Best Essay Paper on Redistribution and Welfare Economics

Redistribution and Welfare Economics

Part 1: Redistribution and Welfare Economics

            Economy has its own preferences and this serves as a challenge to redistribution welfare economics. There are several inequalities in an economy which divided into poor, average and rich individuals in the society. Redistribution of wealth and welfare tend to bridge the gap by use of the tax system. The tax system is made progressive in that the tax rates are relatively low for the poor citizens compared to the rates paid by the rich people. The tax system is designed to get more money from the rich and redistribute money to the poor by building hospitals, schools and residential houses. The goal is to maximize average utility by raising taxes to avoid the substitution effects (Fleurbaey, 2012). The just outcomes on redistribution of welfare are by the government intervening in-:

  • Macro economics in order to manage recessions and reduce unemployment
  • Equal wealth distribution to all citizens
  • Markets to regulate the market policies for imported goods

            In order to evaluate how welfare economy redistributes it is wealth, it useful to distinguish involving horizontal, vertical and between group redistribution. Social insurance is mainly deliberated for horizontal redeployment, which is in search of a chance to transfer income across the life cycle. Pioneering work on poverty highlight the horizontal elements across the life cycle where the citizens face alternating periods of wants and abundance (Stanton, 2011). However, there is a suggestion of vertical redistribution where the role of the government is taking from the rich to give to the poor. By doing this, it improves the standard living of the poor while improving their economy at large. The scale of vertical redeployment is specified by the progressive tax system, where the social spending goes disproportionately to the low income earners. Inter-group redistribution of resources are family reimbursements and general health care for the poor. Welfare provides possessions to its citizens that distress by their earnings prospects. This is derived mainly by introducing services, such as free education, health care, training programs or support to work force (Stanton, 2011, Fleurbaey, 2012).

Part II: Altruism

Altruism is referred to as an act of self-sacrificing for the benefit of someone else. In Monroe’s book on Altruism and social theory, it has a distorted reality in the disciplines it is used like economics and political economy, biology evolution and psychology. These disciplines have assumed the tendencies of self interests and sacrifice their own well being for the benefits of other people in the society. The governments can encourage altruism by not charging taxes on charities. The government can also support the charities by allowing different organizations to partner with charities to fund different projects. For tax purposes donation made to charitable institutions are supposed to be treated as allowable deduction when calculating net taxable incomes (Monroe, 1994).

Government intervention will improve equality distribution of wealth. It will also check on market failures by introducing policies that will discourage external products. The Government may intervene to conquer recessions and reduce unemployment. The policies used to offer incentives for people to start non-profits are supposed to be well documented in that rules and regulations are stated that bind the charitable institutions and their donors. Charitable institutions have to be accountable to all donations given to them for different projects. These projects have to be done to completion and thoroughly inspected by the public or government to make sure that the donor’s funds or contributions were fully utilized. Taxes write offs motivate organizations or individuals to give charitable gifts.

The policies that kill or demoralize the non-profits organizations are heavy taxations and lack of tax incentive for organizations making donations to charitable organizations. The government may also kill altruism by making wrong decisions due to political influence which leads to inefficiency because the decisions does not consider the the whole population but a political party interests. It can also be killed if the population feels the government is controlling their personal freedom by dictating on how individuals should spend. Altruism departs from infinite or finite life span for customers into the best possible economic policy. Policies make sure that equal prospect structures will certainly reduce inequalities in the distribution of market earnings (Monroe, 1994).

References

Fleurbaey, M. (2012). Fairness, responsibility, and welfare. OUP Catalogue.

Monroe, K. R. (1994). A fat lady in a corset: altruism and social theory. American Journal of Political Science, 861-893.

Stanton, E. A. (2011). Negishi welfare weights in integrated assessment models: the mathematics of global inequality. Climatic Change, 107(3-4), 417-432.