The importance of redistribution

by Linda Beale

The importance of redistribution

I have dedicated ataxingmatter to a concept I call “democratic egalitarianism”–the idea that individuals flourish best in a free society that allows them to choose democratically the rules that govern their lives, with the understanding that the institutions must be sustainable and must allow all individuals to flourish, not just a select few. It is that latter idea that supports a view of egalitarianism–not that everyone is always “exactly” an equal of others, but that the society’s resource allocation provisions have to counter the tendency for resources to concentrate in the hands of a powerful few. Since there can be no absolute equality, society’s institutions must counter the tendency for wealth and power to aggregate in the hands of those with more wealth and power by mandating downward redistribution of wealth and power.

The claim is that every decision in society is in some way redistributionist. Most redistribute upwards to those that already have wealth and power and “connections”. Society’s institutions have to counter that–at least at the margins–with downward redistribution from those with wealth and power to those without wealth and power. Hence, a progressive income tax system that taxes those at the bottom of the income distribution less than those at the top serves this underlying value. A regressive sales tax system that taxes those at the bottom more severely, in relative terms, than those at the top undermines sustainable democracy.

The US is becoming more and more a society of haves and have-nots, a society that could allow a candidate for president to make claims about merit that suggest that anyone who isn’t a successful “have more” is just plain irresponsible (Romney’s infamous 47% speech to a private group of wealthy and powerful fundraisers). The Great Recession–engendered in large part by the greed of the have-more class, especially bankers and corporate managers and owners who reap disproportionate rewards for their labor or simple ownership of assets compared to the workers who make those rewards possible–has left the US an even more unequal society than it was before, as the wealthy have mostly recovered and moved ahead, while the middle class and poor have mostly suffered, with jobs that have moved from decent to inadequate and pay scales that continue to reflect the upper class’s willingness to exploit the rest of society for their own selfish ends. (And this is true even if that upper class gives “generously” to charities that further their own interests and push their own views about education or transportation or religion onto the recipients of that “charity”.)

The Times today has a number of excerpts from commencement speeches given by nationally known figures. I found the excerpt from Ben Bernanke’s speech at Princeton worth noting. Here’s the excerpt the Times printed:

“A meritocracy is a system in which the people who are the oluckiest in their health and genetic endowment; luckiest in terms of famiy support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate–there are the folks who reap the largest rewards.

The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world and to share their luck with others.” Ben Bernanke, excerpted in Commencement Speakers: In Looser Tone, A Call to Take Risks and Be Engaged, New York Times (June 16, 2013), at Y20

This sounds well and good as far as it goes. But it suggests that this kind of society (a “meritocracy”) where people who are born into the good life are the ones that can succeed, is okay so long as these meritorious people “contribute to the betterment of the world and share their luck with others”, a phrase which sounds like a mere tithing-type responsibility to “give back.”

Nah, I don’t think so. I don’t think that goes nearly far enough. This is not a society I want to live in–where the rich get richer and exercise some royal-like “noblesse oblige” interest in the dregs of society that their very success has created.

If we are to have a society that believes in merit, then it needs to be one that recognizes that the luck of birth has nothing to do with merit but with the concentration of wealth and power in the hands of too few people. Merit, in any useful sense, is only okay so long as the ranks of those who merit success can readily expand to include those not so lucky at the outset. Else the upper class will essentially become a superior caste that enjoys all the rewards, except for the crumbs handed out as charity, and the masses will be essentially peons serving the wealthy few.

How does one maintain a notion that merit is good but avoid the problem of the lucky, powerful few ruling over everyone else? It requires a lot of work, work we haven’t been doing very well lately. It requires a decent minimum wage sufficient for people to live on. It requires government systems that actively reallocate resources towards those in need and away from those who already have plenty rather than providing millionarie congressmen millions more in agricultural subsidies for their agribusinesses as we currently do. Through a progressive (i.e., redistributive) tax system, a decent anti-trust system that prevents monopolies and even semi-monopolies, a more innovation-supporting copyright and patent system that does not allow a few well-funded groups to control too much of the new knowledge base for too long, a strong labor law system that does not allow employers to ride roughshod over workers, and a very strong sense of the public good and the need to maintain some systems of primary importance to core democratic values as public rather than private ones–like health care, education, and probably energy. We are failing on so many of these points, as anti-trust has withered to a shrunken ghost of its former self, as global MNEs exercise too much power over workers and communities, as companies are allowed to ignore the externalities of their success (government subsidies and government stability) and of their business models (environmental pollution, worker deprivation).

In particular, the tax system is so frequently under attack from the radical right because it offers an important tool for preventing oligarchy–through the estate tax, which should be strengthened rather than weakened, through the income tax, which should be made more progressive by getting rid of preferential rates for capital gains (among many other important progressive reforms), and through the provisions for standard deductions and personal exemptions and refundable credits, which can provide a part of the social safety net that any wealthy, advanced nation should provide.

These things won’t happen until people stop allowing corporate greed–and the wealth and power ambitions of the Koch brothers and their ilk–to decide the fate of the nation. We do still have the power of the ballot box. We as individuals have to work to counter the corporatist creedo that is being preached by Koch-funded think tanks and “social welfare” (really political party) groups. We have to elect people willing to fight for a sustainable democracy and to legislate against the interests of the biggest and most powerful businesses and their owners/managers. The corporatist lobby that commodifies everything is extraordinarily powerful. Fighting it isn’t easy. But it must be done.

See the Motherboard article, below, for another analysis of the “meritocracy” idea, and some insight into what the inventor of the term, Michael Young, meant to be doing in his seminal work a half century ago.