On 6th April, Congress leader and I.N.D.I. Alliance’s possible PM Face for Lok Sabha Elections 2024, Rahul Gandhi, promised an ultra-left idea of ‘wealth redistribution’. He claims that it would eradicate poverty and socioeconomic inequality. Gandhi said if Congress (with the alliance parties) came to power, his party would conduct a financial and institutional survey to ascertain who has wealth in the country. He said the grand old party would then distribute the wealth to the backward castes and ‘minorities’ based on their population, based on caste census data.
No matter how ridiculous it sounds, the idea is not a new recipe for economic disaster. It has been talked about in India several times, like during the COVID pandemic; Yogendra Yadav had suggested it under the action plan “Mission Jai Hind”.
The concept of wealth redistribution is associated with communist and socialist ideologies. Over the past, it has been implemented in various forms, and most of the time, it resulted in massive disaster. Initially, it may look good, but in the long run, it kills the economy and puts the country in such a vulnerable position that coming back from it seems almost impossible.
Those who support the idea claim wealth redistribution addresses economic inequality and promotes social justice. However, all over the world, policies aiming at wealth redistribution have failed to deliver the promised outcomes.
The Soviet Union Collapse
The most infamous examples of failed wealth redistribution occurred in the Soviet Union after the Bolshevik Revolution in 1917. The Soviet government introduced several radical economic policies to redistribute wealth and resources. The government took over private properties and nationalised them. The industries were brought under the state’s control.
In no time, the policies led to widespread inefficiencies, shortages and economic stagnation. Those who claim that a specific set of businesses houses accumulated wealth while the other side of the world is poor forget or conveniently skip to point out that a business is successful because of a lot of reasons. It is not successful only because of policies.
The economy under the Soviet Union struggled to innovate. They were not able to adapt to the market conditions. As a result, consumer goods were scarce. The standard of living declined rapidly, and ultimately, in 1991, the union collapsed. It has to be noted that not everyone is skilled to run businesses, especially when resources are ‘distributed’ without the necessary skills or desire to take good business decisions.
The Mao disaster in China
Another example of failed wealth redistribution came under Mao Zedong’s Great Leap Forward and Cultural Revolution. His policies were framed to collectivise agriculture and industrialise the economy via centralised planning. However, the policies became a massive disaster, resulting in widespread famine, economic chaos and social upheaval. Millions lost their lives from starvation, and China faced a severe economic setback. Only after Mao died did Deng Xiaoping bring economic reforms and economic growth and development back on track.
The untimely ‘demise’ of Venezuela’s wealth bubble
Latin American countries like Venezuela tried wealth redistribution in the West and failed miserably. Hugo Chavez and his successor, Nicolas Maduro, brought socialist policies to redistribute wealth and nationalise key industries. However, the corruption, mismanagement and collapse of oil prices led to severe economic crisis. The currency value dipped to a level of no return. Venezuela faced hyperinflation, a shortage of essential goods and widespread poverty, leading to the mass migration of millions of people who fled the country for a better life abroad.
The Zimbabwean Catastrophe
Another example can be seen in Zimbabwe under the leadership of Robert Mugabe. His policies were aimed at redistributing land from white farmers and giving it to the black Zimbabweans. However, how the program was initiated led to violence and economic instability. The agricultural productivity of the country collapsed. Zimbabwe was once known for supplying food grains to the whole of Africa. However, Mugabe’s policies led to food shortages and economic decline.
No matter which example you pick from history, it did worse for the country where such policies were implemented. The failure of redistribution policies is attributed to a combination of factors, which may include irresponsible centralised planning, lack of incentives for innovation and productivity, widespread corruption and political repression.
Not everyone can manage wealth
What is the idea behind wealth redistribution, anyway? To allow the marginalised to have their businesses? Or give funds to those who never saw enough cash to buy a refrigerator? There is no need to take money from those who have it and distribute it among the marginalised. At every level, there are government schemes that can help them.
On the other hand, there are several examples in India where one businessman failed, but the other succeeded using his vision and skills. Not everyone can be a successful businessman, knows how to manage money, and can be a skilled or unskilled worker.
Some societies function at their own personal level, and disturbing them will lead to economic disaster. For example, if someone does not know how to promote a business but gets unconditional money for the same, he or she may, without putting a mind to it, spend it on ads with zero leads in return. On the other hand, a skilled entrepreneur may use social media platforms to promote his or her business at almost zero cost. The same goes for every sector and every aspect of society when it comes to wealth.
Take the example of the Ambani brothers. When the businesses were divided, what Anil Ambani got looked more promising. However, over time, some bad business decisions put him in a tight position, and he has almost disappeared from the business world. On the other hand, his elder brother Mukesh Ambani is doing exceptionally well and has increased his worth by several folds. It is not that Anil lacked leadership skills, but there must have been some bad decisions that he made over time, leading to the economic collapse of his companies.
When we talk about wealth and resource redistribution, it will take away wealth and resources from the experts and give to those who do not even know how to run a sustainable business. Not everyone can run a factory, and not everyone should do it either.
History teaches us to repel wealth distribution
History shows that the idea of wealth redistribution must be repelled. It is a failed idea that stemmed from extreme Communist ideology. Karl Marx, in his Communist Manifesto, said that wealth should be distributed according to the precepts, “From each according to his ability, to each according to his need.” While the Communists worshipped Marx, in reality, his work and his theories led to millions of deaths worldwide. If any government or any leader is interested in reducing economic inequality, it must be pursued through sustainable and inclusive economic policies. The idea should be to promote innovation, entrepreneurship, and individual freedom. It is the only way to eradicate poverty; nothing else works in the long run.
