The story of Robin Hood is deeply ingrained in our culture. The classic tale of stealing from the rich and giving to the poor is pervasive in everything from the literature of T.H. White to Disney movies.
The narrative can also be found in unexpected corners of our lives. I personally had an encounter with Robin Hood this summer. I took the train to Manhattan in June where all over the city hung banners and signs proclaiming: "Fight Poverty Like a New Yorker – The Robin Hood Campaign."
The Robin Hood Tax, known officially as the Inclusive Prosperity Act, proposed in the bill H.R. 1579, is a tax levied on transactions in the financial markets. Supporters claim the tax will "transform main street" by redistributing a portion of Wall Street's gains to communities across the country.
One aspect of the Robin Hood Tax strives to fix the perceived problem of income distribution in our society.
Income distribution – a principle at the core of the Robin Hood saga – is a hot-button issue today. Everyone from Paul Krugman to President Obama have weighed in on the issue. Some have gone so far as to say our capitalist system is at fault because increased financial inequality is the natural result of free enterprise.
With all the political jargon flying around, many find it difficult to assess the issue, but if you as a student can separate fact from fallacy, the results will be beneficial to us all.
One is hard-pressed to find a concept easier to understand than this: some people make more money than others. Recently, however, the distribution of income has been shoved under the spotlight by politicians and economists alike. However, this is not a new issue. Milton Friedman addressed the issue decades ago:
"A capitalist system ... can be ... characterized by considerable inequality in income and wealth. This fact is frequently misinterpreted to mean that capitalism and free-enterprise produce wider inequality."
He goes on to say that this fallacy is fostered by "misleading public figures."
Regarding the data, Friedman is spot on. Yes, there is a growing differential in income between Americans in the top earning percentiles and those in the bottom. However, to truly assess the extent of this division, one must follow individuals through time – or assess the individual's income mobility.
A study by Scott Winship of the Brookings Institute showed that income mobility – an individual's ability to climb the economic ladder to increased earning potential – has not decreased, but rather has increased since the '50s.
Rather than think of the difference in incomes as a canyon, think of it as a ladder, and in this case, the ladder has grown to new heights for individuals to climb, without removing any rungs.
Therein lies the beauty of the free market. Its true measure is not found in the accumulation of wealth to individuals. Rather, it lies in the opportunity the free market presents for every individual to improve his or her standard of living according to his or her own capacity.
This fact helps explain the dramatic increase in the standard of living our grandparents have witnessed over their lifetimes. The luxuries once reserved for the upper echelons of society – TV, air conditioning, even mobile phones – are now so pervasive that even the poorest among us can enjoy them.
In the context of the free market, our own successes do not derive from where we were born; instead, they are a function of individual self-worth, effort and life choices. Notions of social mobility and high economic payoffs for achievement have only become a reality recently because of capitalism.
The social and subsequent income mobility that capitalism makes possible not only raises the ladder with every innovation, it also further equalizes society.
Instead of aspiring for more Robin Hoods in the world, we need more enlightened individuals who point others to the ladder of success – where how high you climb depends on how far you want to go and how hard you're willing to work.
I'd wager that most people would accept a hand up the ladder of social mobility rather than a handout from a Robin Hood.
Adam Prosise is a senior in economics. He can be reached at firstname.lastname@example.org.