Under which of the following two conditions would income (re)distribution be more justified? Before I present the alternatives, just accept for the time being that we will have the state taking from the better off (at least monetarily better off) and giving it to the less well off (financially) and assume away public choice issues.
Scenario One: The average income level in the economy is rather low, with half the population living fairly comfortably and half the population living near subsistence levels (they are OK, but living a risky existence, if something goes wrong there is no cushion for them to help themselves).
Scenario Two: The average income level is the highest the world has ever seen, with half the population living extremely comfortably and the remaining half living at levels of the well off in Scenario One.
When I read people engaging in discussion about health care, and the welfare state in general, I do not feel that I can ever get a clear idea on which premise the authors are working. In fact, I feel like most would think my question is silly – in other words, there is no choice, there is always to be redistribution. OK, fine, but if that is the position, then in what case is more redistribution warranted.
Let me apply the free-market idea of competition to come up with my answer. I believe “we” have implicitly answered #2. Why do I say that? Because the share of the economy taken over by government and redistributive activities is larger today when we are richer, far larger in fact, than 100 and 200 years ago when we were poorer.
There are several possible explanations for this. First is that the “state” is a luxury good. In other words, we are more willing to allow looters to loot us when our income increases – in fact, we allow a greater proportion of looting than our income increase. Why? That’s a long discussion, but let’s accept it right now. A second possible explanation is that our wealth has brought with us the technology and ability to be redistributionist. When we are poor, it is simply not possible, as a functional reality, to do the actual redistribution. Our wealth has come with great technical advances, but it has also brought with it a record of good institutions – property rights are really well defined, black market activity is relatively small, people trust one another, and so forth – thus, we are better able to actually conduct the redistribution when we are wealthy. A third possibility is that when we are richer, we have an easier time “buying off” our guilt at the existence of the less fortunate – and we do this via both state and private means. I encourage readers to send in other reasons why this might have happened – because both cross sectionally and over time we observe larger redistribution as a share of the economy when the economy is larger.
But let’s think about the ethical implications of this. What is the moral reason for redistribution, at least as it is argued in the classic Progressive texts (or even real liberal texts). Is it to help people who genuinely lack basic “necessities” or is to “help” anyone who has any bit less than us. If it s the former, then wouldn’t consistency demand that the redistribution is smaller when we are richer? After all, even the poorest Americans today live at standards far better than most of the other 7 billion people around the world, and certainly far better than even the middle class did 60 years ago. But we have not behaved this way. Thus, if you choose the latter, do we not embark upon a world of parasitism that would even make Randian villains shudder?
Your comments and ideas are not only welcome, but dearly requested!