Arnold Kling  

Income Distribution and the Left

Pricing and Marginal Cost... What, Me Rich?...

Chris Dillow thinks that the Left has lost its moorings on the issue of income distribution. That is, Dillow supports income redistribution, but he thinks that neither the Left nor the Right is with him.

Hayekian arguments can be applied to company bosses as well as central planners. For me, what’s really offensive about capitalism isn’t (just) the huge wages paid to bosses, but the fact that their claims to justify such rewards – that they are capable of managing massive institutions – are utterly unfounded.

That point by itself is worth an entire essay. But then there's this:

If the state is taking 40 per cent of GDP, the tax system cannot be a force for equality. As Julian Le Grand pointed out years ago, the middle class gets a better deal from the welfare state than the poor; although we all take it for granted, isn’t it just disgusting that the best state schools are in rich areas? As a means of delivering Left objectives, the evidence suggests the state is a failure.

Echoing Dillow, it seems to me that if you wanted the government to be redistributive, you might not be so hard-line on defending Social Security, public education, and Medicare. See Bleeding-Heart Libertarianism.

UPDATE: I'd forgotten that this essay was in the queue to go on line. It discusses what I call self-marginalizing political behavior on the Left, in the context of James Bennett's The Anglosphere Challenge.

For Discussion. The old (socialist) Left was idealistic but misguided. How does that relate to today's paternalistic Left?

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CATEGORIES: Income Distribution

COMMENTS (13 to date)
shamus writes:

The left was always maladaptive, and that has not changed. Since the the left endorses unchecked political power, they they inevitably wind up with Castro, Pol Pot, or Stalin as their poster children.

Is the left really about anything more than mass murder and work camps?

It's hard to support arguments to the contrary with historical examples.

Dallas writes:

I was just wondering, does this "bleeding heart libertarian" approach conflict with any of your other value judgements that led you to support libertarianism in the first place?

IOW: How do justify this progressive consumption tax on moral and ethical grounds and does it contradict any of your other moral or ethical judgements?

For example: A common Libertarian complaint is "What 'right' does the government have to take your money by force or?" You seem to have a justification.

Ronnie Horesh writes:

Your bleeding-heart libertarianism is much more appealing than the current mess. There may though be a role for the welfare state to supply goods, such as basic health and education for those people who cannot or will not make informed choices, and especially for their children. Giving heads of family more cash might not sufficient [or necessary]. My suggestion is that government target such outcomes as 100 per cent literacy and low infant mortality, because it is kinder to the children to do so, and because they have a definite public good character.

jim linnane writes:

Nineteenth century leftism assumes a zero-sum economy. In pre-industrial agricultural economies where leftists have had popular support, ownership of the land by an elite few probably slowed productivity. Leftist governments then made the mistake of having the state replace the elite as owner of most of the land. In early manufacturing economies, owners of machinery reaped all the benefits of increased productivity. There was a zero-sum economy within the firm. Unions and socialism grew to combat this situation. Their solution was for the state to appropriate the profits of increased productivity. The modern economy is much more diverse than these crude models, and the failures of socialism in Europe and much of the third world combined with the triumph of capitalism in the US, have just about thoroughly discredited the notion that turning over a chunk of the economy to the state is going to solve anything. Earlier forms of socialism rested on the assumption that, given the economy, the majority of voters were peasants or workers. Turning over a chunk of the economy to the state was perceived as the equal of giving control to the people as workers or peasants not getting their fair share of the profits. That argument cannot hold anymore because society is too diverse. The left today is in the position of religious leaders: life is too complex and there are some losers, we know better than the masses how things should be, give power to us and we'll fix the mess. We will just do things by fiat on the grounds that it is good for you to obey us and bad for you to make your own decisions.

David Thomson writes:

“Social Security is the latest cause to be sucked into the Left's Mob-o-Matic.”

I am utterly convinced that many Democrats oppose President Bush Social Security proposals merely to give him a hard time. They are acting like immature obstructionists. If Bill Clinton was in the White House---they would strongly support the very same proposals!

Dezakin writes:

I am utterly convinced that many Democrats oppose President Bush Social Security proposals merely to give him a hard time. They are acting like immature obstructionists. If Bill Clinton was in the White House---they would strongly support the very same proposals!

Like they very strongly supported NAFTA?

I think there is a very good reason to be suspicious of a Bush plan on social security: Bush is at heart enamoured with the state to solve so many problems. The great Medicare giveaway alone should give many people reason for some skepticism that the final plan will be anything more than a bad compromise that inflates government spending.

Boonton writes:

Since you brought the topic up, Clinton did briefly float the idea of investing a portion of the SS surplus in some type of stock index. I don't remember how much opposition there was to it among liberals but there was enough to scuttle the silly idea.

Considering the rank dishonesty of this administration coupled with its fiscal negligance I think it is better to say the only reason conservatives support Bush is because he is one of their own & they would have savaged the administration of any Democrat who did what Bush did.

Boonton writes:

On income distribution:

I recently visited the NY Metropolitan Mus. of Art. They have a very nice policy. They have a recommended donation of $15 per person but will take anything. Even if you have just a penny you can get in for the day (that being a bad day for me, I had maybe 15 cents)...

This sounds like a great income redistribution policy. For the poor person they get in for a penny while the rich person pays $15. But it suffers from the same flaws Arnold pointed out.

Like social security, it ceases to be progressive once you can pay $15. Donald Trump, who is probably 10,000 times richer than you, also pays $15. Also those who really benefit from this are the middle class. I noticed a nice looking couple in front of me who paid $2 each to get in. They were probably out on a date that would later include dinner & maybe even a movie. Hence they were getting $14 of benefit each from the museum's progressive policy.

Yet can I really object to the policy? I don't think I can.

Lawrance George Lux writes:

I still support the Concept that Welfare payments are for Business interests, not the Recipients. Business can maximize Consumption at minimal cost to themselves, devolving the Cost to Employees, Customers, and exterior elements.

Why does the New Left insist on Recipients getting the lowest possible Welfare transfers, while their approved Expense transfers are paid full-price to the highest-paid Professional Labor? This is because they are the Mouthpiece for the Business interests, whose leadership comes from the same class as themselves. lgl

Lawrance George Lux writes:

I still hold to the Concept that Welfare transfers are for Business interests, not Recipients. Business can maximize Consumption, while devolving the Cost onto Employees, Customers, and exterior elements.

Why does the New Left insist on the lowest possible level of Welfare transfers to Recipients, but demand full-Cost Expense transfers to the highest-paid Professional Labor for their care? The New Left is but the Mouthpiece of Business interests, whose leadership and themselves spring from the same Class. lgl

Scott Schaefer writes:

Re: NY Met

Several nitpicking reactions:

1) Donald Trump, who is probably 10,000 times richer than you, also pays $15. Baseless assumption; he could pay more [$15 is the recommended donation], he could pay less.

2) ... nice looking couple in front of me who paid $2 each to get in ... getting $14 of benefit each. I think you mean $13 of benefit each, unless you were assuming they would have otherwise paid $16 each -- which, of course, relates to the fundamental characteristic of the policy to begin with.

And, either Donald Trump or either/both of the individuals in your couple may be supporting the museum by means other than the entrance admission.

I know nothing of the museum's finances or tax support, but it seems at least a minor example of the types of creative solutions that abound in private markets.

Jason Ligon writes:

The left wants to be redistributive, but now believes (recognizes) that the market provides all the wealth that they want to hand out.

'Third Way'liberalism short version: You may abuse but not kill the goose.

spencer writes:

The issue cited about the high wages of the bosses is something I would think the right wing should be screaming about rather then the left wing.

Since around 1980 the wages paid to senior management in the US has increased massively.
However, the rate of growth of corporate profits has not changed -- it is still on the 7% trend displayed since WW II with no break in trend obvious around 1980. If managers have not provided more profits to owners, why should they be paid more then they were prior to 1980?

The owners of capital have a real "agent" problem.

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