An Analysis of Motivations for Income Redistribution [pdf]
www1.cmc.edu
www1.cmc.edu
The irony I always see in these scenarios is affluent people's short term memory about history - the invading barbarians, the destruction of the aristocrats' temples, the brutal dictatorships that gained hold from popular outrage about the bourgeois. There's an easy way to prevent this kind of thing, and it's by fostering a society where people can't get angry enough (or powerful enough) to do something totally stupid. A second American revolution seems unlikely as of today, but our current political landscape is telling about how royally broken the world is soon to become.
Those who oppose Income Redistribution seem to think all of their wealth is going to be taken away. Very few advocates actually want that. I think most of the issues of wealth inequality could be solved if the wealthy were just a little less wealthy, and got richer a little more slowly, than they currently do. They'd still be quite wealthy, and probably wouldn't even notice the difference as far as their lifestyle and security. But everyone else would feel a lot more secure and have more opportunities, and that's what will prevent the revolution.
Beloved FDR, in his state 1935 SOTU address said "To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit."
http://www.albany.edu/faculty/gz580/his101/su35fdr.html
I worry that hundreds if not thousands of years of various types of market economics has ingrained much into our humanity, and that progressive notions like UBI and redistribution will have deleterious unintended consequences.
It depends on whether we're pointed at "replicators" ( or some assemblage reinventing them ) and how far we get there, how fast.
And some who advocate for it are just Levellers.
No, it doesn't.
A mature (sufficient to live reasonably comfortably on its own) UBI probably needs a significant revolution in productivity to be sustainable, but UBI does not rely on production being decoupled from labor input (in fact, one of the arguments for it is that, compared to status quo systems and other alternatives to them that have been proposed, it provides better capacity for worker retraining and realignment of labor to meet changing needs.)
Hell, get all the status-seeking crap outta work and you'll probably have better results. Yeah, right :)
But below them are poorer people, desperate people, people who are still struggling to provide for themselves but are loosing ground because the odds are against them. (eg: everything is more expensive when you're poor, opportunities pass you by, etc.) In my opinion, the goal of income redistribution should be to lift these people up enough so that their struggle to hang on is changed into a slow climb towards independence. They don't need riches for that, they just need a fair playing field and enough wealth to stay in the game. No one in this group, I believe, would be hurt by the assistance.
Now, there is a group even further down the ladder, who have given up the struggle, and who couldn't care for themselves even with adequate wealth. These are the people that opponents of various income redistribution proposals use as the examples of "freeloaders" who will "take all our wealth" to get a "free ride". It's disingenuous to highlight this group while ignoring the group I described above, but I do have to agree that this group would not be helped by income redistribution. This group needs a better version of the social safety net that we already have in place: shelters with free meals, medical care, drug addiction treatment rather than incarceration, education. These people need help learning to become productive members of society before they can benefit from directly sharing in the wealth of society and move on to helping to produce that wealth.
If you object to that, please make that argument instead of just asking rhetorical questions.
A lot of my coworkers have the opinion, "Ok, you donate but don't tell me what to do with my money." They'd love to privatize roads, just live on their land and forget all else. It's silly though, we're in a society, the people at the bottom support the people at the top. The people at the bottom don't have the same opportunity as the people at the top. Give me the chance and I'd be a benevolent dictator and rather than give computer guy a chance to own a Tesla, make sure no one at the bottom knows what hunger is.
I'd be more concerned about being robbed because someone has a serious substance-abuse issue, was raised in a broken single-parent household, there's a complete lack of entry-level jobs, or something of that sort, none of which is aided (but rather is perhaps aggravated) by increased levels of income redistribution.
So yea, hunger generally isn't what leads directly to crime, but the crime does exist because these teenagers have wants and needs that aren't being met, to the point that they would rob someone, steal their bike, etc. There are kids here who sell cold water and soda on the street corners to make money. If they're working selling drinks on their summer break, they probably know what hunger is.
If we consider monetary velocity as a public good, then doing things to support it is... supportable.
The problem may be how we go about this.
It is just that it may not actually be possible, unless someone can show a method whereby it can be done without corrupting the agents who execute it and corrupting those who receive it.
Not having governments interfere with their finances is perfectly respectable position. It's positively rude to ask how much someone makes. SFAIK, the various versions of the income tax were designed to be fairly rude. They were, of course, initially targeted only at those with very high incomes, then we got frog-boiled into everyone having to be subject to them.
Tax rents. Not income. Then, perhaps there will be less pain.
Share/poor : txW/P(1-q)
Fractional increase in wealth of a poor (FI) : ( txW/P(1-q) ) / ( W(1-x)/P(1-q) ) = tx/(1-x).
We assumed all poor have same wealth.
Some quick values for (t = .1 = 10%) (x, FI) (10%, 1.11%) (15%, 1.275%) (25%, 3.33%) (50%, 10%) (75%, 30%) (90%, 90%)
Lets say 1%er have 25% of all wealth then poor will see 7.5x3.33 ~ 25% increase in wealth if 75% of rich wealth is taken.
Conclusion: everyone loses in a revolution.
Do not fall victim to envy and anger at the "one-percent". They have great responsibility, and there will exist a balance if they do not properly manage their resources (not necessarily in the form of redistribution). Just find the humor in the silly things money buys that only offer the utility of announcing wealth.
How hard is that?
The abstract says it in a bit more formal academic tones: " The findings suggest that for most people, the motivation for redistribution is financial self-interest".
But put it to a vote to pretty much any group of people, at any time, in any place, and they'd prefer to steal from their neighbors than they would to work themselves.
The trick of civilization is curb this impulse, thus allowing the generation of positive sum games.
As Milton Friedman once said (and apologies for butchering this; it's from memory): the wonder of capitalism is that it's the only system that restrains the capitalists.
...by which he means that every society has rapacious take-no-prisoners people.
The trick is to channel that into METAPHORIC rape and take-no-prisoners, and away from the literal implementation.
Your money doesn't earn you more money doing nothing. In a free market, you need to use it efficiently and in a way that provides value to other people. If you are careless or unlucky you will lose it.
To clarify, it's not free money.
And even if they were making decisions for themselves, the amount they earn is primarily based on the amount they have to invest, not the quality of their choices. Are the choices of someone who earns 1% on $1billion really 100x as valuable to society as someone who earns 10% on $1million?
If the wealthy make money by consumer surplus, then that money is honorably had and we want them to make more of it. They are doing well by doing good.
If the money is made by rent-seeking, then we should tax it.
Now all you have to do is figure out rent-seeking. :)
Rents are complicated to talk about, but the canonical example from Ricardo is land that is worth more because of where it is causing it to be more productive.
Take a parking lot in Manhattan - it'll be worth more and derive more income than the same area in Kansas farmland. The owner does nothing to add this value - the value is created by the other people and buildings surrounding this parking lot.
Since this value is socially created, it's more justifiable to tax it on behalf of that society.
Since our alternative is to tax labor, it seems more equitable to tax rents.
This might be a problem with say, Micheal Jordan, who trades on his name for income that's pretty clearly his but it's still income from rents - the desire of others to use his fame creates the value, not anything he does in particular.
Nobody said this has to be easy.
Why is realising that people are going to want cars in future more valuable than realising people are going to want parking in Manhattan in future?
EDIT: IMO the problem is that the rewards for creating capital are indefinite, and that this just becomes more noticeable when you're talking about housing.
Yes, there's a certain uncomfortable similarity to physiocracy.
Like I say, it's not a really easy thing to reason about. I can't really do it either past a rudimentary level. Your example "parking in Manhattan" is pretty good, but the car itself provides its own utility.
The utility for the parking lot is proved from others owning cars.
Likewise, gasoline provides its own utility. But oil underground? Probably rents.
Rents-thinking comes from Ricardo, but it's strongly associated with Henry George. Fascinating guy; "Poverty and Progress" is a worthy read.
What I'm talking about simply owning the factory (or perhaps a better example is owning a car company, without managing it yourself).
I'm familiar with Georgism, but I had a similar confusion about land value tax. I just don't see what's so special about land compared to capital goods. I'd rather have a general wealth tax.
I'd just like to see rents in general taxed rather than labor taxed. The theory of rents provides a means to distinguish between ... "socially useful" wealth and "sort of parasitic" wealth."
As you note, there's nothing original about this.
But in any case, I'm not suggesting a labour tax, I'm suggesting a wealth tax. I think my argument is similar to George's: just as LVT encourages efficient use of land, a wealth tax encourages efficient use of wealth in general.
The choice to produce cars seems analogous to the choice to buy land.
Once that choice is implemented, owning a factory (or share of a factory) seems no more and no less active nor noble than owning a piece of land.
One can then own land without actually doing anything with it - you can let it out at rates for others to use. You can't just let a car factory sit. And if you just own the building and land, and do nothing else, then yes- you're just charging rents. But generally owners have to work to own a factory, if at nothing else than making operation policy decisions.
Perhaps a trip thru "Poverty and Progress" is in order? George is better at this than I am.
Most people making arguments against income inequality in the US seem to want income to be more equal down to and including themselves, but never very far below themselves. They want it to be equal within the US, but I have a hard time believing they'd be as excited to extend that same income equality worldwide. Doing so would see even the poorest Americans taking a massive cut in lifestyle and living at a level of poverty most people in this country have never seen or experienced.
It's striking that much of the OWS movement was made up of "the 2%" ... angry that they weren't in "the 1%".
First world, college educated people...who'd either picked the wrong majors, or didn't want to pay back their student loans, etc.
But so do those who are against redistribution. I've yet to meet a person who was against redistribution, as well as against certain benefits they get from tax money (police force, etc).
Taxpayer provided services is income redistribution. Some people's incomes are being used to provide other people services.
Everyone wants free shit. That's why your comment is a bit of a non-statement. It's similar to saying "Everyone likes food". Or "Everyone likes money." It doesn't explain anything.
I've met plenty. There are those who relish the opportunity for free market alternatives to public police forces.
You've met them for police forces. But have you met any that are against all taxpayer supported services?
The big one being: No military?
Other than that: No transportation services (road maintenance, etc). I've met people who quickly say they want that privatized and voluntarily paid for, but when I really make them think about it, they change their mind quickly. There are always places they want to drive to that they do not want to pay for.
And even if you have met such a person, they really are a minority of people in the group who are against wealth redistribution.
That's the tradition, but its not entirely true; the Continental Navy was formed in 1775, but disbanded 10 years later in 1785, and it was nearly another decade before the US Navy was formed in 1794.
In any case, anything in the 18th century is well before Eisenhower... ;)
I didn't mean literally "no military" but we've had extreme drawdowns after every conflict . By "no military" in scare quotes I mean that there was an aversion to a standing army dating back to the Revolution. I was ( apparently overly simplistically) identifying that as a principle. The Legislature literally did not want the Executive to use the standing army as a political tool.
Obviously, the inventory ... lag of ships means that we'd have larger navies in some peacetime intervals than others. We only had permanent forces after the advent of the Cold War.
No, it wasn't. A minimal peacetime army and, for most of its history, a substantial navy -- with reliance on that navy, the oceans, sheer size to provide depth, and the fact that only a small number of countries had land borders to provide mobilization time for the army in time of need was a thing for the US prior to WWII.
> See any good bio. of Eisenhower for details
Any bio of Eisenhower (or any non-fiction work more generally) that claims the US had no military prior to WWII is, ipso facto, not a good one.
I would have thought the reference to Eisenhower's bio. would be enough to show that there was some army.
The Navy varied dependent on who was in charge.
Sure, but its not even approximately the same as no military (and its much more true of the Army than the Navy, except, IIRC, for two periods -- from the end of the revolution to 1794 when there was little (and, from 1785, no) Navy, and about a decade somewhere around 1870-1880 when there was a very small Navy.
From just before the turn of the 20th Century onward, the US at no point didn't have a world class Navy.
First of all, he uses this as a thought experiment and a sort of alternate method of constructing a model.
Second, it sort of assumes a frictionless universe in which there is much weaker national/tribal/city-state affiliation.
It's a good thing to know about, but I'm skeptical that actual humans as they currently are can handle it.
And I think your stretching your definitions to suit your level of income redistribution.
The conversation of how much and what type does need to occur. I just wish everyone realized that it is income redistribution. Your level of what your comfortable with is simply different from others.
>You can make the argument that I'm effectively paying for an insurance policy, or that by supporting the recipients I am supporting the economy which in the end supports me, but the relationship is not nearly as direct.
It is not very direct with fire and police, either. With both of them, it is effectively an insurance policy. If you benefited from the police, it is not clear you contributed in taxes as much as is needed to get that benefit. And I'm sure you would not advocate a system where you get only as much police benefit as what you put in.
I think that "tax rents" is the method whereby this can be done, if it can be done at all.
Competing hypothesis: People's motivations are less driven by self-interest when the discussion is an abstract one and more driven by self-interest when there are real losses and gains to be had. It still has a self-interest component, but now the claim is that it is those who do not want redistribution acting out of self interest. Self-interest is clearly a component here, but singling it out as a motivation for wanting redistribution makes for certain specific arguments.
I'm also not sure how transferable the results around distribution in a game are for questions with societal implications; I know these sorts of experiments are common in psychology, but I wonder if the limited scope of this game means people are more willing to take everything they've earned since many of the reasons to support redistribution do not exist in a game setting, e.g. real suffering, not wanting violent revolution, etc.
I fall on the side of wanting the government "out of my pockets" because I question the overall effectiveness of domestic programmes in helping "the poor". I may be ignorant, but like to think that international causes do a better job of decreasing wealth inequality by supporting those at the very lowest end of the spectrum in third world countries. Call me an asshole, but understanding that no system is perfect, because America has one of the better social/government systems in favor of economic mobility, government use of taxpayer dollars for domestic programs targeting income redistribution should be limited. While I do think that there are worthwhile programmes that support the poor domestically, my position on income redistribution can be more easily understood when looking at wealth inequality at a global scale.
https://goodmenproject.com/featured-content/the-hidden-reaso...
What people are advocating for is less income redistribution to the top.
It is worth noting that if you ask the public how wealth is distributed currently, and how it should be, the U.S. public desires a sort of socialist utopia, more equal than Sweden: http://www.people.hbs.edu/mnorton/norton%20ariely.pdf
Note that people prefer that socialist utopia regardless of their personal wealth and regardless of their political orientation. EVERYONE prefers that. There is complete Democrat-Republican rich-poor consensus that the United States would be better off if it were much more equal.
In the U.S. at least, and probably elsewhere, most of the opposition to social welfare policies is rooted in racism. The best way to derail any proposed social welfare idea is to talk about all the black people that will be helped by it. This opposition has nothing do with how the individual will be affected by the proposed policies in a monetary sense.
And I feel like you're being very disingenuous by implying that him not getting what he voted for is equivalent to communism.
The cardiologists and their like can be outvoted. That's how it goes in a democracy. But the number of people who lose on net may be greater than the number of people who win on net. So the only way it gets implemented may be through... let's say "undemocratic" means.
Note well: I'm not advocating this. I'm just pointing out that this may be the way the politics works out.
If anything, they found that calls against redistribution of income are most likely motivated by self interest.