The central issue in American politics now is whether the country should reverse a three-decade-long trend of rising inequality in incomes and wealth.
[...] Do we want to be a moderately more equal country or not? This is the question Obama has put before the nation. Let's debate it without the distracting rhetorical sideshows designed to obscure the stakes in the coming battle.
I've been thinking a bit about how this questions applies to the fiscal stimulus debate. My fairly unsophisticated reading is that the original debate focused more on questions about "averting disaster" and "unlocking prosperity" -- we wanted to halt a slide in growth and then reassume its march -- than it did on questions about fairness and equality. But answering questions about fairness and equality is essential to justifying the stimulus.
Here's why: A couple of weeks ago the CBO released a report (pdf) on the long-run macroeconomic implications of the bill. The CBO found that "in the short run the stimulus legislation would raise GDP and increase employment," but also found that "[i]n contrast to its positive near-term macroeconomic effects, the legislation would reduce output slightly in the long run." (The CBO bends over backwards to make clear that these conclusions are tentative and speculative and based on assumptions that others might not share. But this is nonetheless what it concludes.)
So how do we justify a bill that might be good for GDP in the short run but bad for GDP in the long? Well, there are a few options. First, our present-value calculations might conclude that a unit of reassurance about the present is worth more than a unit of reassurance about the future, just as we might conclude that a dollar in 2009 is worth more than a dollar in 2090. (Hence, interest rates.)
But a more compelling argument is that the bill is redistributive (at least in a way I like). There are more important measures of national economic health than GDP, and a world in which millions of additional people are employed for many years seems preferable to a world in which national output is a couple of percentage points higher ten years from now. It isn't worth thinking about the stimulus as a measure designed solely and purely to stimulate growth: if growth is lower, it will be in the hope that America is be a more equal place.
This is more or less the same logic behind progressive taxation -- no one (except maybe Grover Norquist) really suggests that tax fairness always takes a back seat to maximizing growth -- and it's not something to be ashamed about in the context of fiscal stimulus. My sense is that a lot of liberals are uneasy about defending fiscal stimulus in these terms. In Dionne's words, I think they're obscuring the stakes.
"So how do we justify a bill that might be good for GDP in the short run but bad for GDP in the long?"
Step 1- establish that said bill is actually growing the GDP, as opposed to crushing it.
Judging by the Dow's performance post stimulus bill passage, that's going to be extremely difficult to do.
Unless the point is to make everyone miserably poor- which is one way to get rid of income inequality.
Unfairness "problem" solved, hooray.
the CBO report is really worth a read. you can disagree with the assumptions or conclusions of the report, but if you think they are reasonable then I think the two arguments I've made are pretty reasonable too. (though I'm obviously biased.)
The second argument is not especially controversial. Say there are only two people in the world. Would you want a world in which one person has one dollar and the other has a million dollars, or a world in which both have 400,000? The mean GDP per capita in world 1 is higher, but it seems obvious to me that world 2 is better.
I think I would prefer a world where the guys who have the ideas, take the risk, and succeed keep most of the money. Let's assume that one guy is economically valuable enough to generate a million bucks and the other guy is basically useless (i.e. only makes one buck the entire year). It would seem pretty generous to me that the productive guy would keep 97% of what he made and the beggar would get maybe 3% (i.e. $30k).
It would be interesting to look at some stimulus analysis from sources other than the CBO. I know some have claimed that the CBO is above political pressure but I'm not sure that is historically completely true.
Congressional Democrats were outraged with the initial CBO analysis of the stimulus that was leaked out. Rev 2 of the CBO analysis was, strangely enough, much more to the liking of the congressional Democrats. Congressional Dems are putting a lot of pressure on the CBO and the CBO is likely to bend to that pressure a bit.
Here is a link to a WSJ graphic illustration of the stimulus package spending that is pretty nice (might be a little dated, though):
http://s.wsj.net/public/resources/documents/WSJ_Stimulus_021209.pdf
"but it seems obvious to me that world 2 is better."
It follows that in world 2, *something* prevents these people from having differing amounts of money for *all* time (equity of wealth distribution is your criteria for goodness, right?)
Thus, in world 2, something would interfere with one's freedom to use one's mind to *create* wealth and to *voluntarily* trade value for value to mutual benefit.
If world 1 is such that the person with 1 dollar (now) is free to use his mind to *create* wealth and to freely trade with the millionaire to mutual benefit, world 1 is infinitely better to world 2.
Really? You are of course welcome to choose between competing conceptions of the good life, and a world in which there are no taxes and no redistribution is certainly one such conception. But it seems to me that (1) That world would be unappealing to most people, and (2) It isn't clear that your world actually expands individual liberty. (Or at least your world defines freedom as a an exclusively negative thing -- ie "freedom from" and not "freedom to.") Are you more free with zero dollars and no taxes then with 100 dollars and some taxes?
Conor asks: "Are you more free with zero dollars and no taxes then with 100 dollars and some taxes?"
Implicit in your question is an odd notion of freedom.
Do I have the freedom to travel to the moon? Yes, AFAIK, there is no other human or humans forcibly preventing me from going to the moon.
OTOH, I do not have the means to get there (yet) but, if I read your question correctly, you would argue that because I don't have the means, I am not 'free' to go to the moon.
According to wordnet.princeton.edu, freedom is:
"the power to act or speak or think without externally imposed restraints"
My answer to your question is thus: I would be more free (to act or speak or think without externally imposed restraints) with zero dollars and the right to produce and keep the values I need to sustain my life.
Or, put another way, I would be less free with $100 that can be taken by force from me at any time in the name of my 'freedom'.
I don't think this is that odd: there is positive freedom ("freedom to do X") and there is negative freedom("freedom from intervention X"). Both are valuable but to some extent there can be a tradeoff between the two. (Robinson Crusoe is the philosophy-seminar example of someone with maximum negative freedom but minimum positive freedom.)
Conor:
The freedom to *do* necessarily implies freedom from intervention.
Further, your notion of "positive freedom" is indeed odd. According to plato.standford.edu:
"On the one hand, one can think of liberty as the absence of obstacles external to the agent. You are free if no one is stopping you from doing whatever you might want to do. In the above story you appear, in this sense, to be free. On the other hand, one can think of liberty as the presence of control on the part of the agent. To be free, you must be self-determined, which is to say that you must be able to control your own destiny in your own interests.
...
In a famous essay first published in 1958, Isaiah Berlin called these two concepts of liberty negative and positive respectively (Berlin 1969).[1] The reason for using these labels is that in the first case liberty seems to be a mere absence of something (i.e. of obstacles, barriers, constraints or interference from others), whereas in the second case it seems to require the presence of something (i.e. of control, self-mastery, self-determination or self-realization)."
http://plato.stanford.edu/entries/liberty-positive-negative/
Now, unless I've misunderstood you, your conception of 'positive freedom' is quite at odds with the notion of "control, self-mastery, self-determination or self-realization."
The basic "on the one hand, on the other hand" distinction you quote below is exactly what I have in mind when I'm talking about positive freedom: "one can think of liberty as the presence of control on the part of the agent. To be free, you must be self-determined, which is to say that you must be able to control your own destiny in your own interests."
What does it mean to control your own destiny? It seems to me that the presence of control requires certain background conditions. It also seems to me (via John Rawls and Berlin and others) one of those background conditions is some basic set of material goods. You might disagree that those are the relevant background conditions. (Others would too: Tocqueville et al think it's some basic social/cultural fabric that can exist even alongside dire poverty, ie in feudal France.) Or you might think that the negative freedom is far more important. That's fine. But this notion of active/positive freedom -- or whatever you want to call it, it doesn't really matter -- certainly makes conceptual and logical sense.
"It seems to me that the presence of control requires certain background conditions."
Of course. Those certain background conditions are known as a "free market" - an environment free of force, coercion, and fraud.
What material goods does one need in order to be in *control* of one's life?
As I see it, to be in control of one's life is (1), to be *able* to reason, (2), to *accept* one's faculty to reason as one's guide to the actions required to sustain one's life, and (3), to act according to one's reason rather than by the force of others.