Tuesday, March 07, 2017

Socialism Reconsidered - Part 3

This is the third in an occasional series.  You can find the previous posts by clicking the label at the bottom of the post.

Let's begin with a bit of Americana - No Taxation Without Representation.  Every school kid learns this was the cause of the American Revolution, even if it turns out to be more myth than fact.  (In college I took a course where we read Alan Heimert's book Religion and the American Mind.  I confess that as a non-Christian much of it was over my head.  But the core hypothesis stuck with me - that for ordinary people in the colonies who were part of the militia, not the wealthy where taxation did matter, the Revolution was really about being against the Church of England.)  I want to invert this phrase and pose a question.  If you don't pay taxes are you still entitled to representation?

There are many possible reasons why somebody doesn't pay taxes.  When my mother was in her later years, her home health care was so costly that it more than offset the earnings she had from Social Security and elsewhere.  Indeed, eventually the estate was reduced to nil, having been expended on the costs of long-term care.  That's one sort of situation.  Another is if you run a business that has large capital losses.   Our current President seems to have exploited this.   But the main one, and the one I want to focus on here, is that you are poor - you're income is too low to warrant paying taxes.  So for this third category the question above amounts to - are poor people entitled to representation?

To me it is a question with a simple answer.  America is a democracy.  Each citizen has inalienable rights.  Representation is part of that.  So the answer is yes.

But that is theory, not practice.  Let's consider voting.  The following table gives U.S. aggregate voting in Presidential elections, along with the potential population that could have voted, so a voter participation rate can be computed.  The data are found here.   I put them into Excel so that the relevant portion of the table can be represented along with the column headers. 

The highest participation rate was in 1960, not quite 63%.  While there are a lot of people who do vote, there are many who don't.  For the sake of comparison and to benchmark this rate of voting, I did a search on Canadian voter turnout.  The Canadian voter participation rates tend to be higher than the U.S. rates, with the top rate in 1958, around 79%.

You might ask whether higher voter participation rates mean the democracy functions better.  I believe this to be the case, but that is just one person's opinion.  It is not trivial to find out how others view the issue.  In any given election, where a person has a preferred candidate and would like to see that candidate win, there is a tactical preference for low voter participation on the other side.  The question, then, is whether you can elicit a preference about how well the system functions that entirely abstracts from the tactical preference.  I'm not sure you can but I think it would be interesting to investigate.

Let me switch to a more normative view.  In the first essay I talked about taking a Rawlsian Veil of Ignorance view of social justice.  Such a view would deem 100% voter participation as the ideal.  But for this to hold, one must simultaneously take a positive view of how elected officials act.  That is, they represent the people who voted for them.  They tend to disregard the interests of other people.  This is not meant to be a controversial point.  It is just meant to say that if those who are elected really did represent everyone equally, then high participation rates wouldn't matter.  When elected officials represent only their own constituencies, non-voters are under represented.

The Web page where I obtained the table above has additional information on factors that influenced voter participation in 2008, when Barack Obama was first elected President.  Age matters as does race.  But for this discussion the factor I want to concentrate on is income.  Poor people have lower voter participation rates.   How would our politics change if voter participation rates didn't vary with income and/or we had near universal voter participation?   Benefits doled out by the government would go increasingly to the needy.   The costs of providing those benefits would be borne by those who can afford to do so (even if they don't want to do so).  In other words, there would be more income redistribution than there currently is.

As I am writing this, the lead article in the NY Times is about the Republican plan to replace the Affordable Care Act, i.e., Obamacare.  Undoubtedly, there is more of a Robin Hood approach in Obamacare than the Republican plan, though this piece from a week ago characterizes Obamacare as to the right of the traditional Democratic approach to universal health care.  I mention this only because it gives an example of a government policy that has an income redistribution consequence.  You might call this a direct way the government impacts the income distribution.

There are indirect ways as well.  An interesting lecture by the Nobel Prize winning economist, Joseph Stiglitz, called Why Capitalism is Failing illustrates the point nicely.  (The discussion starts around the 21:00 mark.)  The market largely determines people's incomes.  But the way the market does this is influenced tremendously by the rules of the game and how the government shapes the economic environment.  Think about antitrust legislation and how vigorously it is enforced, or about how the law treats unions and workers who don't belong to unions, how intellectual property ownership gets conferred, what public good infrastructure is provided, and many other government policy decisions.  These indirect effects on the income distribution swamp the direct effects.  This, of course, explains why there is so much lobbying to gain political favor.  The rules of the game matter and the lobbyists know it.

Nonetheless, to the extent that voters have interests that are opposed to the interests of lobbyists, when voters are made aware of an issue their interests serve as a restraint on how much politicians can be swayed by lobbyists.  There has been much discussion recently that we have become a plutocracy.  Low voter participation rates facilitate that.  One can understand why the plutocrats themselves would like to keep it that way.  The rest of us, however, should have an interest in higher voter participation rates, especially since, as Stiglitz argues, there is inefficiency with extreme income inequality so the pie would be bigger if some of that could be eliminated.

The Democratic Platform for 2016 is interesting to consider this way.  It begins with a section on economic security for the middle class.  It says nothing about improving the livelihoods of poor people.  There is a later section on voting rights and campaign finance, but there is no mention of voter participation rates.  Thus, there is no connection made between the economic policy ideas and the voting (or non voting) behavior of the Democratic constituency.

My guess is that if poor people did vote at the same rate as the rest of the population, then they'd mainly vote for Democratic candidates.  I don't know this for a fact, but I think it a reasonable working assumption.  Given that, what we have now is a kind of low level equilibrium, where the politicians don't expect such people to vote so don't offer policies and programs that would favor them and where such potential voters choose not to vote because it seems that the system doesn't care about them.  I am calling this a low level equilibrium to suggest there is an alternative, high level equilibrium, one with much higher voter participation and much more income redistribution as policy.  If you take the Rawlsian ideal as the goal, you'd like to see a shift from the low level equilibrium to the high level equilibrium.  I will conclude by speculating how that might come about.

Before that, I really don't want to present these ideas from a partisan perspective.  If there were already universal voter participation my own sensibilities might be that of an Eisenhower Republican.  When I talk about Socialism in my title, I am not talking about government production of goods and services.  I am simply talking about the Stiglitz point that the government shape the economic environment to advance the Rawlsian ideal and then let the market take it from there.  But this is clearly not where the Republican party is now.  Further, they are the winners in the low level equilibrium.  That seems obvious.  So they lack incentive to change things this way.  In contrast, the Democrats do have the incentive to see things change.  It is the only way they might become the majority party.

So the first step is to get some changes in the thinking by the Democratic leadership.  Voter participation is key.  They must increase that as part of their long term-strategy.  Voting rights can still be part of the approach, but it is not the whole story.  There has to be policy pieces that appeal to those who currently are not voting.  If there are pocketbook issues that matter, people will be more inclined to vote.  But there are risks in this, particularly that upscale voters might be alienated.  Since they are the ones contributing the bulk of the cash to the campaigns, there might be reluctance to move away from the historical approach as represented by the 2016 platform.  That reluctance must be overcome.  However, there should also be self-protection on this point, which might be had by bringing in upscale voters into the strategy discussion so they can understand the issue.

The second step is to really hammer on the theme of social responsibility.  Even if the real game is to get the top 0.1% in the income distribution to pay more in taxes, a lot more really, that simply can't work in the low level equilibrium.  It can work if the top 20% are paying more in taxes, so that a big number of people are actually doing that.  Getting a good chunk of those to stay in the Democratic fold requires moving away from narrow voting your pocketbook and toward a broader vision of what the social good looks like.  This will require lots of education and lots of marketing.  And it must survive many election cycles, not just one.

The third step is to work through a set of policies that aim to increase labor force participation while also having an adequate social safety net for those who are out of the labor force.  But the logic of what is wanted here requires a different rationale than the historic one, especially if artificial intelligence will soon make much paid work obsolete, as some have argued and which I mentioned in the first post in this series.  Here the goal, as much as possible, is to create a set of shared work experiences.  The idea of income redistribution is challenged by the thought that some people are not deserving of receiving benefit.  In the class I teach I have my students read this piece called How to Get the Rich to Share the Marbles.  In other words, income redistribution policies shouldn't just address the needs of the recipients, though that is necessary.  They must also address the psychological needs of the donors.  When that happens, government is more of a conduit than a coercive force.  That's the way it needs to be perceived.

The last step is for the language of the previous three steps to embrace state politics as well as national politics.  This post was motivated by a strong negative reaction to a Scott Walker Op-Ed in the NY Times.  Walker makes reference to taxpayers and voters, but not to citizens.  Walker argues that States know how to do things but that the Federal Government does not.  Wisconsin is known for voter suppression tactics recently.  Black citizens, especially in Milwaukee, are under served and under represented.  Reading Walker's piece, I felt like I was returning to the early 1960s, before the Voting Rights Act was passed.   There needs to be a strong counter narrative.  Voter participation must rise in Wisconsin, as it must nationally.

Of course, wishing doesn't make it so.  But wishing is a way to advance the conversation.  That's what I'm trying to do here.

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