Redistributing Wealth Is the Wrong Way to Fix a Rigged Game

Foreign policy: Working-class Americans, who disproportionately serve in the military, would benefit from fewer wars of choice, like the conflict in Iraq, that kill thousands of them, maim tens of thousands, and damage many others with terrible consequences ranging from PTSD to suicide. But there are powerful lobbies that will benefit financially from more wars of choice, and that benefit in any case from often wasteful spending on various weapons systems of choice. At the very least, defense contractors that perpetrate fraud ought to be pursued mercilessly.

* * *

That isn't an exhaustive account of policy areas where there is room to significantly improve fairness and outcomes for non-elites. But it is enough to show that tremendous good could be done for regular Americans even if you take redistribution beyond the safety net off the table. Why do I prefer to focus on those sorts of efforts, as opposed to open-ended progressive redistribution? 

Several reasons.

For one, Americans should have strong, though not absolute, claims on what they earn -- not absolute, because everyone has an obligation to fund certain common enterprises (common defense and a safety net among them). But I'd much rather use public policy to redistribute ill-gotten wealth away from rich rent-seekers who make their money gaming the system at everyone's expense than by taking earned wealth from people who accrued it by creating value for others.

Progressives seem to have no aversion to redistributing, without any principled limit, even the most legitimately earned wealth. If that characterization is correct, why? If not, what is the principled limit?

I also think activist government and redistribution are extremely vulnerable to rent-seeking elites -- more vulnerable, in fact, than a system that focused on establishing fair general rules. Libertarian populists accuse President Obama of crony capitalism when they tout their remedies. To me, the response that Chait offers is extremely unconvincing, but not for the reason he might think. 

Here's the part of his piece I'm talking about:

The most important premise of Republican populism is the belief, accepted as self-evidently true after four and a half years of relentless repetition, that Obama's governing style is corrupt, or at least close to corrupt. Obama's agenda, writes Carney, amounts to "taxpayer transfers to the big companies with the best lobbyists, with some crumbs hopefully falling to the working class."

Douthat calls it "cronyist liberalism."

But this is almost completely wrong. There's a speck of truth here: Obama has fallen short of the soaring idealistic vision of governance campaigned on in 2008 -- negotiations conducted on-camera, lobbyists treated in his administration like lepers -- but he's still easily surpassed the normal presidential standard of good governance. The Bush administration devolved into a massive K Street patronage operation; Reagan's administration featured five distinct genres of corruption scandal (sixteen Reagan HUD staffers were convicted of bid-rigging, high-level staffers Michael Deaver and Lyn Nofziger were convicted of illegal influence peddling, Reagan's EPA was a sewer, etc.).

Chait would have us believe that the Obama Administration hasn't had a whiff of cronyism, especially compared to the rampant cronyism of Republican presidents. Wilkinson says this gives Obama too much credit, and I agree, but why contest Chait's point? Assume Obama is as good as Chait says. Guess what? He leaves office in 2017, when another person will enter the White House. Whether then or soon after, a Republican will enter the White House. He or she can inherit a system where redistribution is discouraged and the focus is on establishing fair "rules of the game," or one where the president has tremendous discretion to redistribute wealth. 

The system more generally prone to corruption is obvious. Even by Chait's logic -- Obama is unusually honest, and GOP presidencies devolve into patronage operations -- we're likely to see more patronage than honesty in the near future, when the machinery of redistribution so carefully built by Democrats falls into the ideological descendants of the people who executed the K Street Project. By Chait's own logic, his preferred system will only work when Democrats are in power.

The actual nature of our two-party system, where Republicans and Democrats both regularly end up in charge, is that some unfair elite gains accrue to Republican interest groups and others to Democratic interest groups. (Some groups have bought off both parties.) If it were true that only redistribution can improve the lot of regular Americans, it would make sense for Democrats to ignore the illegitimate gains won by the people who help to keep their party in power.

But it isn't true. Regular Americans would be a lot better off if the worst rent-seeking were reined in, including rent-seeking by Democratic interest groups. As a matter of public policy, there are a lot of reforms that two smart guys like Wilkinson and Chait could agree on as discrete improvements. The obstacle is the contours of coalition politics in America even more than substance. Luckily, some people are trying to change the contours of coalition politics in America.

They should be encouraged.

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Conor Friedersdorf is a staff writer at The Atlantic, where he focuses on politics and national affairs. He lives in Venice, California, and is the founding editor of The Best of Journalism, a newsletter devoted to exceptional nonfiction.

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