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December 18, 2007
Understanding Resistance to Redistribution
Over at Balkinization, Professor Brian Tamanaha worries that the "fabled American Dream, the supposed glue that holds our society together across its many fault lines, is a delusion for many." He points to "new research [that] suggests the United States' much-ballyhooed upward mobility is a myth, and one that's slipping further from reality with each new generation." (Even The Economist has recognized the problem!) Tamanaha wonders why the issue has so little visibility in national political debates, and gives several good reasons. I'd like to focus on one of them: the sense that increasing inequality "feels irresistible, the product of structural factors beyond our control."
First, though this sense may be widespread, it is highly contestable empirically, and doesn't really "ring true" at an intuitive level. Let's not even talk about the justice or appropriateness of an executive making hundreds of times more than line workers--what about people who almost got to the top spot? As Eduardo Porter reports, "widening disparities in business, which show up in a variety of other ways, reflect a dynamic that is taking hold across the economy: the growing concentration of wealth and income among a select group at the pinnacle of success, leaving many others with similar talents and experience well behind."
A form of "legitimation theodicy" has become important for some at the top, who reach for sports metaphors:
[Some] very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”
The flip side of this is a well-cultivated sense among the "losers" in the new economic order that their fates are their own fault. This is one reason why the SCHIP battle is so hard-fought right now: it is very important for those pursuing an inequality-enhancing agenda to insist that some people do not deserve health insurance. . . . and that that sin is so egregious as to be visited even upon their children.
I do not expect redistributional issues to get much play in the upcoming presidential election, for a number of reasons. The media is largely run by those who benefit from the current order. Moreover, no candidate has much reason to offend the what Professor Spencer Overton has aptly called the "donor class." As he noted in 2004,
Less than one percent of the U.S. population makes financial contributions over $200 to federal candidates, and these contributions represent the vast majority of funds that candidates receive from individuals. Of those who contribute over $200, approximately 85 percent have household incomes of $100,000 or more, 70 percent are male, and 96 percent are white. This donor class effectively determines which candidates possess the resources to run viable campaigns.
Thomas and Mary Edsall’s work has detailed the ways in which federal officials’ reliance on large donors has slowly narrowed the range of acceptable political discourse. To the extent politicians are reliant on the support of those enriched by market forces, they are reluctant to interfere too much with the distribution of social power such forces generate.
So what is to be done? First, those concerned about equality of opportunity have to become more skilled at relating the objective harms arising out of inequality. Robert Frank has become a master at this, and I'm going to try to draw out the implications of his work in an upcoming review of his book Falling Behind: How Inequality Harms the Middle Class.
Second, consider the following comment from Greg Mankiw on health care debates:
What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor.
The bottom line of health care reform has to be an insistence that its financing rely not merely on redistribution from the healthy to the sick, but also from the rich to the rest. A just society is committed to the universal destination of human goods--especially those essential to the preservation of human life. Perhaps we will eventually reach a point at which taxation of those at the top to provide for the care of those at the bottom truly threatens the well-being of our economy. But when "the increase in incomes of the top 1 percent of Americans from 2003 to 2005 exceed[s] the total income of the poorest 20 percent of Americans," we're a long way from that point on the Laffer Curve.
Posted by Frank Pasquale at December 18, 2007 11:29 PM
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Comments
No one is for inequality for its own sake. Those of us that oppose redistributive policies do so mainly on the ground that they retard economic growth. By hurting economic growth, redistributive policies hurt basically everyone in the future. A policy of taking from the rich and giving to the poor may help the current poor, but it does so at the expense of both the future rich and the future poor.
Inequality may offend some people's sense of fairness. But inequality is at the heart of capitalism. And capitalism, as we now know from centuries of experience, is the far superior at creating wealth than alternative economic systems. Thus, we endure some amount of inequality in the hope that in the long run every one will be better off because of it.
Posted by: khkjhk at December 19, 2007 05:29 PM
"Those of us that oppose redistributive policies do so mainly on the ground that they retard economic growth."
Hmm. Surely another important reason is political. Many forms of redistribution require additional power to be vested in the state in order to accomplish them. That in itself may be enough to make the redistribution program undesirable.
By analogy, consider regulation. There's a lot of federal regulation as to which I simply don't have strong views about whether it's pro- or anti-competitive, but that I view with suspicion because it gives bureaucrats in D.C. discretionary control over important aspects of American life.
Domestic politics is not solely about maximizing social utility ("economic growth"), regardless of what utility function one would prefer to see maximized. It's always also relevant to ask: "who decides?" Frank's post touches on this sort of concern when he talks about political donors.
Posted by: Mike O'Shea at December 19, 2007 08:59 PM
