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September 02, 2003

creation, not redistribution

I'm increasingly dissatisfied with programs to redistribute wealth from the rich to the poor. To be sure, redistribution can increase aggregate happiness and opportunity, since an extra dollar makes much more of a difference to a poor person than to a rich one. Also, there is some evidence that inequality reduces health and longevity (regardless of the total amount of wealth in the society). Nevertheless, I think that aiming for more redistribution is politically foolish, since a majority of American households are now wealthy enough that they do not imagine themselves as the beneficiaries. Even some of those who might benefit from redistribution consider it undesirable. It's coercive; it's divisive; it may be economically inefficient (at best, it's zero-sum); and it makes the recipient feel beholden and dependent.

The alternative would be to increase people's opportunities to become creators of wealth. There could be two parts to this agenda. First, we could strive to lower barriers to entrepreneurship. This is a Republican goal, identified especially with Jack Kemp (who has done good work). The problem is the standard Republican solution, which boils down to tax cuts. Cutting taxes does nothing to increase opportunities for people who don't have much money to start with.

The Hope Street Group, an organization of business executives, is working on much more serious ideas for expanding real economic opportunity. They say:

"Equality of opportunity" is the notion that all Americans should get a genuine chance to make the most of their talents and efforts to benefit themselves, their families, and their communities. It requires that children have the educational opportunities that allow them to realize their own potential. It requires fair access to job markets, capital markets, and the home market. It requires that government lighten the burden of those who are just beginning to build up their earning power and their savings. It requires a system in which people can bounce back from failure, so that they're not afraid to take risks and to invest in themselves in the first place.

While helping more everyone to contribute to the market economy, we could also increase citizens' opportunities to make public goods. To do this, we would encourage public service by expanding (rather than brutally cutting) Americorps; by opening new routes into professions such as teaching and nursing; and by making such professions more desirable and satisfying. Indeed, we would encourage all the learned professions to recover their civic and public purposes. And we would increase public contributions to the government itself, for instance by asking citizens to collect GIS data on environmental issues, or by assigning important regulatory issues to citizen juries.

Not all public goods are created in the state sector. For example, as I've argued in several articles (for instance, this one), there is a "digital commons" composed of the protocols, the open-source software, and the free webpages of the Internet. The Internet was built by volunteers, including teenagers and poor immigrants; by nonprofit associations; by the government; by profit-seeking entrepreneurs; and my major corporations. All these players were doing what Harry Boyte calls "public work," that is, working together to build an accessible public good. The Internet commons is now in grave danger from several directions (spammers and virus-makers, corporate monopolists, government censors). However, groups such as the New America Foundation have lots of concrete ideas about how to expand and protect the Internet and other public assets.

Putting all these policies together, we could have a movement whose goal would be to make everyone a creator of wealth.

Posted by peterlevine at September 2, 2003 12:25 PM