Robin Hood Effect
Categories: Wealth
Who doesn’t love Robin Hood? Oh right...the people whose money he took to give to the starving, crippled, and poor. Well, he was only a legend anyway.
The Robin Hood effect is the phenomenon of income being redistributed to reduce inequality as time goes by. Wealth and income inequality decreasing...equality increasing. This could be effected through taxes on the wealthy, or other redistributive means. Robin Hood didn’t care how it happened, as long as it happened.
There’s a “reverse Robin Hood effect” as well, where wealthier folks are gaining more at the expense of the poorer folk.
This phenomenon falls under the rubric of “normative economics,” which is all about opinions. Some people think the Robin Hood effect is something to strive for...people with Robin Hoods inside themselves. Others think, "Nah, every man for himself"...even if that means that most are left on the bottom of the economic dogpile.
From an economic perspective though, an economy is “healthy” when people spend, so some argue that a larger middle class is necessary for a sustainably healthy economy. We can’t rely on wealthy people spending because there are so few of them with all of their needs met, so...they could just choose to let it sit in an offshore bank account, which would slow the economy.
