Monday, September 24, 2012

Redefining Redistribution

The various recent sound bites from Obama on "redistribution" have been rebutted in an odd way through various Democratic talking points.

In the rebutting of the 1998 Loyola speech, Democrats have noted that the Republicans' release of the sound bite is deceptively edited, and that immediately after Obama discusses his belief in redistribution, he talks about market-based solutions.  (Clip, transcript, and gratuitous commentary here.) 

But it's pretty clear from the clip that Obama is talking about markete-based solutions to further redistributive ends. 

The next avenue of rebuttal has been more along the lines of, "Redistribution is just what government does."  An example of this is Deval Patrick's argument on Meet the Press yesterday:

We-- it seems to me the first question ought to be what is it we want government to do and not do.  And then what’s the sensible way and fair way to pay for that.  I really believe in this no-- notion just as the president does of common cause and common destiny that we all have a stake in educating our kids.  We all have a stake in ensuring that this country is well defended.  We all have a stake in investing in the infrastructure that creates a platform for economic growth and-- and opportunity and indeed we all have a stake in the American dream.
Notice that entitlements don't get mentioned explicitly anywhere in Patrick's argument.  And that's where things get kinda sneaky.

For argument's sake, let's define two terms to describe the totality of what government does with its revenues:
  • Collective action involves the transfer of tax monies to activities that benefit the public in general, rather than specific individuals.  Defense, law enforcement, infrastructure, education, and research subsidies would all fall into this category.
  • Redistribution involves the transfer of tax monies to individuals for purposes of increasing their wealth beyond what they can make as free agents in various markets.  Social security, Medicare, various welfare programs, EITC, GI Bill programs, and various kinds of individual loan guarantees all fall into this category.
Now, I've obviously defined the terms to make my argument--feel free to call them "X" and "Y" if that'll make you more comfortable.  But it's misleading at best to define "redistribution" as "the transfer of tax monies to any end that the government sees fit."

I'd be a bit surprised to find any Republicans that would object to the use of of tax monies for many purposes of collective action.  No doubt there'd be brisk debate about whether individual investments were cost-effective or not, but in general everybody agrees that collective action is a legitimate government activity.

Similarly, I don't think you'll find more than a tiny fraction of Republicans--even Mitt "47 percent" Romney--who disagree with government being responsible for some amount of redistribution.  But almost all Republicans and conservatives are alarmed by the growth of redistribution at the expense of collective action.

Let's go to a table on the White House's web site, "Table 3.1--Outlays by Superfunction and Function: 1940-2017" (Excel).  This lists the percentage of outlays for various government functions.  (Weasel words:  this is federal spending--things might look somewhat different if you included state and local spending, but I'll bet not much different.)  I rolled up the percentages of the the various superfunctions as follows:
  • Collective action:  national defense, physical resources, net interest, other functions, and undistributed offsetting receipts
  • Redistribution: human resources (which contains education, which I'd label as collective action if I were more diligent, but it's a tiny amount)
Here's the graph from 1940 to 2017:

I think this adequately explains conservative concern over redistribution.  Conservatives would love to be able to spend more on infrastructure and research and law enforcement and, yes, defense.  But it's simply not possible if the redistribution trend continues.

A good society should give the poor a hand up, and it's lovely to care for your sick and elderly, but ultimately societies have the morals that they can afford.  If we can't flatten out the redistribution trend, the government will ultimately collapse.  Then there will be no redistribution at all.

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