No, this isn’t impossible
The cynical (or “realistic”) assessment of such redistributive reform is, of course, dim. It’s not going to happen.
And indeed, without EU, or better OECD-wide, or even better, global consensus, none of this is going to happen, unless we want to close our borders again, at great political and economic cost. And still, such soberness as a programmatic platform is a declaration of political bankcruptcy.
“Poverty has no utility.”
Ferdinand Lasalle
States used to be able to decide about how to run their households, what to produce, whom to reward, and how much.
In fact, any political community, at whichever level it is meaningful, ought to be able to do this. To decide on and produce what they collectively value the most, and to allocate their resources accordingly.
And these resources, these consumption checks, are needed today, as ever. To alleviate undeserved hardship, to extend opportunity and to provide the public and common goods of our planet and societies to sustain and improve the quality of all our lives.
A democratic society and economy, like any household, ought to be able to look at how the chores and rewards are redistributed, in which state the commons are, and to act on that impression.
With today’s sophisticated administration, overall affluence and advanced technology, we are of course able to do this. And still, for all practical purposes, it appears to remain a naive utopia.
Let’s just keep in mind: There is nothing self-evident, let alone justifiable, about an economy that is potent, but unsustainable, about a policy that is laissez-faire, but of grotesquely unequal opportunity, about shops and services that are extravagant, put conspicuously consumptive.
Redistribution done right – and an efficient and adequately equipped state is possible. This is what we live up to, or choose not to.
This is the real economy of our political economy.
My thoughts exactly.
Tell this to the state of California. :’( Over $8 billion in cuts to public education (and that’s just the largest category).
And California, by all means and measures, is not a poor state, but one of the richest in terms of wealth and GDP. It’s absurd.
Thanks for your comment, Ashley!
What do you exactly mean with “let’s redistribute”? You can redistribute a lot, from taxes over food to land. You should be more precise on a controversial issue like that to avoid misunderstandings.
Hey Jan-Dirk, thanks for your comment.
I agree that, to be fair, effective and efficient, redistributive policies need to be very carefully designed. I’ll write more on that (progressive consumption tax, for example) soon on this blog.
Generally, I find only redistribution through taxation acceptable – discretionary, or arbitrary redistribution are of course out of the question.
But still, I do think that we need progressive taxation of wealth, consumption and inheritance, which, in effect does mean partial expropriation.
For that purpose alone I want to reclaim the term redistribution.
And let me add one more clarification – I am generally not a big fan of reallocation of property rights from one private individual to another, something that I believe redistribution is often misunderstood to mean.
Direct transfers for consumption (social assistance) is necessary, and may need to expanded (kids) but should always stay minimal, and be regarded as what it is: a last, and unfortunate resort of public policy.
The redistribution we need happens through the state and the public or common goods it provides. Like public education and environmental protection. That’s where we need the “Louis Vitton”-kind of money to go to instead.
First statement that has to be challenged: Why is a more influence by the state per se a desirable objective?
Second topic that I have in mind when talking about redistriution is justice. To what degree should we accept inequality of income and wealth? And on the other hand to what degree is the influence of the state not legitimate in the view of the people who would pay higher taxes?
Hey Joe, first of all: Jaimaica?!? Is that a political statement? Where’d the green come from?
On to more serious stuff.
More influence for the state is not per se desirable. But a potent polity that ensures that common and public goods are plentifully provided, and a fair society that extends equal opportunity to everyone (equality in inputs, not outputs) are desirable. To that end, we can go out and cap some of the extravagancies.
Not swords into plowshares (that too, though), but Mercedes S-Class into schools.
As I said, I’m not necessarily in favor of the state interfering in the market. Those instances should be carefully restricted. But in any case, I want the polity to call the shots, or at least a greater share of the shots that are then provided by the market.
On to the broader question of distributive justice. I think a little more utilitarianism, with all its dangers, is what we need now: inequality of income and wealth are then acceptable only if, and in so far as they incentivize welfare-enhancing activity.
Thank you for sharing your inspiring thoughts. Some points, however, need clarification. Let me formulate 3 questions:
1. Your political intent is clear. Isn’t it time, then, to think and write about realisitic concepts and strategies for an implementation instead of musing about its impossibility?
2. You pose the claim that redistribution is not automatically socialism – at least not in the academic meaning of the word. However, some paragraphs later you write about the market being “inadequately incentivized” for certain tasks and postulate the need for some kind of dirigisme – implying the reallocation of resources to purposes destined by some state authority. Isn’t this is an interference with the market assuming the superiority of the state in deciding what’s good for the people? Isn’t that kind of socialist thinking? Don’t you think there is a broad gray area on the way to socialism? What about e.g. the General Government Total Outlays (as percent of GDP) as a coarse indicator?
3. As you say, your concept of taxing the rich needs international cooperation or even “global consensus” to avoid emigration to tax exiles. I’m always sceptical about pushing some kind of world government for things like taxation. The competition of nations and systems is an important factor for the improvement of civilization. Furthermore, this again implicitly assumes superiority of a central political decision-maker over the natural outcome of free competition. Especially in terms of stability and reliability diversity matters. Large monolithic structures are prone to total failure. In my opinion, there should not be too much unification on a global scale. Hence, for me it is rather the question: Can a single state improve its performance in the long run by taxing the rich – taking into account a short increase of tax emigration in the beginning?
Hey Johannes, thanks for your thoughtful comments.
Here come my responses:
1) You’re absolutely right, this kind of talk is cheap. I’m writing my thesis on progressive consumption taxation and hope to provide helpful detail there. More soon on this blog.
Still, I think it is helpful to set the ground, and to remind ourselves what is inevitable about our political economy, and what isn’t. Extravagant consumption and underfunded budgets aren’t.
I guess I’m a little careful to endorse the goal post “realistic” … for what it exactly means to be a realist depends an awful lot on your inclination to accept the status quo’s boundary conditions as given. I don’t think we should do that too readily.
2) I also agree that continuous treatment of “socialism” (government outlays of GDP) makes some sense.
In preempting the “that’s socialism” criticism, I wanted to point out that a potent polity, and a larger public budget need NOT and must not make a society any less free (certainly not in terms of freedoms TO) and need NOT and must not make competition, wherever feasible less important.
My point is really one of achieving the social optimum under a game-theoretic cooperation problem: Sometimes, if everyone does what is best for herself, the sum total is suboptimal.
In a Prisoner’s Dilemma of global CO2 emissions, yes, dirigism, at the highest level possible, is the only choice to overcome. The same holds true for other policy fields (even if not narrowly as a Prisoner’s Dilemma), such as public education and extending universal opportunity in the face of excessive poverty and social exclusion.
In these cases, people may well know and do what is best for themselves – individually rational, but at the expense of others.
3) First of all – a worldwide taxation regime is probably not something that is meaningful to pursue in the next decade or two, or more (god forbid). So we’re really talking EU-wide coordination, or maybe later OECD-wide consensus.
Secondly, I’m not sure I can even conceive of compelling evidence that competition between states helps progress. One of the basic things you need for competition is for customers to choose producers relatively easily. Does that happen? Do people choose their country, and, if they’re dissatisfied, relocate abroad? Maybe a privileged few, but no more than that.
And so, thirdly, I’d rather go with a potent EU or OECD government, the democratic institutions of which of course would have to be carefully designed. That way, at least, we get to overcome the ruinous tax competition between the states.
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