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I have friends who are entirely dependent upon the State for their livelihood — and I am not just referring to elderly retirees. Most of these aid recipients have received disability retirement pensions from the Social Security system. These folks are not in any way anomalous in American life. You might be surprised to learn how many disability recipients there are.

More interesting, however, is this fact: no small number of these folks — indeed, most of my friends on state aid — are not die-hard Democrats demanding vast increases in the size and scope of the welfare state.

Not a few are conservatives — one of my closest friends is an authoritarian conservative of the Bill O’Reilly sort — and they rail against lazy people and welfare queens and all the rest.

Yes, they think and vote this way even though they are mostly or entirely dependent upon the taxpayers.

What is going on here? This strikes many people as paradoxical. Many are the Democrats who think that “being a Democrat” is precisely what these state aid recipients should be: grateful, die-hard supporters of the welfare state, devoted to its expansion.

After all, the Democratic Party is the party most enthusiastic about state aid programs like this. And Democrats expect fealty.

What is the matter with Kansas? asked one prominent leftist scrivener. So many Kansans would be so much better off if they voted Democratic and siphoned more special favors off the state — ultimately, off of producing Americans — and “as a matter of right.”

Vladimir Gimpelson and Daniel Treisman, writing in the Washington Post a few years ago, expressed their wonder as to why the very poorest of the poor in our country are so lax in their demands for more redistribution — for programs and handouts that (our querists think) would be “in their interest.” The two professors’ think piece (a summary of an allegedly scholarly study) is entitled “Why don’t democracies take from the rich and give to the poor?” and it presses the question, seeking answers:

Since the time of ancient Greece, political theorists and observers have feared that inequality leads to instability. The greater the income gap, the more the poor have to gain by taking from the rich. In democracies, the thinking goes, inequality should predispose voters to demand government redistribution. In dictatorships, the rich, fearing Robin Hood policies, should resist democratization. And the poor, locked out of power and wealth, should be more tempted by revolution.

Though these arguments have been around since Aristotle, it’s hard to find evidence for them in the real world.

And they cite some recent scholarship on this. Democracies do not turn revolutionary.

Why? Scholars have suggested a variety of things that might derail political unrest. Belief that the economic system is fair, or the hope of being rich someday, or even organized religion might reconcile people to the gap between rich and poor. Or it could be that, with their assets hidden in Swiss bank accounts, the rich these days have just become too hard to expropriate.

But there’s a simpler possibility: Maybe inequality fails to trigger the expected political consequences because most people just don’t know how large the gap is between the wealthy and the rest of us.

“If people don’t know how much they stand to gain and at what cost,“ they conjecture, “why would they take political action?”

Amusingly, that “if” premise is only half-interrogated:

We looked at eight cross-national surveys to see what people believe about inequality. Time and again, large numbers of respondents had no clue what the income distribution looked like in their country, how it had been changing recently, and where in that distribution they personally fit.

The authors conclude that while “Americans still seem relatively relaxed about income inequality,” that may very well “be changing.”

Right. But though the subject of the (in)elasticity of demand for redistribution is interesting for several reasons, my concern is different. Indeed, I wish to begin by interrogating the part of the premise the professors take for granted: do the poor really have anything to gain by increased redistribution of wealth?

As present, after all, the fifth and lowest quintile of market income earners in America do not pay federal income taxes. They are, in fact, net tax consumers. Maybe the poor do not demand more because they have an inkling about how much they get now.

Actually, I suspect that the poorest grossly underestimate the levels of their subsidy. Indeed, I suspect that Professors Gimpelson and Treisman — economist and political scientist, respectively — would underestimate the current levels of subsidy. You see, our professors at the Post are only interested in “income inequality” and how it is perceived, and how these two things stack up against the demand for further redistribution that they have somehow measured. (Maybe I will carefully read their paper, but I haven’t yet, and nothing they write suggests to me that they are onto something very important.)

So, what is the level of subsidy in America? Well, after-tax, after-subsidy incomes show that the lowest income quintile in these United States have an effective (net) negative tax rate of over 200 percent:

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That is, they do not pay taxes, net of the full panoply of state benefits (SNAP, SSI, Section 8 housing, etc.). They get subsidized to the tune of 213 percent.

This is a huge amount of handouts. Sure, too many businesses receive subsidies in America — far too many — and some rich folk make a lot of money off the government, but, evened out, it is the poor who right now do get the lions’ (or pigs’) share of redistributed wealth.

And it is rather astounding that our two professors of egalitarian studies (for that seems to be their real profession, here) nowhere indicate that the poor right now are living off of the rich. Our professors just assume that “the poor” should demand even more.

Now, I could spend many paragraphs explaining the complexities of income statistics, the slippery nature of the “increasing inequality” meme. Because it tracks statisticians’ artifacts — a five-fold division of society by incomes — and the amount of wealth that changes in these quintiles, and not the majority of individuals who do indeed move from one quintile to another and then back again as they navigate the arcs of their lives, all this inequality talk is mostly confusion and error. But I am going to let others handle those niceties. I am going back, doggedly, to that basic query: why don’t the poor demand more?

Yesterday, on the YouTube show Right Angle, Steve Green, Scott Ott, and Bill Whittle offered some possible answers — responding to the Post piece:

  1. “There aren’t enough poor people” in our country to actually vote themselves more — America is richer than you think, says Steve Green. While the professors think the poor overestimate their wealth levels, Green in effect says that the professors overestimate the number of the poor — and in a democracy, numbers count.
  2. And Green offers another reason for lack of egalitarian envy: “even our poor people are kick-ass Americans.”
  3. Bill Whittle suggests that our poor Americans have more than a hunch that, by world standards, they are rich — and yes, our poor are richer than many another country’s poor. It would be ungrateful to demand more. And perhaps (Whittle moves on quickly) our poor have a broader perspective — and more “moral fiber” — than our professors.
  4. Whittle also wanders into the point hinted at above: this talk of income quintiles obscures the truths of income mobility. The American system of merit “allows people to move up and allows people to move down.” Given this reality, it would be stupid for the poor to scuttle their best way out.
  5. Scott Ott notes that, as a general rule, the folks most exercised by income inequality are people far above the gutter. The suggestion here is that maybe talk of income inequality does not really serve the poor. Maybe it serves a class or classes of the better-off. Alas, Ott does not explore this latent idea in his answer, but goes on to speculate that America’s low-income earners just do not buy into the solution as a workable feature to rise out of their ruts.

To explore the notion that Ott skips over too quickly, you might best turn to netizen-philosopher Stefan Molyneux, who talks about “languasites.” In a world of Makers and Takers, these “language parasites” find tricky ways to assuage the fears (and other anxieties and insecurities) of the Makers and thus leech off of them. A grand example can be found in Lucian of Samosata’s Hermotimus, or The Rival Philosophies, in which we encounter an earnest student of Stoicism milked of his wealth and diverted from his youth in the vain pursuit of . . . enlightenment . . . which is translated as “Happiness” in the edition I own, Marcus Aurelius and His Times: The Transition from Paganism to Christianity (1945), Irwin Edman (introduction), p. 172.

This idea of the linguasite (“tongue parasite,” with some loose construction — but surely better than “languasite”) is awfully pregnant, and it might be useful to prod Molyneux further on just who does and does not fall into that category. But the idea is fairly clear. And in the context of the income inequality obsession, what we have here are the second-hand dealers in ideas who F. A. Hayek wrote about. More importantly, we have a class idea, here. Many members of the cognitive elite somehow find themselves ensconced in key positions in the welfare state. Might not they develop a natural class interest in promoting the idea no matter its effects on the poor themselves? College professors, for instance, are consulted by bureaucracies and legislators, and teach many future government functionaries, lobbyists, lawyers and journalists who make their livings transforming society away from the ugliness of consumer-determined merit and into “rationally-determined” social justice.

And here we come to the interesting aspect of the welfare state: the establishment of classes based on state redistribution.

Now, we have to forget Marxian analysis, for his simple oppression/exploitation theory of class was based on a misconstrued of the nature of trade and productivity in a market economy. And we can glide right over the classical liberal class theory (very interesting, and not entirely irrelevant) that Marx pilfered to concoct his grand farrago. We should turn to Joseph Schumpeter, instead.

imageClasses form around perceptions of success, wrote the great economist in an under-appreciated study. “What makes a subgroup of society,” I wrote in the Laissez Faire Books edition a few years ago, “‘organically’ related enough to qualify as special, as constituting a class?” The answer can be found in “social factors like honor, which was, after all, the basis of the first major governance system of civilization. And honor depends on — is, indeed, obsessive about — success. It is not failure but success that ‘exerts a continuing effect’” that forms a class. But let us turn to Schumpeter for a fuller picture:

[S]uccess brings in its wake important functional positions and other powers over material resources. The position of the physical individual becomes entrenched, and with it that of the family. This opens up further opportunities to the family, often to an even greater degree than to the successful individual himself, though these positive factors are to some extent offset by the deadening effect on the original impetus of exalted position and security, by the diversion and complication of interests, and perhaps also by the sheer exhaustion of energies which everyday experience shows to be not uncommon. Coordinate families then merge into a social class, welded together by a bond, the substance and effect of which we now understand. This relationship assumes a life of its own and is then able to grant protection and confer prestige.

I speculate that one of the great triumphs of the modern welfare state has been to reroute the mechanisms of class away from natural groupings like family and clan and into the artificial, state-bounded and -funded institutions like the Academy.

And maybe one reason professors promote redistribution, in their writings and lectures, more enthusiastically than the poor do, with their votes, is that the subsidized poor serve as trophies of the cognitive elites. Perhaps increasing state redistribution is not advocated by the elites because it really helps the poor, but because it is emblematic of class success, and thus class cohesion and prestige. The poor do not gain prestige by sucking up more taxpayer-funded resources. But boy, members of the cognitive elite do!

But is that all there is to it? Class interest?

I think not. I suspect, anyway, a bit of economic rationality going on here. I suspect that not a few normal people look at the demographics of redistribution and become alarmed. My wards-of-the-state friends are dependent upon continued support. Increasing the ranks of the recipients, or even the amounts generally redistributed, does not make the system they depend upon more secure.

Do you see the incentive here? No small number of state aid recipients oppose expansion of the programs that support them. And while socialist ideologues might think that these clients of the State are somehow naturally beholden to a robust welfare state ideology, and that by voting Republican (or worse, Libertarian) they are “voting against their interests,” this is simply not the case. People “on welfare” have a very compelling interest to not support the increase in the size and scope of the programs that supports them.

Let me restate why: increasing the number of recipients of such aid programs could very well jeopardize the financial stability of those very programs, endangering the livelihood of current recipients.

This is a very basic point. To not notice this point is to miss something about the nature of economic redistribution: that it depends on a larger population of contributors putting wealth into the system than taking out of it. The more recipients of taxed funds we add puts a strain on those taxed, especially if the ratio gets out of hand. On pure economic grounds, it makes sense to be a member of a small group gaining at the expense of the majority than a large group gaining at the expense of a minority.

We cannot all live at the non-reciprocal expense of others.

One might call this perspective common sense. But it is not “folk economics” — it is theoretically sound; the rationale works out in extended analysis. Indeed, one of the problems with the sustainability of Social Security in the United States — and of similar programs throughout the West — is that the ratio of contributors to recipients is getting smaller. The trend line is foreboding. It is the reason we are at last taking Social Security off the proverbial “third rail” and contemplating reforms such as raising the retirement age and raising the income ceiling for FICA contributions, er, taxes.*

What is astounding to me is that this elementary fact of redistribution — that it cannot be complete, that socialism itself is a fantasy never capable of delivering on its promises, for we cannot all be Takers. There must be Makers. And there should be a reasonable ratio between them to make the programs sustainable.

That this notion of redistribution has seemingly evaporated from the public conversation strikes me as odd. I do not even hear libertarians, the strongest critics of government redistribution of wealth, bring it up very often, and cannot now think of an instance where it became part of a general theory of redistribution. But the more I think about this, the more basic it seems.

Indeed, it applies to criminology, too: the more theft going on in society — and remember, theft is merely the illegal redistribution of wealth — the more crime would drag society down. It is in the interest even of criminals to discourage crime generally. Perhaps for this reason (if not this reason alone) criminals rarely oppose laws against theft and murder and the like. They realize social systems cannot be stable where everyone plays criminal. They simply make an exception for themselves. They try to bet against the house, hoping to squeak through the cracks of the system and gain “rents” that would evaporate if too many criminals tried to game the system. It is instructive to recognize the fact that criminals themselves rarely even try to take up the pretense that theft and murder are good ideas to spread around. It is as exceptions to the rule that criminals’ livelihoods make any sense at all.

That is perhaps one reason why, when crime becomes “organized,” territory and limitation of criminal acts according to “honor” and other codes, become common. It is also one reason why police often are deferential to organized crime: a monopoly of a service limits the supply of the service, and criminal monopoly is better than no such monopoly, which would mean more crime. And thus greater the threat of unsustainability. Yes, crime can serve as an excellent example of “market failure” — that is, for situations where the criminals, acting in their separate self-interests, yield themselves a net detriment, not benefit.

All of this reiterates one basic thesis: leftism is parasitic upon the system it despises. Nearly all leftists I have ever met abhor the idea of “profit.” They consider business activity necessarily “dirty.” They are distrustful of markets, and see in markets only internecine competition and, in fact, predation and parasitism.

This view of social life I regard as obviously and completely at odds with reality, the inverse of the truth. Redistribution is parasitism. Leftism is the philosophy that parasitism via State redistribution is good in and of itself — perhaps better than production in the market. And socialism is the bizarre notion that “we can all be parasites” — though of course socialists do not state their doctrine in such a bald, unvarnished way. Instead, socialists cook up shaky theories purporting to show that market distribution is not productive, that the rich who gain so much by trade are in fact “exploiters” of the poor, and that the poor would be better off without the rich . . . or at least better off were the rich sucked dry.

It used to be understood among old-fashioned Progressives and FDR/LBJ-style “liberals” that one could go too far in redistributing wealth. But by earnestly grinding through their rationales for taking from some to give to others, modern progressives have lost sight of the basic realities inherent in the system they propose. And so they cannot see — or at least countenance talking about at any length — any point in emphasizing those limits.

This can be clearly seen in the cultural divide between The Tea Party and the Occupy Movement. The Occupiers characteristically demanded more redistribution and more regulation and generally derided the evils of big business. The Tea Party, on the other hand, was concerned with curbing government spending and aiming to balance budgets. Democrats mocked those “tea baggers” who seemed to misunderstand basic realities, such as when signs were held aloft saying “Keep the Government Out of My Medicare.” And that sort of thing is indeed hilarious. But the idea still remains that adding people onto Medicare rolls and under-funding the system does not help people who have come to rely upon Medicare.

So the signs really meant “Keep Progressives Out of My Medicare.”

But Democrats — who now seem almost uniformly “progressive” — have missed the point. They cannot see sustainability as a legitimate issue. Politicians like Sen. Elizabeth Warren have gone so far as to call the conscientious Tea Party activists “anarchists.” It is hard to imagine a more absurd charge. But, when you hold to the crazy idea that more government is always better government, you will tend to say absurd things.

So we exist now at this strange point in history when the Democratic Party has lost its grip on power even though it is the party of special interest promises and Potlatch “generosity.” The last moment of possible turnaround for the Democrats was, I think, when they turned on the Tea Party. Had they embraced the Tea Party, and made a public effort to rein in spending, they would now be dominant and their hold on power unassailble. But that was not to be. They had become so blind to the realities of redistribution and its parasitism upon productive capitalism that they lost savvy people even amongst the recipient cohorts. Sure, leftism has always been parasitic on the system it hankers to destroy. But parasitism only works on a principle of hormesis. It is the hygiene theory of immunity as applied to the body politic. The hookworm is the parasitic drain. Too many, and the host dies.

The idea that progressives now regard contemplation and discussion of this principle utterly verboten says a lot about their divorce from reality. Their fantasy now runs their policy prescriptions. And it may very well be a function of class prestige that is one of the drivers for this. Sure, there are other factors — like the socialist soteriology, or the entelechy at the heart of the left’s other-obsession memeplex — but we should not overestimate the wisdom of the elites or the folly of the poorest among us.

twv

enjoy-capitalism

N.B.  There is, of course, another very basic reason for state aid recipients not to support increasing the register of aid recipients: they may want to think of themselves as deserving recipients, and fear that others placed on the rolls for laxer standards might be seen as unworthy, or as being dangerously discouraged from finding alternate means of support. And the more folks going onto the rolls for comparatively trivial reasons might poison the well politically, and tar all recipients as unworthy of help. To what extent this fear is a rational, moral or merely a petty rationalization, I will consider at another time.

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