Question

Redistribution of income or wealth will be a dis-incentive to people working hard. This brings back memory of why the old communist blocks failed and free market continue to thrive till today. This is only possible in command economy where government have exclusive authority over the factor of production. I definitely agree with Amanda on that "People who earn lots of money often work harder or have innovative ideas etc ."

When income is redistributed, tendency abound for bandwagon effect to become the order of the day, since the generality of people will take that whether they work or not, everyone gets the same reward. At some point, those hard working and diligent among the society will have no motivation to up their game, while innovation and productivity will suffer including the economy at large.

In 175 words do you agree or not?

Answer 1

Yes I do agree . Incentive is a thing that motivates or encourages you to do something . A prize or gold medal is the motivation for a runner , similarly economic success , wealth etc act as motivation for most enterpreneurs , managers , executives etc . Communist blocks failed due to lack of productivity . In command economy the government owns all factors of production and uses it in the best way possible . People when once come to know that whether they work or not everyone gets same reward the obvious tendency would be to not work and choose leisure instead . This is common rationality . Equity and efficiency are two opposite poles . The trade off for equity is efficiency or productivity . As in case of higher tax rates , here also hard working people do not want to invest their hard work . The economy at large will face low production , income and growth . So in every economy there should be a balance between equity and efficiency .