66-948: The Mexican Central Railway ( Ferrocarril Central Mexicano ) was one of the primary pre- nationalization railways of Mexico . Incorporated in Massachusetts in 1880, it opened the main line in March 1884, linking Mexico City to Ciudad Juárez , across the Rio Grande from El Paso and connections to the Southern Pacific Railroad , Texas and Pacific Railway , and Atchison, Topeka and Santa Fe Railway . Other major branches included Irapuato to Guadalajara (completed in 1888), Chicalote to Tampico (completed in 1890), and Guadalajara to Manzanillo (completed in 1908). The Mexican Central acquired control in June 1901 of
132-494: A palace economy . These economies were centrally based around the administration, meaning the dictator or pharaoh had both the ability and the right to say who was taxed and who received special treatment. Another early form of wealth redistribution occurred in Plymouth Colony under the leadership of William Bradford . Bradford recorded in his diary that this "common course" bred confusion, discontent, distrust, and
198-482: A better standard of living. Seen for example in the work of John Rawls , another argument is that a truly fair society would be organized in a manner benefiting the least advantaged, and any inequality would be permissible only to the extent that it benefits the least advantaged. Some proponents of redistribution argue that capitalism results in an externality that creates unequal wealth distribution. Many economists have argued that wealth and income inequality are
264-405: A cause of economic crises , and that reducing these inequalities is one way to prevent or ameliorate economic crises, with redistribution thus benefiting the economy overall. This view was associated with the underconsumptionism school in the 19th century, now considered an aspect of some schools of Keynesian economics ; it has also been advanced, for different reasons, by Marxian economics . It
330-436: A current political infrastructure that addresses these issues. Modern thinking towards the topic of the redistribution of wealth, focuses on the concept that economic development increases the standard of living across an entire society. Today, income redistribution occurs in some form in most democratic countries, through economic policies. Some redistributive policies attempt to take wealth, income, and other resources from
396-505: A deceased person from closest family members and moving towards a more distant family. Son(s), daughter(s), wife, husband and parents are the prime recipients. This distribution is explicitly illustrated in Qur’an and cannot be changed or modified. Under varying conditions, the share received by different relatives accordingly changes. The important principle is that the owner at the time of his/her death cannot change these shares. The context that
462-409: A different political party or faction is in power. A re-nationalization process may also be called "reverse privatization". Nationalization has been used to refer to either direct state-ownership and management of an enterprise or to a government acquiring a large controlling share of a publicly listed corporation . According to research by Paasha Mahdavi, leaders who consider nationalization face
528-482: A dilemma: "nationalize and reap immediate gains while risking future prosperity, or maintain private operations, thereby passing on revenue windfalls but securing long-term fiscal streams." He argues that leaders "nationalize extractive resources to extend the duration of their power" by using "this increased capital to secure political support." Nationalization can have positive and negative effects. In 2019 research based on studies from Greenwich University found that
594-489: A few years" but "longer growth spells are robustly associated with more equality in the income distribution." The Industrial Revolution led to increasing inequality among nations. Some economies took off, whereas others, like many of those in Africa or Asia, remained close to a subsistence standard of living. General calculations show that the 17 countries of the world with the most-developed economies had, on average, 2.4 times
660-426: A government to take property in certain situations. Due to political risks that are involved when countries engage in international business, it is important to understand the expropriation risks and laws within each of the countries in which business is conducted in order to understand the risks as an investor in that country. Studies have found that nationalization follows a cyclical trend. Nationalization rose in
726-523: A lower social class tend to favor more redistributive policies than their counterparts born into a higher social class. Research has also found that women generally support redistribution more than men do, though the strength of this preference varies across countries. While literature remains mixed on if monetary gain is the true motivation behind favoring redistributive policies, most researchers accept that social class plays some role in determining someone's views towards redistributive policies. Nonetheless,
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#1732801645494792-420: A person is in can influence their views on redistributive policies. For example, despite both being Western civilizations, typical Americans and Europeans do not have the same views on redistribution policies. This phenomenon persists even among people who would benefit most from redistributive policies, as poor Americans tend to favor redistributive policy less than equally poor Europeans. Research shows this
858-446: A progressive system of taxation to achieve a certain level of income redistribution. In addition to the creation and implementation of these tax systems, "globalization of the world economy [has] provided incentives for reforming the tax systems" across the globe. Along with utilizing a system of taxation to achieve the redistribution of wealth, the same socio-economic benefit can be achieved if there are appropriate policies enacted within
924-545: A strategy to build socialism, more commonly nationalization was also undertaken and used to protect and develop industries perceived as being vital to a nation's competitiveness (such as aerospace and shipbuilding), or to protect jobs in certain industries. Nationalization has had varying levels of support throughout history. After the Second World War , nationalization was supported by social democratic and democratic socialist parties throughout Western Europe, such as
990-505: A trickle-down effect, where the benefits of growth would eventually reach the poorest members of society. However, evidence began to emerge in the 1990s that challenged this notion and suggested that the link between economic growth and poverty reduction was not as strong as previously thought. This shift in thinking led to a reconsideration of the importance of addressing inequality in the pursuit of development. The redistribution of wealth and its practical application are bound to change with
1056-484: Is a major instrument of restricting the excessive accumulation of wealth and helping the poor and most vulnerable members of the society, Secondly, usury , or charging interest , is prohibited. Elimination of interest from the economic system is a revolutionary step with profound effects on all spheres of economic activities. Finally, the Inheritance Law Of Islam is the distribution of the property of
1122-448: Is because when a society has a fundamental belief that those who work hard will earn rewards from their work, the society will favor lower redistributive policies. However, when a society as a whole believes that some combination of outside factors, such as luck or corruption, can contribute to determining one's wealth, those in the society will tend to favor higher redistributive policies. This leads to fundamentally different ideas of what
1188-411: Is much more equal than Western economies. Likewise, the socialist planned economies of the former Soviet Union and Eastern bloc featured very little income redistribution because private capital and land income were restricted. To attain an efficient allocation of resources with the desired distribution of income, if the assumptions of the competitive model are satisfied by the economy, the sole role of
1254-419: Is one example. Medicare is a government-run health insurance program that covers people age 65 or older, certain younger people with disabilities, and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). This is a direct benefit program because the government is directly providing health insurance for those who qualify. The difference between
1320-424: Is sometimes related to the term class warfare , where the redistribution is alleged to counteract harm caused by high-income earners and the wealthy through means such as unfairness and discrimination. Redistribution tax policy should not be confused with predistribution policies. "Predistribution" is the idea that the state should try to prevent inequalities from occurring in the first place rather than through
1386-401: Is the seizure of private property by a public agency for a purpose deemed to be in the public interest. It may also be used as a penalty for criminal proceedings. Expropriation differs from eminent domain in that the property owner is not compensated for the seized property. Unlike eminent domain, expropriation may also refer to the taking of private property by a private entity authorized by
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#17328016454941452-478: Is ‘just’ or fair in these countries and influences their overall views on redistribution. Another context that can influence one's ideas of redistributive policies is the social class that one is born into. People tend to favor redistributive policy that will help the groups that they are a member of. This is displayed in a study of Latin American lawmakers, where it is shown that lawmakers born into
1518-524: The Gini index for the income distribution before taxation and the Gini index after taxation is an indicator for the effects of such taxation. Wealth redistribution can be implemented through land reform that transfers ownership of land from one category of people to another, or through inheritance taxes , land value taxes or a broader wealth tax on assets in general. Before-and-after Gini coefficients for
1584-674: The Monterey and Mexican Gulf Railroad , which connected the Mexican International Railroad at Reata (near Monterrey ) to Tampico, and connected its main line with this line at the Monterrey end through a branch from Gómez Palacio . The Mexico, Cuernavaca and Pacific Railroad , owner of an unfinished line from Mexico City to Acapulco (completed to Rio Balsas ), joined the system in November 1902, and in 1905
1650-451: The commanding heights of the economy ), and in many jurisdictions such entities have no history of private ownership. Nationalization may occur with or without financial compensation to the former owners . Nationalization is distinguished from property redistribution in that the government retains control of nationalized property . Some nationalizations take place when a government seizes property acquired illegally. For example, in 1945
1716-408: The distribution of wealth can be compared. Interventions like rent control can impose large costs. Some alternative forms of interventions, such as housing subsidies, may achieve comparable distributional objectives at less cost. If the government cannot costlessly redistribute, it should look for efficient ways of redistributing—that is, ways that reduce the costs as much as possible. This is one of
1782-419: The negative income tax for very low income earners and tax loopholes (tax avoidance) for the better-off. Two other common types of governmental redistribution of income are subsidies and vouchers (such as food stamps or Section-8 housing vouchers). These transfer payment programs are funded through general taxation, but benefit the poor or influential special interest groups and corporations. While
1848-516: The public ownership of a national government or state . Nationalization contrasts with privatization and with demutualization . When previously nationalized assets are privatized and subsequently returned to public ownership at a later stage, they are said to have undergone renationalization . Industries often subject to nationalization include telecommunications , electric power , fossil fuels , railways , airlines , iron ore , media , postal services , banks , and water (sometimes called
1914-526: The "haves" and give them to the "have-nots", but many redistributions go elsewhere. For example, the U.S. government's progressive-rate income tax policy is redistributive because much tax revenue goes to social programs such as welfare and Medicare . In a progressive income tax system, a high income earner will pay a higher tax rate (a larger percentage of their income) than a low income earner; and therefore, will pay more total dollars per person. Other taxation-based methods of redistributing income are
1980-649: The 1960s and 1970s, followed by an increase in privatization in the 80s and 90s, followed again by an increase in nationalization in the 2000s and 2010s. The term appears as "expropriation of expropriators ( ruling classes )" in Marxist theory , and also as the slogan "Loot the looters!" ("грабь награбленное"), which was very popular during the Russian October Revolution . The term is also used to describe nationalization campaigns by communist states , such as dekulakization and collectivization in
2046-482: The 1990s, Ferromex acquired most of the former Mexican Central, the primary exception being the branch from Chicalote to Tampico, which was assigned to Transportación Ferroviaria Mexicana (now Kansas City Southern de México ). Nationalization Nationalization ( nationalisation in British English ) is the process of transforming privately owned assets into public assets by bringing them under
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2112-445: The 1990s, the dominant view among development economists was that inequality in poor countries was a less pressing issue compared to ensuring sufficient growth, which was believed to be the primary means of reducing poverty. The policy recommendation for developing countries was clear: it was not possible to simultaneously decrease poverty and inequality. This perspective was based on the belief that economic growth would eventually lead to
2178-519: The 50 states of the US, British researchers Richard G. Wilkinson and Kate Pickett show a correlation between income inequality and higher rates of health and social problems ( obesity , mental illness , homicides , teenage births , incarceration , child conflict, drug use), and lower rates of social goods ( life expectancy , educational performance, trust among strangers , women's status , social mobility , even numbers of patents issued per capita), on
2244-544: The British Labour Party . In the United States, potentially nationalizing healthcare is often a topic of political disagreement and makes frequent appearances in debates between political candidates. A 2020 poll shows that a majority (63%) of Americans support a nationalized healthcare system. A re-nationalization occurs when state-owned assets are privatized and later nationalized again, often when
2310-599: The Eastern European economies has increased after moving from socialist controlled systems to market-based economies. For the Islamic distribution, the following are the three key elements of the Islamic Economic System, which have significant implications for the distribution of income and wealth (if fully implemented) and are markedly different from Capitalism. The Islamic system is defined by
2376-457: The French government seized the car-maker Renault because its owners had collaborated with the 1940–1944 Nazi occupiers of France . In September 2021, Berliners voted to expropriate over 240,000 housing units , many of which were being held unoccupied as investment property. Economists distinguish between nationalization and socialization , which refers to the process of restructuring
2442-829: The GDP per capita of the world's poorest economies in 1870. By 1960, the most developed economies had 4.2 times the GDP per capita of the poorest economies. Regarding to GDP indicator, GDP has nothing to say about the level of inequality in society. GDP per capita is only an average. When GDP per capita rises by 5%, it could mean that GDP for everyone in the society has risen by 5%, or that GDP of some groups has risen by more while that of others has risen by less—or even declined. Public choice theory states that redistribution tends to benefit those with political clout to set spending priorities more than those in need, who lack real influence on government. The socialist economists John Roemer and Pranab Bardhan criticize redistribution via taxation in
2508-736: The Mexican Central bought the Coahuila and Pacific Railway ( Torreón to Saltillo ), which paralleled the branch from Gómez Palacio to Monterrey and was to be operated jointly with the National Railroad of Mexico . The Mexican government gained control in 1906, and in February 1909 the Ferrocarriles Nacionales de México ( National Railways of Mexico ) took over the property. Following privatization in
2574-547: The Scandinavian countries, social democracy has been in decline since the labor movement weakened. Instead, Roemer and Bardhan argue that changing the patterns of enterprise ownership and market socialism , obviating the need for redistribution, would be more sustainable and effective at promoting egalitarianism. Marxian economists argue that social democratic reforms – including policies to redistribute income – such as unemployment benefits and high taxes on profits and
2640-566: The Twenty-First Century is at the forefront of the debate, mainly focusing on within-country concentration of income and wealth. Branko Milanovic provided evidence of increasing inequality at the global level, showing how the group of so-called "global plutocrats ", i.e. the richest 1% in the world income distribution, were the main beneficiaries of economic growth in the period 1988–2008. More recent analysis supports this claim, as 27% of total economic growth worldwide accrued to
2706-514: The USSR . However, nationalization is not a specifically socialist strategy, and Marxism's founders were skeptical of its value. As Engels put it: Therein precisely lies the rub; for, so long as the propertied classes remain at the helm, nationalisation never abolishes exploitation but merely changes its form — in the French, American or Swiss republics no less than in monarchist Central, and despotic Eastern, Europe. Nikolai Bukharin also criticised
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2772-426: The classic theory that individual preferences for redistribution decrease with their income, leading to societal preferences for redistribution that increase with income inequality has been disputed. Perhaps the most important impact of government on the distribution of “wealth” is in the sphere of education—in ensuring that everyone has a certain amount of human capital . By providing all individuals, regardless of
2838-582: The colonists looked upon it as a form of slavery. A closely related term, distributism (also known as distributionism or distributivism), refers to an economic ideology that developed in Europe in the late 19th and early 20th century. It was based on the principles of Catholic social teaching , particularly the teachings of Pope Leo XIII in his encyclical Rerum Novarum and Pope Pius XI in Quadragesimo Anno . More recently, Pope Francis echoed
2904-414: The context of Nordic-style social democracy , reportedly highlighting its limited success at promoting relative egalitarianism and its lack of sustainability. They point out that social democracy requires a strong labor movement to sustain its heavy redistribution, and that it is unrealistic to expect such redistribution to be feasible in countries with weaker labor movements. They point out that, even in
2970-401: The continuous evolution of social norms, politics, and culture. Within developed countries income inequality has become a widely popular issue that has dominated the debate stage for the past few years. The importance of a nation's ability to redistribute wealth in order to implement social welfare programs, maintain public goods, and drive economic development has brought various conversations to
3036-422: The earlier Papal statements in his Evangelii Gaudium . Different types of economic systems feature varying degrees of interventionism aimed at redistributing income, depending on how unequal their initial distributions are. Free-market capitalist economies tend to feature high degrees of income redistribution. However, Japan's government engages in much less redistribution because its initial wage distribution
3102-408: The economic framework, organizational structure, and institutions of an economy on a socialist basis. By contrast, nationalization does not necessarily imply social ownership and the restructuring of the economic system . Historically, states have carried out nationalizations for various different purposes under a wide variety of different political systems and economic systems . Nationalization
3168-500: The following three key elements: Ushr and Zakat, the prohibition of usury, and the Inheritance Law. Ushr is an obligatory payment from agriculture output at the time of harvesting. If agricultural land is irrigated by rain or some other natural freely available water the producer is obliged to pay ten percent of the output as Ushr. In case irrigation water is not free of cost then the deduction would be five percent, while Zakat
3234-446: The funding of public services . One basis for redistribution is the concept of distributive justice , whose premise is that money and resources ought to be distributed in such a way as to lead to a socially just , and possibly more financially egalitarian , society. Another argument is that a larger middle class benefits an economy by enabling more people to be consumers , while providing equal opportunities for individuals to reach
3300-477: The government is to alter the initial distribution of wealth – the major drivers of income inequality in capitalist systems – was virtually nonexistent; and because the wage rates were set by the government in these economies. A comparison between Socialist and Capitalist Systems in terms of distribution of income is much easier as both these systems stand practically implemented in a number of countries under compatible political systems. Inequality in almost all
3366-429: The main concerns of the branch of economics called the economics of the public sector. One study suggests that "the middle class faces a paradoxical status" in that they tend to vote against income redistribution, even though they would benefit economically from it. The objectives of income redistribution are to increase economic stability and opportunity for the less wealthy members of society and thus usually include
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#17328016454943432-770: The motivations of the nationalizing party. Nationalization was employed towards the Panama Canal by the Panamanian Government, which came under the Panama Canal Authority in 1999, to internationally positive effect. Likewise, the Suez Canal was nationalized multiple times throughout history. In Germany, the Federal Press [ Bundesdruckerei ] was nationalized in 2008 with positive revenue and net income since. Expropriation
3498-498: The nationalization of key services such as water, bus, railways and broadband in the United Kingdom could save £13bn every year. Nationalization may produce other effects, such as reducing competition in the marketplace, which in turn reduces incentives to innovation and maintains high prices. In the short run, nationalization can provide a larger revenue stream for government but may cause that industry to falter depending on
3564-539: The other. The authors argue inequality leads to the social ills through the psychosocial stress , status anxiety it creates. A 2011 report by the International Monetary Fund by Andrew G. Berg and Jonathan D. Ostry found a strong association between lower levels of inequality and sustained periods of economic growth. Developing countries (such as Brazil, Cameroon, Jordan) with high inequality have "succeeded in initiating growth at high rates for
3630-409: The persons receiving transfers from such programs may prefer to be directly given cash, these programs may be more palatable to society than cash assistance, as they give society some measure of control over how the funds are spent. Governmental redistribution of income may include a direct benefit program involving either cash transfers or the purchase of specific services for an individual. Medicare
3696-405: The phrase varies, depending on personal perspectives, political ideologies and the selective use of statistics. It is frequently used in politics, to refer to perceived redistribution from those who have more to those who have less. Occasionally, albeit rarely, the term is used to describe laws or policies that cause redistribution in the opposite direction, from the poor to the rich. The phrase
3762-497: The political arena. A country's means of redistributing wealth comes from the implementation of a carefully thought out well described system of taxation. The implementation of such a system would aid in achieving the desired social and economic objective of diminishing social inequality and maximizing social welfare. There are various ways to impose a tax system that will help create a more efficient allocation of resources, in particular, many democratic, even socialist governments utilize
3828-406: The proposed " Buffett Rule ", which is a hybrid taxation model composed of opposing systems intended to minimize the favoritism of special interests in tax design. The effects of a redistributive system are actively debated on ethical and economic grounds. The subject includes an analysis of its rationales, objectives, means, and policy effectiveness. In ancient times, redistribution operated as
3894-399: The tax and benefits system once they have occurred. For example, a government predistribution policy might require employers to pay all employees a living wage and not just a minimum wage , as a "bottom-up" response to widespread income inequalities or high poverty rates. Many alternate taxation proposals have been floated without the political will to alter the status quo. One example is
3960-657: The term nationalisation , preferring the term statisation instead. |Fred Moseley]] in Dollars & Sense , January/February 2009 Property redistribution Redistribution of income and wealth is the transfer of income and wealth (including physical property ) from some individuals to others through a social mechanism such as taxation , welfare , public services , land reform , monetary policies , confiscation , divorce or tort law. The term typically refers to redistribution on an economy-wide basis rather than between selected individuals. Understanding of
4026-532: The top 1% of the world income distribution in the period 1980–2016. The approach underpinning these analyses has been critiqued in certain publications such as The Economist . Peter Singer 's argument contrasts to Thomas Pogge's in that he states we have an individual moral obligation to help the poor. The rich people who are living in the states with more redistribution, are more in favor of immigrants than poorer people, because this can make them pay less wages. Using statistics from 23 developed countries and
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#17328016454944092-413: The wealth of their parents, with a free basic education, government reduces the degree of inequality that otherwise would exist. Income inequality has many different connotations, three of which are of particular importance: The existence of high inequality within many developing countries , alongside persistent poverty , began to draw attention in the early 1970s. However, throughout the 1980s and into
4158-726: The wealthy create more contradictions in capitalism by further limiting the efficiency of the capitalist system via reducing incentives for capitalists to invest in further production. In the Marxist view, redistribution cannot resolve the fundamental issues of capitalism – only a transition to a socialist economy can. Income redistribution will lower poverty by reducing inequality, if done properly. But it may not accelerate growth in any major way, except perhaps by reducing social tensions arising from inequality and allowing poor people to devote more resources to human and physical asset accumulation. Directly investing in opportunities for poor people
4224-436: Was one of the major mechanisms advocated by reformist socialists and social democrats for gradually transitioning to socialism. In this context, the goals of nationalization were to dispossess large capitalists, redirect the profits of industry to the public purse, and establish some form of workers' self-management as a precursor to the establishment of a socialist economic system. Although sometimes undertaken as part of
4290-448: Was particularly advanced in the US in the 1920s by Waddill Catchings and William Trufant Foster . More recently, the so-called "Rajan hypothesis" posited that income inequality was at the basis of the explosion of the 2008 financial crisis. The reason is that rising inequality caused people on low and middle incomes, particularly in the US, to increase their debt to keep up their consumption levels with that of richer people. Borrowing
4356-494: Was particularly high in the housing market and deregulation in the financial sector made it possible to extend lending in sub-prime mortgages . The downturn in the housing market in 2007 halted this process and triggered the financial crisis . Nobel Prize laureate Joseph Stiglitz , along with many others, supports this view. There is currently a debate concerning the extent to which the world's extremely rich have become richer over recent decades. Thomas Piketty 's Capital in
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