There seems to be view (particularly on the left) that some wealth distributions are grossly unfair (and government should do something about it), but they have not thought through the implications of their beliefs.
Take whatever distribution you think is the outer limit of fair, for example suppose you think no one should have more than $1 billion dollars net worth or less than $100,000 of net worth. Or (equivalently) no one should have a net worth in excess of 10,000 times someone else’s. The actual distribution doesn’t matter. It could be that everyone should have exactly the same amount, whatever. As long as you think there should be some limit on either end (I’ll use the $X for the top end and $Y for the bottom end) then:
- If you are at $X maximum you are (functionally) not allowed to work or invest. If you do so you would go over the limit.
- If you are at the $Y minimum you are not allowed to spend any of your money because then you would be under the minimum. So you really don’t have $Y since you aren’t allowed to spend it!
- Suppose the $X person is an entertainer and wants to do a show, and suppose the $Y person wants to pay to go to the show. The tickets are $1. They are not allowed to transact! Even though both would like to, it would be illegal if you really believe that no one should have more than $X or less than $Y.
- If “everyone” gets $Y net worth regardless of what they do then they should spend extravagantly and the government will give them back what they spend because they would be below the minimum “fair” amount.
- Alternatively, if “everyone” gets $Y net worth regardless of what they do then they could take that $Y and buy deep out of the money options (or lottery tickets, or whatever). If they win, then they are rich, but if they lose the government gives them the money back!
This is insanity!