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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!

3 Responses to “If You Had to Accept Redistribution”

  1. Harry says:

    More when I get to my computer, but yes, a world of parasitism, over a stagnant or shrinking number of carcasses, and a waterhole running dry.

  2. Harry says:

    James Madison was worried about the tyranny of factions, where the majority takes rights from the minority. Our tax system has become one where a large portion pay little or no income tax at all, although they do pay all sorts of hidden taxes. The net result has been popular support for all sorts of government spending at all levels, under the illusion that somebody else is footing the bill.

    Thus I do not think that people are any more generous today than they were 100 or 200 years ago, except that our capacity for generosity has grown with prosperity. If anything, people have grown less generous as their political capacity to be generous with other people’s property has grown. It has become cheaper to feel good about yourself.

    Fifty years ago many medical doctors treated the poor for free, although then the poor did not include people who owned a car, a dishwasher, and a television. Today, many poor families have several televisions, several cell phones, and a dishwasher in their subsidized low-income housing. Obama and Al Franken want to hook the poor up to the Internet, and have the stockholders of Verizon subsidize a high speed connection for free, presumably for families making less than $250,000. And they blame high medical costs on medical doctors, who charge Medicaid for what they used to do for free, at least for the very poor.

    The political class has cynically figured they can keep this shell game going; in the process they show contempt for the intellegence of the voters, whom they regard as their subjects.

  3. Harry says:

    Mike, after rereading your post several times, I have detected you asked not one, but several questions.

    You ask us to accept the premise that some redistribution, meaning involuntary legal taking from one person and giving to another is a given. Fair enough. You then ask under what circumstances that may be justified, and propose scenarios 1 and 2.

    In both cases there is an actor in the middle of the transaction, the government, which, simply put, uses the force of law to take from the more fortunate to give benefits to the less fortunate.

    There are several other hidden premises in the question. The first is that the poor, especially the helplessly poor, should be helped by someone; the second is that the government is the last resort for these people, and that otherwise not be helped.

    The answer to that question is easy. Our government We the People should under all circumstances should help the helpless, especially those mentally or physically handicapped to be unable to care for themselves.

    Your next question was how come we are where we are today? You offered a possible reason in economics terms that big government might be a luxury good.

    An innsight, especially for me, who normally thinks of the government as overhead. But then when you are running a business, especially if you are an executive of a large public company, why not take on some overhead in flush times, especially if you can do it at stockholders’ expense, and you do not have most of your money in company stock.

    Marx, if we could bring him back from the grave, would cite such an example as proof of the moral weakness of capitalism, only he never would have guessed that the same management would also be managing the company for other “stakeholders” like labor, under the premise that everyone in on the bargain would be dead when everything unraveled.

    For the same reason the political class, and not just the federal government, provides benefits to the people. Our township supervisors build baseball fields (lots of bulldozing, chain link fence, and subsequent maintenance cost) to benefit the poor, and when the field is dedicated, the supervisors show up to get their pictures taken. The supervisors are not paid much, but it sure makes them feel good about spending their —oops it’s not their money!

    Why do we put up with this? I think part of the answer is that the natural opponents of such nonsense are too busy to think about running for office, whereas the people who do are like the chairman of our board of supervisors, who I believe teaches sociology at a local community college. Something like that. His predecessor was similar, and the first thing he did was to hire a professional township manager. It grows, like kudzu.

    I know this is anecdotal, and not the sort of reasoning supported by tables of stastics economists like. But then you never asked for numbers, right?

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