“The adverse effects of redistributive policies on economic performance are implied in such expressions as the trade-off between equity and efficiency, or between social justice and efficiency. These formulations recognize to some extent that economic activity is not a zero-sum game. But they still disguise the extent the outcome of economic processes depends on the performance of people–performances which can be promoted or obstructed by official policy.
I have already noted that it is by no means obvious why it should be unjust that those who produce more should enjoy higher incomes. And attempts to prevent them from doing so will affect adversely the average level of incomes. It will do so cumulatively because if everyone can expect to receive only something like the average of all income, this average itself will fall. A neat example of this process emerged from an experiment designed a few years ago by a teacher in an American university. The students demanded much greater equality in all walks of life, including the grading of their papers. In response to these demands the teacher announced that from a given date the students would be given equal grades for their weekly papers, and that the grades would be based on the average performance of the class. The experiment brought about a rapid decline in average performance and thus in the average grade, because the incentive to work declined greatly.”
This, in a nutshell, is why free markets and the profit motive are the greatest engines for generalized economic advancement and technological innovation ever devised: it harnesses motivation in the direction of creation.
As I say on my other website, you can be equal in both wealth and poverty, and since Socialism doesn’t create wealth, equalization in poverty is the default outcome.