Income Inequality Dwight Lee 2002  Essay

It is grossly inefficient not to means-test Social Security and Medicare. I would fix these programs by making them both means-tested. This would result in more efficient transfers to seniors who actually need the money, rather than giving money to seniors who do not need it. This would free up more money to other Americans -- even if just the average taxpayer by way of allowing for a balanced budget.

Lee notes that current redistribution policies have only made a marginal impact on the percent of national income that goes to the poor (from 6.4% in 1950 to 6.7% in 1970). This is not a significant improvement, unless that redistribution has become considerably more efficient over that time. There does not appear to be much evidence that supports the idea that redistribution has become more efficient. Instead, most redistribution programs are not means-tested, which means that much of the redistribution is wasted, at least contributing nothing in the way of poverty reduction.

I would prefer the income redistribution policies, if they are truly aimed at helping the poor, are focused on the poor. Programs that make blanket payments to people who do not necessarily need them are economically inefficient, and unlikely to make much contribution if any to the goal of poverty reduction.

Works Cited:

Lee, D. (2002). Redistribution of income. Library of Economics and Liberty. Retrieved February 19, 2012 from…