It's difficult, but there's no shortcuts
I tend to be in favor of free trade, skeptical of unions (particular public service unions), opposed to excessive regulations, and a number of other positions that would likely be seen as right of center or at least centrist.
But it's generally because I believe that taxing winners and using that revenue to fund a high level of public services for all is a better way to achieve social goals. I would significantly increase the current level of taxes in the U.S. and use those resources to make our public services and safety net better.
It’s true that earnings are not based on merit. But they are based on generating value for other people. And that seems pretty fair to me.
The utilitarian case for higher taxes is very strong. But the justice case is pretty weak - largely rich people do deserve their money.
"In Denmark, the actual gap in living standards between the bottom and top deciles is much smaller. You can’t do anything about the fact that some people are better at certain things than other people or that some skills are more lucrative than other skills."
The real question is what is the gap between the Danish bottom decile and the US bottom decile. I.E how much of the US gap is because the top decile is in the stratosphere compared to Denmark?
Very few people who haven't grown up in privilege become libertarians as adults, that should tell you all you need to know. (Many socialists, progressives and liberals grow up in privilege and some don't)
It's a world view that cannot be defended on impartial grounds. It's selfishness and self righteousness - an attempt to feel good about oneself and one's position in society - dressed up as a philosophy, a second rate philosophy at that. One doesn't have to agree with John Rawls in order to see that there is something fishy about a political position that is only defended by those who know they will end up on top.
As for the concrete issue of justice and redistribution I think it makes more sense to focus on lifting the bottom 15-20% to a good life standard than to redistribute wealth among the remaining 80-85%. It's an abomination that there are children without adequate housing, schooling and nourishment in a rich country today. It would be great if this matter could be solved by private charity but it's an empirical fact that it can't, people won't be that generous as we have seen over and over again.
Why do Dems like using 400k threshold on not raising anyone’s taxes?
Taxes alone don't create what Matt wants. Taxes plus functional government produces it. Raising taxes before fixing government will only undermine support for Matt's preferred outcomes.
To use an example, France has high taxes and uses that money to build quite a bit of rail (both subway and traditional trains) at (reasonably) low cost. People feel the pain of the tax but they get something quite valuable in return.
But as Matt has pointed out many times, our system doesn't allow for large-scale construction at reasonable cost. Our rail projects very literally cost ten to twenty times as much as French ones. If you raise taxes to build rail, people will feel the pain of increased taxes but they will see little to no benefit in terms of more rail service.
How do we fix that? I'm not sure. But you can't get European results w/o governments that function at European levels. Places with high taxes and non-functional governments don't have great public amenities. The money just disappears into the ether.
I think I fundamentally disagree with the premise in the sense that I don't really think compressing the range of material distribution is a good in and of itself. What's good is maximizing the average productive capacity of individuals. The more capacity available on a per person basis the more sustainable life is, the more choices people have, the more opportunities for flourishing exist. To the extent unequal distribution is a problem it's essentially a political one.
I understand the need to put a floor on certain material needs for a society to function, but even that is kind of problematic because it creates need for like immigration control and things. Minimum wages create barriers to market entry for untrained workers. Stuff like that. The urge to compress the wealth distribution within a closed economic bubble inevitably caps innovation with one hand and excludes categories of people and goods on bases I typically don't subscribe to with the other.
Even beyond that, the provision of services like a swimming pool is like the worst possible use of all but the most local of government entities. This is not an efficient provision of a needs based welfare floor for the purposes of a stable pubic order. This is bread and circuses territory. Way too much "egalitarian" rhetoric rapidly devolves into class and status envy where redistribution really does devolve into the equal sharing of poverty.
None of this is to say I'm embracing some delusional an-cap fantasy. Something like a carbon tax funding productive universally accessible infrastructure is a great idea. School funding is good. Alleviating childhood poverty is good. Hell I'm even open to sorts of UBI ideas. Taxes are necessary to pay for all those things.
The problem is people like to do taxation like we're Robinhood. Stealing from the rich to give to the needy like there's big Scrooge McDuck style piles of gold out their and we just have to hand everyone their one coin to make things "fair". That's not how wealth exists in the economy. Taking money from one sector and putting it in another via taxes creates dead weight loss. To the extent government provides these type of society wide services they should have really universal benefits, not simply be transfers for the sake on wealth compression, and the tax burden should be spread as widely as possible to avoid distorting the efficient functioning of the market.
Wait, is this a Freddie deBoar guest post?
Really though I agree that this is terribly under discussed on the left, especially the far left. Most RW types are able to at least talk about the inequality of ability (although I abhor the typical response). But because the libs tend to think that variation in ability is driven by some causal variable that can be fixed, we don’t have a coherent discourse on how to move forward.
As a test, ask your smartest liberal friend how much benefit kids get by doing SAT/ACT prep. I bet they overestimate the effect of test prep by a factor of 10. Also, they will claim that test prep is only available to rich kids, even when they know damn well that the Kaplan test prep book is *in the school library* collecting dust.
I predict that as the Northern European countries go from relatively homogeneous nations to nations of half refugees, the support for redistributive programs will decline. Income inequality will soar because the magic dirt of Northern Europe will not overcome the norms imported from south of the Med.
One thing I cannot get over after moving back to the US from Denmark is how low the taxes are.
No 25% VAT on all goods and services. Less than the 33% flat rate I paid as a foreigner (it would be closer to 40% otherwise).
But you did get regular and on time bus service in rural locations, litter picked up, and lots of parks (and ducks, so many ducks, obscene numbers of ducks.)
We should make some note of the meaning behind Erickson’s comments. While I think Matt tackles the most important part for anyone wishing to play a more constructive political game, we can’t discount the other think Erickson is talking about.
I read Erickson’s tweet as a dog whistle. I think the history of public pools in the US bears that out. When some on the right talk about “entitlements” they are talking about money going to those they consider undeserving. The poor. Blacks.
The reason so many aren’t familiar with public pools (though I doubt Erickson is ignorant of this history) is because they went away in large swathes of country during the 40s-70s as suburbanization, white flight, and backlash to desegregation took hold.
My neighborhood pool growing up in Marietta, Georgia was not public. It felt public because is was open to anyone living in the neighborhood but it was actually private: funded, operated, and maintained by the HOA. So, while most homes in my area did not have pools of their own, every neighborhood had its own private pool for neighborhood residents. It was great. That’s where I learned how to swim. Joined a swim team with other neighbors to compete against other private HOA pools in other neighborhoods. It was a summer jobs program for teens who worked as lifeguards, did pool maintenance, and coached the swim team. But all of this was built on exclusivity. It just didn’t feel like it because all that exclusion was layers deep.
But hey, it was colorblind! Technically nobody was excluded because of their race and all you needed to be able to do was buy a home in that neighborhood. It just seemed to never happen and that it never happened seemed to be the expectation.
When I read Erickson’s tweet, what I see him saying is that liberals want to take your tax dollars and give it to poor black people so they can enjoy the same luxury you have to pay HOA frees for. You’re a winner. You can buy a nice home in a nice neighborhood and pay for a neighborhood pool (along with your similarly successful and probably white neighbors).
I think there are three separate propositions
1. It will be good for society if for any given job the person hired is the one who could perform it best out of the pool of candidates AND we should aspire to reach the point that all who can and wish to be part of that pool are part of it (my definition of “meritocracy” but not the one commonly used in these discussions).
2. A decent society ought to guarantee minimum standards of living
3. It would be good for democracy and for the health of our civic life and social fabric that the gap between rich and poor doesn’t become too excessive.
These goals seem to me to be mutually reinforcing (and all served well by redistribution and good broad public services) but many here I suspect consider them contradictory and much of the debate stems from that.
This in many ways of one of Freddie de Boer's main theses: in the process of promoting security and welfare for all people, there's no need for us to pretend that everyone is actually equally capable. And, in fact, pretending that leads to all sorts of weird consequences and partial lies, and probably takes us further away from security and welfare for all people. The layer I think he misses is that we need much better social investment in order to give more people with desire and ambition the kind of opportunities and second and third chances that a talentless rich kid gets.
The US has the most progressive tax system in the world....we also have the highest avg. household income of the major economies, best GDP growth outside of China for the past 15 years, etc. And yet, most Americans do not pay income tax. In fact, a significant percentage actually have negative taxes in the form of tax credits and wealth transfers (food, housing aid).
The egalitarian societies being compared to the US in the chart are far more regressive in comparison. They have 40-50% payroll taxes AND 16-20% sales taxes. And the universal health care is rationed like crazy. And the EU has had stagnated GDP growth at around 1% for a decade and a half.
This is why people are for higher taxes and services rhetorically until they hear the details.
Pools, libraries, parks, and schools are municipally funded services. I don’t think anyone proposes raising property taxes to mitigate inequality - it’s always federal income tax. The things federal income taxes get spent on are at best quite remote from the taxpayer.
An interesting point that "lots of Americans currently have their nominal earnings propped up by occupational licensing rules or other weird franchises like the laws that protect car dealership owners and liquor distributors." - these things provide job security in a society where the lack of a secure job is much more of a problem that there is when there is a welfare state.
Big improvements in efficiency can be accessed by allowing innovation, but there are always losers to any sort of big disruptive change. Having a society where there is a good safety net makes it more politically acceptable to push through disruption, which can help keep up innovation and productivity improvements.