So What About You?

posted at 7:29 pm on October 27, 2009 by J.E. Dyer
[ Economics ]    printer-friendly

How Do YOU Feel About “Redistribution”?

A recent discussion at another blog has reminded me that the concept of “redistribution” – of wealth, income, etc – is a heavy, heavy burden on our thinking about politics and economics, and one that, now more than ever, we all need to get straight in our minds.

We are in a dangerous and vulnerable political period today.  A political faction in America is seeking to implement an intentionally redistributionist agenda, and in my view has been surprisingly straightforward about that.  The practices of the past – obfuscating all drives toward collectivist redistributionism with invocations of compassion and emotional anecdote – have been left behind.  Politicians on the left today are making only the most perfunctory obeisance to feel-good obfuscation, and are working – quite avowedly, in many cases – toward coercive schemes intended to accomplish redistributionist goals.

We need to armor our thoughts on this subject.  It is only going to come up more and more often, although it is likely to assume deceptive guises.  When a public official speaks, for example, of putting less of society’s resources into health care and more into higher education, he is talking about redistribution of what you produce (there exist no other “societal resources”), from the priorities you would naturally choose to the ones chosen for your society by the central government.  You may very well prefer to spend the product of your labor on health care for your parents.  You might indeed be willing to sacrifice other things – things you want, things in your own life – to provide health care for your parents.  But government officials in the US today are actually proposing to suppress or eliminate your power to use the product of your labor to demand that health care – because they want to use the product of your labor for other things.

That is one, more subtle form of redistributionism.  Less subtle, of course, is the crude idea of leveling people’s economic estate by taking from some and giving to others.  That is what most people have in mind when they hear the word “redistribution.”  As we go forward in the  national debate over what sort of nation we intend to be, I would like to advance the following propositions for consideration.  It’s essential that we sort out what we mean and how we feel about this thorny, freighted issue.

1.  “Redistribution” of wealth or income is inherently an impossible task.  There is an enduring theory in the human mind that it can be achieved, but in reality it cannot.  The reason is very simple:  neither income nor wealth is “distributed” in the first place.  Wealth is created by individuals, and income is earned.  The production of either is dependent on the attitudes and conditions leveraged by individuals.  There is no such thing as a predetermined “product” – of goods, services, wealth, or income – inherent with any particular organization of society.  Some forms of organization discourage the attitudes and conditions conducive to producing wealth and earning income.  Other forms foster those attitudes and conditions.  But organizational abstraction is not the engine of production and wealth:  people are.  Wealth and income are meaningless except in relation to what individuals have done to create and earn them.  Neither quantity was “distributed” in the first place, and neither can be “redistributed.”

2.  Taxing and spending are not, inherently, means of “redistribution.”  Be careful about your thinking if you believe these activities are such a means.  I advocate refusing to accept use of the word “redistribution” to describe the traditional activities of government, because by accepting it you are buying into a freighted concept that has other, malign meanings to various political partisans.  Buying a military with tax dollars is not “redistribution,” it is the purchase of goods and services.  The same is true of buying roads, building dams, and running public hospitals.  The same is even true of providing welfare and food stamps to the indigent.  Our intention with such expenditures is not to level incomes or redistribute wealth but to relieve suffering and prevent the public problems created by vagrancy.

We even need to keep firmly in our minds that the major entitlement programs, Social Security and Medicare, are not intended as a means of “redistribution.”  We are not taxed to support them because we have more than someone else, nor are we made beneficiaries of them because we have less than someone else.  On not one single day since the inauguration of Social Security has that been the premise for it; and the same is true of Medicare.

3.  There is grave danger in not recognizing the meaningful distinction between taxing and spending, on the one hand, and intending to “redistribute” on the other.  Social Security is not intended to transfer purchasing power from the young to the old, on some theory that if the old use the purchasing power instead of the young there will be a better social outcome.  The fact that there is an effective transfer of purchasing power going on is an artifact of accounting and fiscal management.  It is not evidence that Americans have given political approval to the concept of “redistribution.”  We have never bought into that false idea.

4.  It is within government’s purview to decide to purchase goods and services, which is what it is doing when it pays for police and fire services, runs schools, and manages the collection of import tariffs.  We can dispute whether government should envision purchasing services like academic studies of the regurgitation habits of exotic flies, or Departments of Getting People to Drive a Whole Lot Less.  But we can probably agree that even if these are bad purchases, they are still straightforward purchases of services with tax dollars:  the exchange of money for a definable, if stupid, product.

What is not within government’s purview is imagining itself to be making allocational decisions about “society’s resources,” according to some ideological schematic.  Government should not have any actionable opinion on whether health care “should” represent less of the economy, and university research more.  Government’s attitude should be one of taxing enough to pay for what it needs – not of deciding how big sectors of the economy should be; or of deciding the maximum wealth anyone should be able to create or hold onto, or the maximum income anyone should be able to earn and retain; or of prescribing what is too much medical care for people to receive, and punishing those who provide it.

5.  It has made a significant difference that Americans have never agreed to an explicitly redistributionist agenda.  We have always thought simply in terms of taxing to pay for government services; and while we may tax the rich more – a practice there is debate over the wisdom of – we do not do so for the explicit purpose of making them poor so that they are not rich any more.  We don’t tax the rich because others are poor; we tax the rich, as well as the middle class and some of the poor, to pay for useful things like our military and air traffic control system, along with useless things like those on the annual Golden Fleece list.  It is because we have not demonized or prohibited wealth that we still have so much of it.

There is no question that our tax code, above a certain level, penalizes the effort that goes into creating new wealth through productivity.  So does regulation that makes American employees expensive relative to their productivity.  But these are systemic burdens that weigh down the creation of wealth – not rules that are intended to proscribe it absolutely, or control its use according to a societal vision.

The reason I make these points is that there is tremendous danger in accepting the proposition that we already have “redistribution” going on.  We do not, in fact, have “redistribution” in operation in America.  We are not already living with anything like the sort of power left-progressivists seek to wield over the product of our labors.  Agreeing that there’s some redistribution going on, and that therefore we can handle a little more, would be signing our own death warrant.

This doesn’t mean we don’t need to change anything.  The quasi-redistributionist artifact created by management of our Social Security and Medicare programs is problematic for our future, portending more and more taxation for younger people to support the beneficiaries at the other end of life.  But this is an artifact of how the system has been managed; it is not the product of a deliberate intention to transfer purchasing power between demographics.

It is the latter that is intolerable as a practice of government.  People have occasionally, through consensual processes, tweaked their governments’ fiscal management and programmatic organization enough to have a real and positive effect for individuals in the economy.  Americans have done this ourselves, as with our election of Reagan in 1980 and the overhaul of the tax code, or the 1994 Congressional election and the welfare reform it produced in 1996.  No people, however, has ever moved away from comprehensive economic dirigisme, on the part of their government, without a crisis of government in one form or another.  History makes clear that this is not a path we can go down, hoping to recover by constitutional means if we decide we don’t like it.

J.E. Dyer blogs at The Optimistic Conservative and “contentions”.

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