On Social Welfare

For those of you transitioning over from the short-lived previous location of my blog, welcome!

The following is a link to a short article from Tumblr that provides the basis for my first real post: http://communismkills.tumblr.com/post/16120904596/not-oddly-enough-all-arguments-in-favor-of-social

In this post, the writer expresses the opinion that social welfare programs have no real economic basis, and that all arguments for the creation of such programs are based on the idea of 'equity,' i.e. that people deserve certain things at the cost of other people, and it is cruel or unethical to deny them these things.

However, economics does provide a sound foundation for the creation of social welfare programs based on the redistribution of wealth from richer individuals to poorer individuals. This foundation is based on the idea of diminishing marginal utility.

Diminishing marginal utility is one of the key ideas in the economic field of utility theory, and it states that you get more satisfaction out of possessing the first unit of something than any later units. For example, the first slice of pizza you possess is much more useful to you than the hundredth, as, barring some odd occurrences, you will be incapable of consuming that hundredth slice of pizza before it goes bad.

The same idea applies to money. Say you have two people: one with $100,000,000 and one with only $1,000. The richer of the two cares less about losing or gaining $1,000 than the poorer one. Imagine the difference between doubling your wealth and lose 1/1000 of your wealth, and the concept is grasped.

It can then be said that a redistribution of wealth can raise the overall utility of society; thought it may lower the utility of richer individuals, it will raise the utility of poorer ones by more than the utility lost, at least in theory.

It may be that there exist no cases or individuals for which such a redistribution can occur, but the theoretical possibility of such a redistribution still exists.

In related news, this is my first real post! Hooray?