Putting More on the Table Brings People With More to the Table

by Will Wilkinson on March 15, 2006

If you haven’t been following this month’s Cato Unbound discussion, then what are you waiting for?! You’ve got time to catch up now before the free-for-all blog discussion kicks off.

Jacob Hacker’s essay is very good, I thought. But it sharpened my longstanding bafflement about what exactly it is that (non-libertarian) egalitarians think they are up to. Hacker argues that one of the most troubling things about economic inequality is its effect on the political process. The democratic ideal is equality of voice—equal say in the political process that determines our common terms of association. But the wealthy have the means to buy a louder voice and a disproportionate say in process.

So what do we do? Hacker here does not say. But I assume that he would like to see higher taxes on people in the upper income brackets, for both equality of opportunity and equalization of voice reasons. Is this a good idea? This is where I become baffled. Consider Hacker’s reply here to a point of Schmidtz’s:

“When we insist on creating enough power to beat the best players in zero-sum games,” Schmidtz claims, “it is just a matter of time before the best players capture the very power we created in the hope of using it against them.” The best (or at least the richest) players do seem to have captured power in American politics, but it is rather perverse to suggest that this is the fault of egalitarianism. Instead, what we have here is a classic story of cumulative advantages—people who have more are being heard more by political leaders, and what government does reflects this imbalance.

Is it in fact perverse to suggest that this could be a fault of egalitarianism? I think it is in fact what anyone sensitive to the power of incentives would predict from an increase in the power of the government to redistribute wealth.

Imagine you are wealthy. Now, ask yourself: If I have more at stake in what the government chooses to do, will I be less motivated to influence that choice? Of course not.

I will be more motivated. Putting more power and money on the table for the government to dispose of is a surefire way to ensure that the people with the most money and power to lose will come to the table to make sure that they don’t lose it. Moving money around is a zero-sum game, zero-sum games are games of conflict, and the strongest players win games of conflict. The more motivated you are (I’m talking to you “progressives”) to make the strongest players weaker, the more motivated the strongest players will be to stop you. And they will win, because they are the strongest.

Suppose in round 1 the government is seen as having no power to redistribute income. So very few people devote resources to controlling the government, since government has so little to give. Suppose, though, that a bunch of altruistic social democrats who would like the government to do more downward redistribution take over (so little opposition!). In round 2 the social democrats increase taxes and redistribute the money downward. Social Justice! Yay! But in round 3, people who had their money confiscated will surely notice, and many will be motivated to populate the government with people who will give them their money back. So, suppose in round 4 the government is now populated by tax cutters, and they cut taxes, and cut the redistributive programs. Now, all the people who were benefitting from redistribution, who have come to depend upon it, will say, hey! But, lo and behold, the people with the most money find it easier to control the political process in each subsequent round. Any round that decreases the resources the wealthy have to spend on voice will only increase their motivation to spend their remaining resources on voice in the next round. They may, for a round or two, have a smaller relative advantage, but they will be more motivated to use it to full effect. The key point is: the social democrats’ egalitarian motivation kicked off the process that led to the consolidation of advantages by the powerful.

The straightforward implication is that you can’t reliably equalize wealth or voice by putting more money and power on the table. Putting money and power on the table further biases the process in favor of people with the most money and power. And, worse, putting money and power on the table provides a compelling incentive to invest in conflict instead of cooperation. This is doubly bad because over the long run the strongest win all the gains from conflict. The clearly optimal truce is to prohibit money and power from coming on the table, and to provide the best possible incentives to invest in cooperation. Even if the strongest take the larger share of the surplus from cooperation, the weakest at least get a share, unlike under conditions of conflict.

This is what I took Dave to be getting at. And this is perfectly consistent with Hacker’s “classic story of cumulative advantages.” The more you try to use the state to take power away from the rich, the more you will lose. Then the rich will have the power that they had, plus the power of the state that you were trying to use against them.

I think liberal-democratic egalitarians are in a bind. I think Marx(ists) saw the game structure here. The only way to win a game of conflict against the stronger is to create a yet stronger coalition of the weaker through the sheer power of numbers. And then, basically, gang up to eliminate the strongest and redistribute their stuff. Of course, this doesn’t work, either. Because the coalition of the weaker–”the Party”–simply becomes a vehicle for predation for a new class of the strongest. But if we’ve gotten to this point, then the cooperative game has been almost entirely destroyed, and all that’s left is conflict and predation, and you get the most horrifyingly inegalitarian result imaginable.

OK. So we don’t want that. So what do we do? Use liberal democratic means? I think that lands you right into the scenario I laid out above: the more money and power on the table, the more the powerful will dominate the table, and so you can’t equalize money and power by trying to put more of it on the table. The only egalitarian solution in sight is: take money and power off the table.

[What do you think about this month's Cato Unbound essays? If you write a sharp blog post about one of them, we may publish it alongside our invited contributors. Here's Chris Bertram and Harry Brighouse's contribution from Crooked Timber. Our issues are intended as a launching pad for broader conversation, not a dais from which the elect instruct us. So dig in!]

Viewing 7 Comments

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    There's more than a grain of truth to Will's point here. Congress may hold hearings on oil industry profits being too high, but they are not going to take back the 14 billion dollars in subsidies they gave out last year. Attempts by the SEC to regulate CEO pay were part of what led to the excesses of stock option compensation that further increased CEO salaries. Etc.

    But the underlying premise of the argument is:

    The institutions of government could not do anything else but foster inequality. It is impossible for the people to control government and make it work toward their interest in less economic inequality... with all that implies for the strength of democracy.

    This capitulation, if you can call it that coming from a libertarian, is unwarranted. If our system were not biased in favor of protecting the wealthy, it would be possible for us to elect a Congress that would (for example)

    (1)give payroll taxes a progressive rate structure,

    (2)enforce tax laws against business and investors instead of juts against wage/salary employers, and

    (3)institute a federal voucher that would fund all public school students equally.

    Partially there is a failure of political will that explains why we don't adopt such policies even though they would pretty straightforwardly benefit a majority of the population. But, more than that, the reason is that the resigned electorate rightly assumes these changes to be impossible in the face of the current system in which candidates supporting these ideas could not get funded or otherwise supported.
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    Will,

    I am a little confused on who you're referring to when you say non-libertarian egalitarians. Are there libertarian egalitarians? Who are they?

    In the Cato Unbound discussion, Schmidtz didn't seem to be an egalitarian--neither did Singer or Palmer.

    Do you have any libertarian egalitarians in mind?
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    Dallas, Palmer, Schmidtz, and I are all libertarian egalitarians. As Schmidtz points out, there are lots of dimensions of equality. And it's just part of what it means to be a liberal to be egalitarian with respect to power. There are no natural rulers. People ought to be equal with respect to the distribution of legal rights, and those who would give some people special legal rights, such as the right to coerce via the state, carry a very heavy justificatory burden. This is the egalitarian doctrine par excellence. Part of the libertarian argument is that redistributive egalitarianism is an illiberal doctrine, inconsistent with the fundamental liberal equality in power among citizens.
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    ... so, 'power corrupts'

    The minority who control or can gain control of government power ... will do so to further their own self-interest -- at the expense of the majority not in power.

    Thus, the egalitarian & democratic status of a society is inversely proportional to the power of its government. Who knew ??

    The old "Iron Law of Oligarchy" says the same thing.

    What's new ??
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    The idea that all liberals (and at least some non-liberals) are egalitarian is not original to Schmidtz or any of the Cato bloggers. One of the more comprehensive recent works that explores that idea is Amartya Sen's "Inequality Reexamined". Did anybody cite that?
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    In the Soviet Union, they were called the Nomenklatura.
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    Will,
    Nice post. Two things that might be added to your analysis. First, there is, of course, the "Bootleggers and Baptists" dynamic. Once egalitarian/public interest claims are taken as a valid reasons to increase the size, scope, and power of the state, there is an incentive to use this rhetoric as a cover for rent-seeking.Second, I think for at least some redistributivist egalitarians, democratic politics is seen as the realm of cooperation, whereas the market is seen as the realm of zero-sum conflict. Thus playing the statecraft game may seem like a better bet for registering the voices of the weak, whereas the marketplace is seen as the realm of the strong. Thus Chomsky the "anarchist," for instance, has advocated an increase in the power of the federal gov't and prefers gov't agencies to corporations ("private tyrannies") on the grounds that at least gov't agencies are open to democratic accountability, while private firms are not. Go figure.

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