# Abstract In this post, I propose how to stop inequality from growing, focusing on the problem that the rich people don't have an interest to contribute money to a wealth redistribution system. The solution involves creating a wealth redistribution system such that contributing wealth to that system (in order for that wealth to be redistributed among people) is voluntary. Then, the amount of wealth that a person receives from the system depends on how much they have now (the poorer they are, the more they get) and how much wealth they have contributed to the wealth redistribution system in the past (the more they have contributed, the more they get). Diminishing marginal utility ($utility \approx \log wealth$) creates a situation that the benefit of receiving for example $20 is higher, if a person is poor than when they are rich. So, it can be a good deal for a rich person to contribute $20 now, and then receive $30 in the future if they are poor, and only $10 in the future if they are rich. # Problem [[Why is inequality bad (both for poor and rich people)|Inequality is bad for collective utility of people]] (collective utility - the sum of what all people want). The solution is wealth redistribution. "Wealth redistribution" means taking wealth from the rich people and giving it to the poor people. But if the system of wealth redistribution is voluntary, then the rich people don't have an interest to contribute their wealth to the system (so that the wealth is redistributed to the poor people). Wealth redistribution can be also facilitated by the government which can force rich people to contribute to that system. Because the government has the power to penalize people for not paying taxes (and taxes are the way through the rich people contribute the money to the system). But if it's organized by the government, then the rich people can simply move to a different country to avoid paying the tax. Additionally, the government might not want to introduce the wealth redistribution system because it might be corrupted by the rich people or for some other reason. How to organize wealth redistribution so that the wealthy people will contribute their wealth to the system? # Strategy Make wealth redistribution that: 1. is a voluntary financial service, meaning that the people contribute wealth to that system only if they want and how much they want, 2. gives an amount of utility to the participants (in the form of wealth) of the system that is proportional to how much money they have contributed to the system, 3. doesn't have to be facilitated by the government, 4. is decentralized - there's no central entity who is in control of the system. Why would rich people participate in that? Why would rich people voluntarily want to give their money to the poor? In order to understand the reason, firstly you need to understand two things: 1. [[Why is inequality bad (both for poor and rich people)#Logarithmic relationship between number or resources and their utility|Diminishing marginal utility of resources]]. The idea is that utility that a person gains from resources (wealth) is approximately equal to the logarithm of the number of resources (wealth). In other words, $utility \approx \log wealth$. 2. [[Why is inequality bad (both for poor and rich people)#Winner takes all scenario|Winner takes all scenario]]. The idea is that on default (without any norms, agreements, systems) the world heads towards greater inequality, until there is one winner that has everything and the rest have nothing. Diminishing marginal utility ($utility \approx \log wealth$) means that the benefit of receiving for example $20 is higher, if the receiving person is poor than when they are rich. Without any intervention, the end-game is that there will be one person who has everything (winner takes all scenario). Due to diminishing marginal utility, that scenario is bad for everyone, except that one winner. And assuming that there is uncertainty about acquiring wealth, then we don't know who the winner is going to be, so from the perspective of present moment, that scenario is bad for everyone. So, imagine we have a wealth redistribution system to which people can contribute their wealth. Then, that wealth is redistributed to people who are the poorest and who have contributed the most wealth in the past. So, how much you receive from that wealth redistribution system depends on how much you have now (the poorer you are, the more you get) and how much wealth you have contributed to the wealth redistribution system (the more you have contributed, the more you get). Assuming that there is uncertainty about who is going to be wealthy in the future and the future is long, it's in the interest of a rich person to contribute to the wealth redistribution system. For example, if they give \$20 now, then they might receive \$30 in the future if they are poor, and \$10 if in the future they are rich. But due to diminishing marginal utility, it's better to avoid poverty, so it can be a good deal for that rich person (depending on some variables, like for example the base of the logarithm in the equation $utility$). So, in other words, by participating in wealth redistribution, the rich person trades their wealth for security in the future. And it's a good deal, assuming that there is enough uncertainty ahead and the future is long enough. So, we don't necessarily need the government to stop inequality from growing (although it still would be nice if the government solved that problem), because we can create our own system (assuming that we can solve the other obstacles on the way to create such system). There are also other obstacles on the way of establishing such system. But this post is about overcoming this one specific obstacle that we need to take wealth from the rich people, and the rich people don't want to give their wealth away. Also, that voluntary system doesn't solve inequality to the optimal level (for collective utility, with utility of each person being taken into account equally), because the wealthy people still might not have interest to giving their wealth away to the optimal level. But it's still beneficial. Also, with such system, there is a danger that the people in charge of the wealth redistribution system can abuse their power. In other words, being in charge of that system is part of the wealth itself, and it's a kind of wealth that is indivisible (i.e. you can't divide into little pieces and share it with others). For that reason, the system might need to be decentralized and ideally it should be easy to replicate the system to avoid concentration of power. How to accomplish that is another problem, but it's beyond the scope of this post. Perhaps, there are also other solutions that don't rely on decentralization and don't come with a risk of concentration of power. In some of my next posts, I'm likely to focus on how to deal with other obstacles to establish such system, so ensure that you won't miss my next posts (e.g. through subscribing to my website/blog), if you are interested in that. # Conclusion Due to diminishing marginal utility and the tendency that the world heads to more inequality, it is possible to design a wealth redistribution system such that the rich people have an interest to voluntarily contribute their wealth to that system, and the system is beneficial to everyone. It is in the interest of the rich people to participate in that system, because by giving their wealth now, they get security in the future. If such system is implemented, it's probably better if it's a decentralized system.