thoughts on Wilkinson’s views on income inequality

Will Wilkinson has done yeoman’s work in his recent posts regarding income inequality, and in articulating some of my own dissatisfaction with certain liberal narratives regarding income inequality. A key graf:

If we find that redistribution is required to arrive at a system that does the best it can for everyone, then justice will demand redistribution. But the point of redistribution isn’t to correct some flaw (e.g., too much inequality) in the pattern of incomes. The point is to make sure everyone has reason enough to affirm the system in which they will live their lives.

This, I think, is exactly it. The purpose of liberal social programs is above all to provide for a certain minimum threshold in several main areas of basic human security and comfort. Whether we have the responsibility to provide this kind of social safety net, to what degree, and the efficacy of individual programs within it are all questions worthy of debate, and we do endlessly. But they are actual questions about the actual content of government ventures, whereas the debate about income inequality is, as Wilkinson says, epiphenomenal, and thus tangential to the questions of social justice that compel us. I remain open to the possibility that there are problems with income inequality qua income inequality, and I’m happy to hear more arguments about it. I do think that one argument that is given short shrift is the idea that inequality in consumption can lead to social unrest, particularly in an era of conspicuous consumption. (This tends to be taken as a rather silly idea; I imagine French aristocrats in, oh, the mid-eighteenth century would have found the idea rather silly, but come to have reasons to change their mind.) Still, I generally have come to feel that arguing about inequality, rather than about how that inequality manifests itself in social injustice, is silly, and arguing by proxy.

In the defense of liberal pundits, they argue by proxy, to a degree, because they have to. They argue about the side issue of income inequality because they feel prevented by the narrow bounds of our political discourse, and how it defines seriousness, from arguing straightforwardly about redistributive practices to fund social programs. You can’t be too enthusiastic about redistribution if you want to remain employable and in good social standing. So they argue on the margins in order to address more radical notions of redistributive justice. (As I have no real professional ambitions and am a social disaster, I am immune to such concerns.)

Wilkinson writes responses to John Chait and Matt Yglesias and Conor Clarke, which deal with income inequality, the justifications for redistribution and the necessity (or lack thereof) of utilitarianism to that end.

Most importantly, utilitarianism is false. I don’t know about Conor, but I know Matt and I disagree about this. Like Rawls, I think the fact that utilitarianism is completely indifferent to the question of whether an individual’s income and wealth is or is not a result of exchange according to fair procedures is one of the main reasons it is false. How we came to have what we have matters. Utilitarianism says it doesn’t matter. So utilitarianism is false. As far as I’m concerned, the main reason you can’t just take my TV or take the money out of my wallet and give it to somebody who would get more out of it is that it’s my TV, it’s my money. It’s not yours to redistribute.

I find this a very concise and well-argued definition of property rights. Like Wilkinson, I am not a utilitarian. Further, like Wilkinson, I think that we do have certain expectations of property rights, and that violating those rights does represent to some degree an injustice. I want to argue that we can reject a utilitarian vision of redistribution, support Wilkinson’s belief in property rights (with limits), and still believe in an expanded amount of redistribution to ameliorate social injustice. I believe that the first priority of both liberalism and society is to help those at the bottom, and to establish “floors” of minimal standards for all citizens in certain key areas of human security and comfort– food, clothing, shelter, health care, education. I believe that such a prioritization can be supported not by a utilitarian viewpoint but by a contractual system similar to the one that Wilkinson believes binds his television to him.

American political history, and in particular America’s zeal for anti-Marxist propaganda, has obscured the very elementary logic that undergirds redistributive practice. To put it simply, the problem with America’s economy is not one of insufficient total resources to ensure that all Americans meet minimum standards in the basics of life. There is more than enough abundance to go around, in other words, to ensure that everyone has at least minimally adequate security in those basics. On top of that, I believe, there is still more than enough material and financial abundance to create various strata of levels of consumption and affluence. I don’t believe that this is a controversial proposition, although I’m happy to hear it if people disagree. I am, like Wilkinson, an internationalist, and the question of whether the entire world’s population could be adequately provided for by the collective resources of the world is, I think, a more complicated question, although I’m inclined to answer in the affirmative. For the moment, I have this thing called the state, and my particular state, I think, contains enough resources so that if those resources were distributed in a certain way, all of our citizens would be able to meet my minimal thresholds.

The problem with society is then the distribution of resources throughout the population. Some people do not have enough, but the system itself has more than enough. This remains a society of almost ludicrous abundance and affluence, even after the elimination of much of our imaginary cash. Your television, Web browser and favorite celebrity glossies can tell you that much. I am hardly the only person who has felt the cognitive whiplash of turning the channel from a news story about some desperately poor and deeply suffering people in this country to an episode of Cribs and watching some gentleman with poor taste show off his eight cars. There is nothing radical, immoral or undemocratic about believing that it would be better if that gentleman had 7 cars and that some number of people could have the $100K he paid for it to pay their rents and remain off the streets. It is in this sense that there is a little Marx in all of us.

This privileging of the value of minimal standards is not utilitarian. A utilitarian viewpoint would insist that redistributing wealth to those at the bottom would be moral only if the total amount of happiness/utility increased as a result of doing so. I can easily imagine a situation where this may not be the case. Indeed, utilitarianism insist that it is unjust to redistribute if doing so lowers collective utility, even if the people at the bottom are truly suffering. (This would be a situation where the suffering of the poorest was extreme, but where the people in the middle and upper classes outnumbered them by a high enough margin.) But if we believe that the first purpose of social spending is to alleviate the ailments of the people at the bottom, and not to raise overall utility, then redistributing wealth is justified regardless of overall utility.

There’s some huge question begging going on here, of course, and much to unpack. Whether the state has an obligation to provide such minimums is certainly debatable, as is whether it has the right to appropriate money for that purpose. I am trying to point out, though, that a contractual vision of redistribution is possible, preferable to a utilitarian one and more in keeping with certain facets of what I take Wilkinson’s argument to be.

Consider, for example, two aspects of income inequality that Wilkinson argues about, diminishing scales of utility and the “leaky bucket” problem. John Chait writes

Wilkinson is saying the rich are getting little (in the case of luxury goods like refrigerators) or zero (in the case of real estate and higher tuition) actual benefit from their rising incomes. So why not take some of that income away and use it to buy extremely useful but currently unaffordable things for the non-rich, like, oh, basic medical care?

Here, again, the man with the 8 cars, and the family who will be on the street for lack of $600 for rent. I find there to be some simple, intuitive moral truth to the idea that the family should have the money for rent before the guy should have his 8th car, regardless of how he came to possess the money necessary to pay for it. Wilkinson replies with the argument that is at the center of libertarian economic argumentation and wonkish conservative argument.

It’s a strong argument. It turns on the fact that the next dollar can be devoted to economic production as well as consumption. When the return (in utility) to investment in production is greater than the return from anyone’s consumption, utilitarianism forbids using the next dollar for consumption.

This is the crux of things, and the beginning of my disagreement with Wilkinson. That taxation can sometimes slow the growth of economic production I don’t dispute. That job growth is an absolutely essential element of an abundant republic I don’t dispute either. What I dispute is the simplicity with which many economic conservatives have told this story, their certainty about the outcomes of limiting taxation and the degree to which their claims are unverifiable and unknowable. Yes, there are times when excessive taxation crowds out economic production and limits job growth, and we should make every effort to limit that taxation. But the idea that every dollar taxed represents some loss to the economy that would invariably and inevitably lead to more jobs and more American abundance is just not on. Simply because we know that sometimes government programs limit growth doesn’t mean that eliminating programs necessarily leads to growth. Every dollar we stop taxing does not, in fact, invariably end up in the pocket of some hard-working American. Sometimes it does. Sometimes it just goes back to the coffers of whichever corporation is making the most money in the first place. It’s similar to the old arguments about trickle-down economics. Yes, the money can trickle down. Often it doesn’t, and saying that it always does is empty orthodoxy.

And there’s no way to know. It’s an inherent fact about the invisible nature of movements of capital throughout the marketplace that we don’t know, actually, when money that is no longer taxed actually returns to the people through job growth or better compensation. Conservatives and libertarians use that lack of knowledge to assert that in fact there is a nearly complete transfer from taxation to workers, and sadly liberals have largely allowed them to do it. Perversely, this happens in a context where we know very well the number of people who are suffering for lack of social spending programs that can ameliorate poverty, joblessness and lack of health care. This happens in a context where it is at least debatable whether any particular restriction on government spending has provided the kind of benefit in economic growth that offsets the lack of the spending.

I have been deeply frustrated by Reihan Salam’s recent output, as he has grown increasingly aggrieved at the fact that people don’t roll over to the idea that limiting taxation to spur growth is almost always a productive bargain for society.  When he says, “policies that make job creation less likely are socially destructive,” he is not only privileging certain social goods over others, he’s making a great cognitive leap regarding when eliminating social policies actually spur job creation. When he argues for Texan conservatism over Californian progressivism, he is arguing in favor of gains that very well may exist, but may not, and in the context of poverty rates and rates of those without health insurance that we know are staggeringly high. There’s no need to wonder about the number of people so afflicted. This is an aspect of contemporary conservatism I can’t understand, privileging the hypothetical people who might be being denied jobs over the very real people who just are lacking in adequate social goods. But when you assume that there is a very clear and simple connection between limiting government and job creation, and further that you know it occurs and that it outweighs the good of social programs that could otherwise be conducted, well… you end up in a place where you are writing posts that essentially assert that all of the good things about Texas are a product of its conservatism, but none of the bad are.

Anyway. To return to comparative utility– even if Wilkinson is right to reject claims to diminishing utility of wealth, that doesn’t mean that we can’t privilege the dollar that goes to pay for medicine over the dollar that goes to a third flatscreen. We don’t have to, that is, if we imagine as I do that there is a social contract which obligates us as a society to pursue a minimal threshold of living standards. The question of diminishing utility asks us to measure the happiness of the person whose wealth has been appropriated and the wealth of the person or people to whom it is distributed, and the question of whether so doing is just depends entirely on the relative amounts of happiness. A vision of a social contract to provide minimum standards for all citizens, however, does not take either the good of the one being appropriated from or the one being distributed to as the only or even primary concern. We say instead that we as a society have decided that the best interest of all of us is served when we establish our minimal thresholds, and that the individual utility of a given redistributive transaction is ultimately less important than the broader perspective of fulfilling the meeting of our social contract.

Wilkinson also provides a really concise and smart gloss on the “leaky bucket” problem.

[I]n the real world redistribution is a “leaky bucket.” It costs money to collect a dollar. It costs money to transfer a dollar. And taxes and transfers certainly do affect incentives. The fraction of the dollar left for consumption at the end of the transfer varies a great deal from place to place and depends on a lot of things. But there are many real-world scenarios in which the fraction is so small that even a modest return from investment in production can rule out utility-maximizing redistribution.

This is all true, and it is a problem, if we assume that the greatest problem is in how much water ends up wasted on the floor. What my vision of a contractual redistribution prefers is, rather than thinking of a leaky bucket, we think about moving water between cups. When we pour water from one cup to the next, in this metaphor, we inevitably spill some on the ground. The utilitarian vision of redistribution, which seeks to spread the water throughout the cups in whatever way produces the most happiness, has to be deeply concerned with the water splashed on the floor, because it represents a very real loss in potential happiness. But the contractual model imagines a line drawn near the bottom of each cup (and where the line exactly goes is the stuff of democracy), and each cup must, according to our social contract, be filled up to that line. Anything less we consider unacceptable. And we pour until that line is met in every cup, acknowledging that there will be some spilling. That doesn’t mean we don’t care; we do everything we can to minimize the spillage. And we take great care to take water from one full cup or the other in some sort of equitable way. But we fill every cup up to the blue line, because we won’t accept less. If you believe in the breadth and depth of American abundance the way that I do, you think that we can both fill the bottoms of everyone’s cup and still have a whole lot of very tall, very full cups.

All of this depends, of course, on the state taking people’s money away. I don’t take this lightly. I do think Wilkinson has a legitimate claim to his television, and that it is unfortunate if in the process of meeting our socially established minimums the state were to take away the money for his TV. I’m afraid that to this very legitimate complaint, I have only liberal boilerplate to offer. First, as much as Wilkinson may have a right to have as much money to own that TV– just as our celebrity friend might have the right to own 8 cars– I question whether that right trumps the right of a person to eat, to sleep indoors, or to receive treatment for illness or injury. On a first principles level, I do believe in positive rights. And if what we take from Wilkinson or the car enthusiast ultimately amounts to a not punishing amount of what they earn, and if they are both in a certain degree of relative comfort, then I think that version of redistribution is just, up until the point where we can provide for our safety net. The point isn’t at all to take away Wilkinson’s right to his television or someone’s right to 8 cars. If they can do so after taxation, more power to them. But if in the commission of meeting the social standards we want we tax Wilkinson to the point where he must buy a smaller TV or the celeb to the point where he forgoes his eighth car, so be it.

More importantly, Wilkinson has had the ability to earn the money for his TV because he lives in a free and stable society. The state and our society provide him with historically unprecedented levels of safety, security, and opportunity. Boot-strapping rhetoric consistently fails to appreciate the degree to which we have an economy and jobs and growth because we have a government that creates the security and infrastructural reality that makes them possible. Too many conservatives underestimate the degree to which their success is predicated on the continued work of the government they deride, although Wilkinson, I believe does not. Incidentally, Wilkinson can expect that his property rights to his television can be enforced because of a state with the ability to enforce them. His right to property most certainly is not given to him by the state. But his expectation of the enforcement of those rights is.

There’s much more that could be said. I want to be upfront about the fact that whether it is right to prefer a system of minimal guarantees of social security is of course debatable, and I am operating under many assumptions that may be attacked. But I wanted to point out that we can envision a redistributive system that doesn’t require a utilitarian perspective, and also to show that a liberal can support Will Wilkinson’s position towards income inequality more closely than Jon Chait’s. Income inequality does concern me, there’s no doubt. The fact that capitalism is often not a zero-sum game doesn’t mean that it never is, and to some degree the rich getting richer often does come at the expense of the poor getting poorer. But let’s confront that problem by insisting on solving the problem of the poor getting poorer, not by having philosophical conversations of dubious worth about the meta issue of inequality. I am far less interested in making people equal than I am in making them safe, happy and free.