Answer to Question #126375 in Macroeconomics for Boshungmebe

Question

Provide 15 most important economic effects (bad) of forced redistribution?

Answer 1

One of the bad economic effects of forced redistribution is lowering the rate of working. Second, the rate of saving can decrease because the whole economy is strained by higher taxes. Third, investment levels can reduce significantly following an increase in the interest rates. Fourth, education and training opportunities get minimized. Fifth, forced redistribution lessens the rate of innovation. There is also an increase in the budget deficits since there is an increase in tax cuts to boost economic growth. Forced redistribution increases the poverty rates in case poorly structured tax rates. It also reduces the demand for goods and services. It lowers the health levels of an economy. There is increased political inequality due to forced redistribution. This is often as a result of the sudden policy shifts. Forced redistribution also reduces infrastructure development. It can also lead to small businesses closing down due to increased tax cuts. It further increases the security costs especially for the businesses. This leads to social unrests which are triggered by the high levels of inequality. Additionally, forced redistribution increases the rate of unemployment.