To Redistribute Jordan Spieth's Wealth, Let Him Keep It
On his way to what was a dominant victory in the 79th edition of the Masters, professional golfer Jordan Spieth tied or set a number of Augusta National records. He also achieved a personal best with $1.8 million in prize money.
Some who recoil at the supposedly negative economic implications of inequality might be taken aback by the size of the check, but this discomfort will hopefully pass with time. An economy is just a collection of individuals, and applied to Spieth it's hard to see how he hurt himself, professional golf, or society more broadly for having staged an athletic performance for the ages. Too often forgotten is how unhappy and bland life would be absent instances of extraordinary inequality of the kind Spieth displayed in what is golf's most prestigious tournament.
Better yet, the class warriors focused on the alleged horrors of inequality can perhaps take comfort. The top federal tax rate of 39.6% kicks in for individuals who earn over $406,000 per year, and with Spieth already well past that number even before he teed off at Augusta, the federal government will soon enough have its hands on a good portion of his Masters money. Spieth will be rendered more equal relative to everyone else via a progressive tax system prone to penalizing success.
High levels of taxation on property and income are frequently justified by the emotional based on the presumption that the world around us is made better when politicians work to "spread the wealth," or design the tax code to keep big fortunes from becoming too large or concentrated. The positives of such a view are debatable, but whether true or not is to plainly miss the point. If wealth redistribution is truly the goal, then the ideal scenario would be one in which Spieth holds on to as much of his Masters paycheck as possible.
Assuming what seems observably untrue, that Spieth is a wasteful, prodigal spender, wealth redistributors should seemingly rejoice such a scenario. Spieth could quickly spend the portion of the winnings he keeps on private jets, hotels, cars, and booze, and per the alleged Keynesian multiplier, expand the economy through aggressive consumption. Even better, the money wouldn't have to sit in Washington in wait of politicians to vote on its final destination.
Assuming Spieth is quite a bit more austere or scrooge-like with his winnings such that he tends toward caution, there's even less cause for worry. In fact, the disciples of Keynes should rejoice even more if Spieth is thrifty.
To see why it's important to remember that there's no such thing as idle wealth. Applied to Spieth, unless he intends to stuff his Masters winnings under a mattress, the $1.8 million he earned will quickly migrate to the hands of many people not named Jordan Spieth, and who are not nearly as rich as he is.
Indeed, banks don't take in deposits only to reverentially stare at the dollars. More realistically they pay individuals for their savings only to quickly lend them out to borrowers in need of credit. Parsimony in no way subtracts from demand.
As opposed to reducing demand, savings merely amount to a shift of consumptive ability from the saver to the borrower. If Spieth chooses to put his Masters windfall in the bank, his deposit will soon enough represent loans to individuals who need money to buy a car, to pay the college tuition of a son or daughter, who need a home loan, or who perhaps need credit in order to start a small business.
What this tells us fairly explicitly is that the single best way to redistribute the wealth of the rich is to let them hold onto it. Banks that take in deposits without quickly lending them don't stay in business long, so when the rich choose to "hoard" their money in banks there's an almost instantaneous redistribution of their wealth to those lacking it.
Best of all, and if polling data are to be believed, a scenario whereby Spieth is allowed to hold onto his wealth should please Americans of all political stripes. While Americans are divided politically, they're united in their dislike of Congress. If so, it seems Americans would be much more sanguine about Spieth redistributing his wealth through market forces over the more forceful kind in which John Boehner and Nancy Pelosi dispose of his earnings.