Freedom and Redistribution

Despite my previous post, I'm having some trouble with the sleeping thing, so here's a second post, faster than expected!

So, as I mentioned at the end of the last post, we've got historically low levels of graduated income tax going on right now.  Not since the Bad Old Days have the rich been able to keep as much of what they earn as they can now.  The same holds for things like the "death tax" (known as the estate tax before it was spun) that for ages limited how much wealth you could pass on to the next generation and now no longer does so.  I also touched on why that is bad, at least if you don't like aristocracy, which I don't.  You might also, however, quite reasonably not want the government taking away all of your money and spending it for you, as it would in a communist country.  I'm with you on that one; I'm not trying to bring anyone over to Marxism here.  So, since I'm saying that the correct level of redistributive taxation is somewhere more than what we have and less than "all of it," I suppose I'd better say what level I think is correct.  I'm not going to just spit out numbers, because I'm not particularly interested in those (if they even exist in a universal sense, which I think they probably don't) but rather in what philosophy we should follow in using taxes as a means of wealth redistribution.

This question, to me, has two critical parts: the take, and the give.  What's the purpose of taking wealth away from some people, and what's the goal and method in redistributing it?  Since the purpose of this kind of taxation is primarily to shape society rather than to fund specific programs, the answers to those two theoretical questions should more or less determine how much is correct in any given case.  First though I suspect we've got a "hold up there" as at least some people wonder about what right the government has to perform redistributive taxation in the first place.  So let's talk about that a bit.

Ultimately, the government should care about shaping wealth for a couple of reasons.  The first is practical: wealth is very powerful, and the purpose of government is to organize society in a certain way, which means distributing power in certain ways.  This necessarily involves either strict limitations on the power of wealth, or limitations on how it accumulates.  The former is necessary; in order to be the government, it needs to maintain control, a control that is ultimately based on material goods.  If you let a private interest gain more control over wealth than the government, your government is not meaningfully powerful, so every government needs to ensure no other power block gains as much as it does.  In a democracy, though, the situation is limited from the other side, because you're trying to control society such that power is held collectively by the citizens.  In order for this to be meaningful, you need a couple of things, but one really important one is that you not have private interests able to buy off the public, either directly or indirectly.  (We fail at this one by the way, which you should care about a lot, if you like meaningful democracy.)  Again, election law can help with this, but so long as candidates are responsible for getting their own messages out, or are allowed to use their own money to advertise, wealth will be a tremendous advantage.  Even if that isn't true, being able to afford days off work to campaign, travel expenses, and so forth are still critical.  So in practical terms a primary method of ensuring meaningful democracy is curtailing the concentration of wealth, in addition to merely limiting the raw amount any one interest group can hold.

The second reason to control wealth distribution, though, is that egregious inequality of wealth is anathema to liberty.  This ties in very well with my next major topic: what should be the form and limit of the "give" side of wealth redistribution?  In other words, what is the goal of redistributing wealth through taxation, and in what form should that wealth be returned to the community?  In short, I'm going to argue that the goal of the give is liberty, a good old core American value.

Poor liberty is seriously misconstrued these days, and probably always has been.  The most common use at the moment seems to be in the term libertarian, about which I believe I have made my feelings quite clear in the previous entry.  In short, people seem to view liberty or freedom as a lack of constraint, a basic ability to go off and do your own thing without the big mean ol' government getting in the way.  I think this definition of liberty is ultimately not useful, especially in modern society, and in order to help explain why, I'm going to pull out my first game tag.  That's right, both blog topics united in one post!

Anyway, here's a big trap game designers get into: conflating options with choices.  (I promise, this will tie in to politics soon.)  A good example is the recent edition wars in Dungeons and Dragons.  The third edition of the game allowed you huge numbers of options when you were making your character.  Pick any race, any classes, combine them however you want, do whatever you feel like, anything you want man!  This is the libertarian style of freedom: the rules (ie the government) aren't going to stop you.  By contrast, the newer, fourth edition of the game both constrains your mechanical options, and limits how you can combine them.  There are still a lot of them, but there are rules in place that provide limitations fundamentally unlike the ones from the previous edition.  This drew rabid hatred from many players who felt the new edition was incredibly dumbed down.  But it is unquestionably a superior design.  Why is this?  Because a lack of restrictions in and of itself isn't particularly valuable, but rather is a means to the end of providing meaningful choices.  By limiting the options,  the new edition could balance them well, meaning that most of them are good choices, and none of them are so bad as to leave your character impotent.  By contrast, the old edition had so many options no one could possibly balance all of them, leaving the vast majority of them as absolutely terrible choices that would only make your character awful.  In terms of meaningful choice, the new edition has already caught up with or exceeded the old - the old just gave you more ways to fail.  The game design lesson here is this: by all means add options to your game, but always remember that the point of adding options is to add depth by creating meaningful choices.  Adding bad options is worse than useless - it actively hurts your design by tricking players into thinking they have choices they don't, and then punishing them for believing the design.  (In case you're tempted to edition war with me here - many groups can still enjoy the old game, and there are a lot of other differences that might suit your group better.  I'll defend fourth edition over third as a superior game design any day, but that doesn't mean the fun I have with it is any better than the fun I had or you continue to have with third.  Play what makes you happy!)

Anyway, that's the game design lesson - what's the politics lesson?  Liberty is actually very similar to meaningful game options - it isn't about removing restrictions, it is about creating opportunities for meaningful choices.  If no one is stopping me from doing whatever I want, but I'm so poor I can't possibly recover from my poverty, then I am not meaningfully free.  Some societies we consider repressive (and rightly so) actually had this exact issue: if a member of the lower classes were to spontaneously gain great wealth, he or she could have used it as desired, but the structure of society prevented that from being possible.  (There are some great wish fulfillment examples of this in the Arabian Nights.)  In other words, societies can limit liberty through purely economic, rather than legal means - this is in fact the most common method in recent history.

In fact, worse than that, because of wealth's positive feedback mechanism, if left unchecked it will always tend to concentrate in ways that limit liberty.  The more wealth you have, the easier it is to gain more - and that gain comes at the expense of those worse off.  Even if laws exist that stop you from actively using your wealth to deprive others (by hiring thugs or some other unsavory means) over generations as some people lose wealth and others gain it, as the rich become less likely to lose their wealth, the poor become less able to obtain it.  For example, if you lose wealth you might have to sell your house and land and rent instead.  This kind of loss carries on down the generations as surely as gain does: if you must rent, you can no longer pass on wealth to your children in the form of the land, but you also can't gain funds by borrowing against it or renting part of it out to others, and so forth.  In a vacuum, wealth begets wealth and poverty begets poverty, until the poor are trapped by de facto economic slavery: they don't own their means of support, and can pay for that means of support only by means of their labor.  The available options are to work for the landowner or to leave with nothing.  (This exactly situation perpetuated meaningful slavery in the American south for years through sharecropping.)  These are not meaningful choices, but they are choices faced by many contemporary Americans, more or less.  (See for example the excellent book Nickel and Dimed about the working poor.)  That's the end of the process, of course, but the rich have the advantage of choice over the poor in countless ways, some of which apply well before the person being hurt has any direct responsibility for his or her situation.  One example is the choice of public or private primary school, which is becoming increasingly critical in many American cities, were we now have feeder kindergartens that set a six-year-old on the path to an elite college.  It is possible that a poor child's parents did something to "deserve" their poverty, but the child certainly didn't, yet that child's ability to get a competitive education is seriously constrained.

Obviously this isn't a problem that can be entirely fixed; wealth is pretty much unavoidably a pure good in terms of what it allows.  Communism promises to avoid it by removing wealth from the equation entirely, but creates an entirely different liberty problem because it equalizes outcomes, so you've got choices about what you do, but your actions don't have much meaning.  To return briefly to the gaming analogy, communism gives you lots of cool choices in the game, but then determines the outcome by die roll anyway, so none of them mean anything.  (This might not be a problem if we had a vastly different culture, and there are other problems as well, but those are both different potential posts.)

So, if the goal is to maximize meaningful choices, that provides our key guideline both in terms of what should be taken, and how to give it back.  You take what you need to prevent runaway wealth problems, so you try as nearly as possible to provide enough negative feedback (greater marginal tax rates) to compensate for the inherent positive feedback that comes from increased wealth, with a special focus on estate taxes to prevent dynastic abuses.

Meanwhile, you should re-invest that wealth in things that make sure those who don't meet with rampant success aren't doomed forever, and especially that their children aren't trapped by their lack of economic success.  Chief among these is stellar public education (which I maintain should be the #1 priority of any democratic government for many other reasons as well) but also things like unemployment benefits, decent health care, and social programs that allow people to recover from a bad economic break, rather than be destroyed by it.

Obviously the details of this could fill a book - or quite a lot of blog posts, which they might well.  But before the details, the philosophy is critical, and that's the crux of mine.  I have a lot of personal reasons I believe that public services are vital, many of them based on my personal values.  At the same time, America takes pride in being a country that embraces many different values and backgrounds, so to build a consensus around something like redistribution of wealth via taxation, it isn't enough to say "it sounds good to me."  Hence the argument above: in addition to sounding good to me, an active governmental interest in equitable wealth distribution directly serves meaningful liberty, in safeguarding people's ability to make meaningful choices.  In very much the same way, good game design safeguards the player's trust in the design by respecting that their choices be plentiful not only in appearance, but in fact.