibility.

8. Over the last several decades, government power in the US has become more and more centralized. This is the wrong way to go; we should move toward less centralized, more localized government. One cannot expect someone in a massive beaurocracy 3000 miles away to understand and attend to local needs and preferences. And centralized, homogenized government makes it impossible for different states or cities to try new ideas and really find out what works best.

Whatever your political persuasion, there’s one thing I’m pretty sure we can agree on: our present form of government is not the optimal one. It seems to me that we need some fresh ideas and freedom to try them out.

For further reading on this topic, I recommend The Origins of Virtue.

And I'd love to hear your ideas.