Wealth Redistribution Policies Dr Shahram Yazdani Shahid Beheshti

Wealth Redistribution Policies Dr. Shahram Yazdani Shahid Beheshti University of Medical Sciences School of Medical Education Strategic Policy Sessions: 05

“It’s Your money, not the government’s” Ronald Reagan Dr. Shahram Yazdani

Dr. Shahram Yazdani “As long as there existed a business owning, class oppression would continue. Private property is illegal. Karl Marx

What is an Ideology? n n Generally speaking, it is a value system through which we perceive, explain and accept the world. According to the political theorist Robert Dahl, all individuals are ideologues in the sense that we all map out our own interpretations of what the world is and how it should be. Dr. Shahram Yazdani

The Major Components of Ideologies n n n The state of human nature The role of the individual in society The role of the state The sources and limits of political authority The preferred economic and social order Dr. Shahram Yazdani

Ideologies: The Preferred Economic and Social Order n n n Dr. Shahram Yazdani Ideologies have to deal with the fundamental question of who controls the wealth in society. Should wealth be equally shared, or should some individuals be allowed to possess more wealth than others? For communists, private ownership is not allowed. They are committed to providing an equitable distribution of wealth For capitalists, people need to compete with one another in order to have an incentive for material gain. Economic and social inequities are allowed to exist

“The Economy” n How politics and economics interact, and how they balance conflicting values of freedom and equality Dr. Shahram Yazdani

Components of Political Economy n Markets – interaction between supply and demand that functions to allocate resources ¡ Freely allow individuals to buy, sell, and trade what they produce for what they will consume ¡ Sets values, or “prices” for these goods and services Dr. Shahram Yazdani ¡ Markets arise spontaneously, and are difficult for the state to control

Components of Political Economy n Property – ownership of goods and services ¡ State can choose to play a role in protecting property rights – the right to sell property freely, or to not have it taken away n In LDCs, frequently property exists without a fundamental protection of property rights, due to the state’s inability to monitor instances of fraud Dr. Shahram Yazdani

Components of Political Economy n Dr. Shahram Yazdani Public Goods – goods provided and/or secured by the state ¡ Examples (universal): Roads, lighthouses, the military ¡ Examples (in some cases) n Health care in Britain, Canada n Oil in Nigeria and Saudi Arabia n Most businesses in Cuba

Components of Political Economy n Taxation ¡ ¡ Means to provide for public goods and social expenditures Subject of political battles, determined partially by ideology toward the role of the state Dr. Shahram Yazdani

Components of Political Economy n Social Expenditures ¡ ¡ ¡ Dr. Shahram Yazdani Commonly called “The Welfare State” – redistribution of wealth through government taxing some, and paying others Typically provided to the elderly, the unemployed, the poor, and the disabled Often a subject of political battle, due to the question of who benefits from expenditures

Components of Political Economy n Money, Inflation, and Unemployment ¡ ¡ ¡ States create and manage the money supply through a central bank Creation of too much money in effort to stimulate the economy and reduce unemployment can cause inflation Slowing the growth of money to control inflation can slow economic growth and cause unemployment to rise Dr. Shahram Yazdani

Components of Political Economy n Regulation – rules or orders to set the boundaries of given procedures ¡ n States can ban production or sale of goods, set safety requirements, outlaw monopoly control, etc. Trade – access to goods and services from foreign states ¡ Dr. Shahram Yazdani States can allow open trade, or restrict it through tariffs, quotas, and other non-tariff barriers

Tax Rates as % of GDP (2008) n n n n n Dr. Shahram Yazdani n n Sweden: 54. 2 % Denmark: 48. 8 % Finland: 46. 9 % Belgium: 45. 6 % France: 45. 3 % Austria: 43. 7 % Italy: 42 % Netherlands: 41. 4 % Norway: 40. 3 % Germany: 37. 9 % United Kingdom: 37. 4 % n n n Russia: 36. 9 % Canada: 35. 8 % Switzerland: 35. 7 % New Zealand: 35. 1 % Australia: 31. 5 % Ireland: 31. 1 % United States: 29. 6 % Japan: 27. 1 % China: 17% Mexico: 9. 7% Iran: 7. 3% Nigeria: 6. 1%

Gini Coefficient for the 6 Countries n n n n Dr. Shahram Yazdani n Sweden – 23. 1 Germany – 28. 3 U. S. – 40. 8 China – 44. 7 United Kingdom – 36. 0 Russia – 31. 0 Mexico – 54. 6 Iran – 43. 0 Nigeria – 50. 6

Success is one percent inspiration and ninetynine percent perspiration Priori + Experience = Posteriori Where I was born Dr. Shahram Yazdani Who are my parents How I was developed What is my IQ + Inspiration Perspiration = Who am I now What have I now

Wealth Redistribution n Revenue Model ¡ ¡ n Logarithmic (Regressive) Full Range Increasing (Proportional) with Threshold Exponential (Progressive) Payback Model ¡ ¡ ¡ Dr. Shahram Yazdani ¡ ¡ Full Range Flat Rate with Threshold Full Range Decreasing with Threshold Inverse Exponential

Income Redistributive Policies Full-Range Flat Rate Full Range Increasing with Threshold Exponential Flat Rate with Threshold Full-Range Decreasing with Threshold Inverse Exponential

Income Redistributive Policies Tax Reduced Allowance Added Income

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