Saturday, August 15, 2009

A Question for Progressive Egalitarians

. Saturday, August 15, 2009

The new Piketty-Saez income inequality data has been updated to include 2007, and it shows an even greater percentage of national income going to the top of the income distribution. That has likely changed since 2007 because financial crises and recessions tend to reduce income inequality by shrinking the incomes of the top earners, but progressives like Matthew Yglesias have responded to the new data with statements like this:

This trend has a variety of underlying causes, some of which are worth changing and others of which (better global communications leading to a bigger superstar effect) are basically good. Be that as it may, using the tax code to take some of this wealth and transform it into more and better public services for the broad mass of people would do a lot of good.

There's a tension here between egalitarian goals and progressive goals: egalitarians want to make the income distribution more equal (through progressive taxation if necessary), while progressives want as much tax revenue as possible to fund a host of public works projects. Most progressives are egalitarians also, so there's a trade-off to be resolved. Why? Under a progressive tax system government revenue is maximized by greater income inequality, because higher earners are taxed at higher rates than lower earners. From a revenue/public goods perspective progressives should want top earners to earn as much of national income as possible, since it will then be taxed at a higher rate and generate more money for things like high-speed rail and green R&D and public works. If the income distribution is more egalitarian, then tax revenues will decline (because more income is being taxed at lower rates) and the government will have fewer resources for public works.

Sometimes the preferences of egalitarians and progressives dovetail (i.e., public education, nationalized health care), but this isn't always true. So an academic question for egalitarian progressives: if you had to choose between a more equal income distribution and a greater role for the government at the margin where those two things do not run together, which would you choose? And what does your choice say about your political philosophy?

This isn't a "gotcha" question; I'm generally interested in what people would choose and why.


Christopher Dittmeier said...

I think this is an issue of seeing the forest through the trees. At least in Western political discourse, you don't see too many statists (not even old-style socialists, but more along the lines of Italian fascists) who see increasing the power and scope of the state as an end in-and-of itself. Progressivism sees (correct me if I'm wrong) bigger government as a means to an end--namely, greater equality through public provision of goods. If a society ever gets to the point where increasing the public sector actually decreases equality, either there's a flaw in the execution (corruption, patronage, etc.) or progressivism has already achieved its ends to the maximum extent possible.

A Question for Progressive Egalitarians
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