Last Updated on August 23, 2020
It depends on who does it and why?
If you just confiscated their assets and redistributed all the wealth taken from the top 1% you wouldn’t be doing anything new.
Spain (Ferdinand & Isabella) did it in 1490-1500; Bolshevik Russia (Lenin) did it around 1918, Perón did it in 1944 in Argentina. Kim Jong-il did it in North Korea.
Result? Compare North and South Korea.
Marcos did it in the Philippines as did Mugabe in Zimbabwe and Chavez in Venezuela. Massive “redistribution of wealth” also happened in Cambodia under Paul Pot.
All the places mentioned ended up with a messed up economy and the lowest living standards on Earth.
François Mitterrand in France did something similar but much milder, and more or less temporary. France never recovered completely. By that I mean, many wealthy and creative French people moved out of France. Some never came back even after his “reforms” were rescinded. Big mansions and castles were either sold to foreigners or divided up to become condos.
Is that a good thing or otherwise?
France is doing relatively well in living standards despite periodic takeovers of the government by left-wing parties who try to re-distribute wealth.
Soaking the rich till their pips squeak usually re-distributes taxpayers! For example, France’s leading actor Girard DePardu sought and received Russian citizenship when he got his French tax bill. The wealthiest people in France are the foreigners who come in as “tourists.” They do not register as legal residents or taxpayers. They do pay taxes on their homes and cars, but no income tax, wealth tax, health care with-holdings or inheritance tax.
The same happened in socialist England before Thatcher. The wealthy moved to Monaco and wealthy foreigners came to Britain, which was tax-free for them.
Here’s what happened and always happens when governments soak the rich.
The best and most productive people leave the jurisdiction…
They use their talents to build up industries and supply goods and services in other countries. The countries they migrate to prosper while the countries they leave often go into a terrible economic slump. In most countries run by redistributors of wealth, shortages of everything result. Black markets flourish. Crime skyrockets. Oppression reigns — nothing good comes of it.
Confiscated assets are mostly wasted. Some on economically disastrous projects as the nationalization of most industries, railroads, banks, utilities, etc. results in inefficiencies. Much goes to the military and secret police. Enemies of the state are murdered in many places. Free speech ends. Independent court systems end. Travel usually is restricted as exit permits are reserved for the few in power. Currency controls are instituted to forbid the transfer of funds out of the country. Smuggling is needed to survive.
A small group of “leading politicians and military people always get very rich. They engage in conspicuous consumption. If they are smart, they usually stash their money by investing abroad in places that respect private property.
Still, the masses never learn. Even milder forms of redistribution of wealth just redistribute taxpayers. Most of the rich Scandinavians moved to become non-domiciled tax-free citizens of places like London and Monaco.