Wealth and Want
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Nic Tideman: Improving Efficiency and Preventing Exploitation in Taxing and Spending Decisions

Two of the most troublesome features of taxation and public spending are that taxation relies on coercion, and that the combination of taxing and public spending generates substantially haphazard redistribution. People must pay their taxes on penalty of having their property confiscated, or of going to jail. And we cannot say that this process is for everyone's good.

There is reason to believe, though we do not have the basis to say for sure, that some people receive much less in benefits from public spending than they pay in taxes. How do we justify the harm that is thereby done to some persons by the combination of taxing and public spending? I would like to address this question by first discussing some possible justifications that might seem attractive, but should be rejected.

  • One possible justification is conservatism: Things have always been done this way. Our institutions have evolved to solve social problems that we may not even be aware of. Who knows what terrible things might happen if we did things differently?

    There is an element of validity to the conservative position, but not an adequate basis for making conservatism the primary principle of social organization. If we had adopted conservatism as the primary principle of social organization centuries ago, there would have been no end to slavery, no women's suffrage, nor any of the numerous other changes in social organization in response to improvements in our moral understanding. It would be foolhardy to assert that we will never experience further improvements in our moral understanding that will call for changes in social organization.

  • A second possible justification of public spending is majoritarianism: Once we have voted we know the right thing to do. The possibility of majority-rule cycles undermines the simple-minded version of majoritarianism that says that the majority is always right. Still, it would be possible to assert that majorities should have their way when cycles are not observed, and that when they are observed, some device for cutting through cycles can restore the viability of majoritarianism. However, that would give free rein to any majority to exploit any minority. That makes no sense as a theory of justice. One could assert that voters, acting as judges of what is best rather than as self-interested advocates, have a claim to determine in a majoritarian fashion what a collectivity ought to do. But then one still needs a theory of the principles by which the voters ought to judge.
  • A third possible justification of public spending is egalitarianism: People should be required to provide as much for others as they have themselves. This theory suffers from the difficulties of vagueness and questionable operationality. As much what? There is no way to ensure that all persons will have equal quantities of such valued things as affection, talent or self-confidence. It is possible to imagine a crude egalitarianism of goods, but only by eliminating all incentives to be productive. If equality is traded off against some other goal, then egalitarianism is no longer the first principle.

Rawls manages to retain the primacy of egalitarianism without destroying all incentives to be productive by the maximin rule: Laws should be designed to maximize the well-being of the least advantaged person. This formulation, however, generates such anomalies as the following: If there are three persons, and the choice is either a distribution of $10,000, $12,000 and $50,0000, or a distribution of $10,001, $10,002 and $80,000, the maximin rule will select the latter, despite the fact that it makes the middle income person, who is already relatively poor, even poorer while making the richest person noticeably richer. In Rawls's particular formulation there is a further difficulty. He makes the maximin rule lexically subordinate to the rule that all persons should have the maximum individual liberty that all can have. However, he does not deal with the following problem: My individual liberty will be unnecessarily restricted if I am not allowed to sing you a song in exchange for a haircut (without being taxed), but if I am allowed to do so without being taxed, the maximin rule is not satisfied. If Rawls really does mean to put individual liberty lexically first, no redistributive income taxes would be permitted. ... read the whole article

Peter Barnes: Capitalism 3.0 — Chapter 7: Universal Birthrights (pages 101-116)

The standard argument against third wave universal birthrights is that, while they might be nice in theory, in practice they are too expensive. They impose an unbearable burden on “the economy” — that is, on the winners in unfettered markets. Much better, therefore, to let everyone — including poor children and the sick — fend for themselves. In fact, the opposite is often true: universal birthrights, as we’ll see, can be cheaper and more efficient than individual acquisition. Moreover, they are always fairer.

How far we might go down the path of extending universal birthrights is anyone’s guess, but we’re now at the point where, economically speaking, we can afford to go farther. Without great difficulty, we could add three birthrights to our economic operating system: one would pay everyone a regular dividend, the second would give every child a start-up stake, and the third would reduce and share medical costs. Whether we add these birthrights or not isn’t a matter of economic ability, but of attitude and politics.

Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to give people “something for nothing,” despite the fact that corporations take common wealth for nothing all the time. We believe the poor are poor and the rich are rich because they deserve to be, but don’t consider that millions of Americans work two or three jobs and still can’t make ends meet. Plus, we think tinkering with the “natural” distribution of income is “socialism,” or “big government,” or some other manifestation of evil, despite the fact that our current distribution of income isn’t “natural” at all, but rigged from the get-go by maldistributed property.

The late John Rawls, one of America’s leading philosophers, distinguished between pre distribution of property and re distribution of income. Under income re distribution, money is taken from “winners” and transferred to “losers.” Understandably, this isn’t popular with winners, who tend to control government and the media. Under property pre distribution, by contrast, the playing field is leveled by spreading property ownership before income is generated. After that, there’s no need for income redistribution; property itself distributes income to all. According to Rawls, while income re distribution creates dependency, property predistribution empowers.

But how can we spread property ownership without taking property from some and giving it to others? The answer lies in the commons — wealth that already belongs to everyone. By propertizing (without privatizing) some of that wealth, we can make everyone a property owner.

What’s interesting is that, for purely ecological reasons, we need to propertize (without privatizing) some natural wealth now. This twenty-first century necessity means we have a chance to save the planet, and as a bonus, add a universal birthright. ... read the whole chapter



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper