The New Republic apparently believes that economic redistributionism is due for a big comeback. This past week, it published two articles on successive days advocating the return of taxing the rich to pay the poor (or at least, the not-rich). Now, I'm anything but a fanatical libertarian, and it's entirely possible, for all I know, that current levels of government-mediated wealth redistribution in America are less than optimal for maximizing collective happiness. But these two articles are so nonsensical in their reasoning that they cast more doubt than light on their common position.
The first, by economics professor Barry Schwartz, argues as follows: studies have shown that people who are overwhelmed by an excessive number of choices are less happy than those with a more moderate range of options. Wealthy people, because of their wealth, have inordinately many options in life, and are therefore most likely overwhelmed by them. Hence, taxing them and giving the proceeds to the poor (who have far fewer options) will tend to make both groups much happier.
It's, as they say, a creative argument, to be sure. And no doubt some rich people would actually be happier with simpler, more spartan existences. But such people have an uncanny ability to find means--drug addiction, religious discipline, self-impoverishment through profligacy--by which to reduce their choices in life. It's hard to imagine that the failure of the rest to find such means is due to a lack of resourcefulness, rather than a lack of inclination.
The second article on the subject is somewhat less obviously ridiculous than the first. In it, political science professor Jacob Hacker argues that public opinion about the economy is pessimistic these days--despite the economy's fairly robust performance--because family income has become more and more unstable over the years. Hacker's solution: massive government-mediated income redistribution in the form of "insurance" against income instability, in the spirit of the Social Security program. By increasing the safety of the average family's income, Hacker argues, such programs would increase public confidence and encourage economically productive risk, in the same way other forms of insurance make otherwise excessively risky activities feasible.
Now, I'm all in favor of risk reduction through insurance, and I'm not at all averse to government-provided insurance, in those cases where it's valuable for it to be universal. Retirement and medical care are two such cases, in my opinion, and while I acknowledge the problems that have beset government-run health care and retirement insurance plans lately, I'm far from convinced that these problems are inherently insoluble.
But Prof. Hacker's argument suffers from two glaring flaws. First of all, he rests his case on the premise that today's pessimism about the economy is a product of rising income instability. But his own figures indicate that income instability in America rose massively from the 1970's to the 1990's--the latter period being one of widespread economic optimism such as the nation hadn't seen for decades. Apparently, gloomy predictions are less well correlated with widespread income instability than he implies.
Secondly, Prof. Hacker writes as though economic insecurity is crowding out risk-taking on the part of anxious Americans. Yet American household debt--as pure an indicator of risk-taking as one can imagine--is at an all-time high today. (Indeed, this kind of risk-taking is likely more potent than income instability at generating feelings of economic insecurity.) If Hacker's goal is to correct the level of risk-taking among households, then he'd do better to recommend ways of increasing the costs of risk to today's credit card-bingeing, zero-down mortgage-signing American households.
There was a time when appeals for income redistribution were straightforward: one would cite the plight of some miserably disadvantaged group, and declare it a shame that they should suffer so terribly in a society where the privileged enjoyed such wealth. Apparently, it's much harder than it used to be to find such people, because today's advocates of redistributionism have to resort instead to absurdly specious arguments in making their case. We are, indeed, living in fortunate times.