Wealth Redistribution? (And Homeownership)

Recently, in class, we did an economics section of "random economic lives," from a single person making $70,000 a year, to the US median, down to welfare. The results were quite interesting.

As suggested by the title of this post in mind my the most interesting aspects of the activity involved the redistribution of wealth, through welfare, unemployment, and other such programs programs. The key question being, how much money should these "safety net" programs dispense. Now the answers from the two extremes, Communism and Laissez-Faire Capitalism, are respectively, everyone should get enough so that everyone is equal, and that there should be no government assistance, the market will take care of everything.

Now I believe, and I think it is a widely shared belief, that the right amount lies somewhere in between these two extremes. How much however, is one of the biggest political questions today. The Democratic Party generally favors more, while the Republics generally favor less.

I find myself, as I usually do, on the Democratic side of this debate. For a Family of four, the current month payout is $900, with $500 worth of Food Stamps. (http://www.welfareinfo.org/payments/) Now, According to the United States Department of Agriculture, in December of 2008, even with the thriftiest of plans a family of four could expect to pay between $500-$600 for food every month. Leaving $800-$900 Dollars for every other need: shelter, clothing, heat, electricity, water. This seems too low, and I believe that these benefits should be made higher.

However, especially in these tough economic times, when more people than ever may be needing this aid, it may not be possible to increase these benefits. Raising taxes now seems like a bad idea, perhaps, money saved from others sources, (winding down the war in Iraq?) could be used to raise these benefits.

Finally, one other interesting result, when I was using checking the data for the United States Median income, I noticed something interesting. My hypothetical US median family was renting an apartment, and not saving any money, yet when I check the Home ownership statistics for 2005 (http://www.census.gov/hhes/www/housing/hvs/annual05/ann05t12.html), nearly 70% own a home, meaning not only would people at that income level be buying homes, but people making significantly less would also. I could see that it is possible, but only with very careful budgeting. This may have contributed to the housing crisis.

An unsolvable problem?

Israel and Palestine have been fighting for more than half a century now, since Israel was created. The problem seems unsolvable, as violence breaks out regularly despite any peace proposals. Furthermore there is no clear solution in sight. In the past several years, a new element has been added, complicating this already complicated region, as now Hamas, a more radical group controls the Gaza strip, and Fatah, the more moderate group, the West Bank. Now Israel has attacked the Gaza strip.

This humanitarian disaster must be controlled. According to the BBC, "Palestinian medics say 879 people have been killed during the 16-day conflict. Thirteen Israelis have died." Just today, "Palestinian sources said 29 people were killed across Gaza on Sunday - 17 in Gaza City.
Israeli officials said at least 12 rockets were fired by Palestinian militants into southern Israel." Furthermore it is only going to get worse as the day goes on.

The United Nations has called for an immediate end to the conflict, a ceasefire. And if either side would agree to it, it would be a good thing, however it would not address the fundamental causes of the conflict and would only be a short term solution.

The most likely hope for a reasonable solution to this conflict will come from some of the moderate Arab nations in the area. They have an interest in maintaining stability and have credibility with both sides. There are multiple plans out there, one of which, the Syria-Qatar-Turkey plan has already been accepted by Hamas, according to the Al-Quds Al-Arabi newspaper.

This plan calls for cease-fire from both sides, the Israeli army and Hamas, the withdrawal of Israeli army from the Gaza immediately, return to the truce agreement signed back in June between Hamas and Israel, the formation of a special committee to open the crossings into the Gaza Strip, an international conference of donors to rebuild Gaza.

Obviously this plan favors Hamas, but perhaps this plan, or some elements of it can be used as a starting point for negotiation that may ultimately lead to a settlement.

Ending this conflict itself is a worthy enough goal, however, a more long lasting solution in needed. Many previous peace agreements have broken down, I hope all of the parties to this conflict, as well as involved third parties can work towards a treaty, that if it is not completely satisfactory to both sides, they can both live with it.

Revolution and Changing Governments.

History holds many examples of governments changing from Democratic to Autocratic governments and vice versa. Most are violent and happen through revolution, though not all are. Perhaps the slowest example is in England, where over a centuries long period the monarchs and Aristocrats gave up power beginning with the Magna Carta in 1215. Others have been more sudden but also free from violence, including many of the revolutions in Eastern Europe at the end of the cold war. But not all changes of government are toward the democratic side. The ancient Roman government, first a republic became a dictatorship in a rebellion. However, after the Romans overthrew the dictatorship of Julius Caesar the change to an empire, under Augustus Caesar was much more subltely done. History has many examples of governments changing in both directions, and at various speeds, from a lightning fast revolution to a centuries long process.

Today, governments can still change, something we see fairly often, though usually in smaller, developing nations.

One question now is, could China, the largest of the few remaining communist nations transition to a more open and democratic society. The answer is yes, several decades ago, China was much more of a closed society, and much more under state control. If these trends continue, which they seem likely to, China will become a democratic society. The leadership of the China, which normally would have the greatest reasons to oppose such a change, seem to see that progress in these areas are for their own and the national good. If however these leaders change their positions, the change will most likely take much longer and will possibly be bloodier.

A second questions, is can a modern developed democracy like the United States, go in the other direction, towards autocracy. The answer, unfortunately seems to be yes. It is easy when an emergency takes place to allow the government more power, only to deal with the crisis of course. Unfortunately, there are people who would use the government to gain personal power. And it is these emergency powers that are dangerous. One example in the recent history of the United States is the Patriot Act, it grants the government broad powers to spy on its own citizens. Americans must be vigilant, that their leaders are truely looking out for them, and the United States.