Denying the Baseline

post by Paul Kelleher

Although the dunk and the cross-over dribble are awesome, I've always most admired the less flashy basketball player who leaves his defender, plants one foot out of bounds to straddle the baseline, squares his body, and takes a charge against an opponent who's already blown by one defender. For the opponent, going baseline can be a tremendously effective way to score two points; for the defender, protecting the baseline can result in a foul on the opposing player, a change in who possesses the ball, and often a huge momentum swing. Controlling the baseline is power.

These aspects of basketball have a metaphorical (and also linguistic) connection to the central disagreement between libertarians and liberals. In a response to a good column on Ron Paul's brand of libertarianism by Will Wilkinson, Eli Dourado describes what he sees as "the real problem with taxation":

The action of making X do Y is sometimes justified...but it should never be satisfying. If an intruder came into my house and threatened my family, I might (might!) be justified in shooting and killing the intruder. But if I were satisfied that I got to justifiably shoot and kill someone, it would represent serious moral deficiency.

I feel that way about all coercion; it should never be satisfying, even when it is justified. Yet when I observe real-world taxation, I see a lot of satisfaction. People seem glad, for instance, that taxation is progressive. It’s not just a resigned, “Well, this is the most justified level of progressivity.” People are satisfied that those who they want to pay taxes are doing it.[...]

[T]he whole politics-taxation nexus...trains people to think not only that might makes right, but that coercive outcomes are outcomes to celebrate. They’re not.

Dourado doesn't say whether and why taking from some to give to others is justified in his opinion. But he does want to emphasize that even when it is justified, it still really is taking from some to give to others. He uses the example of taking from some to "pay for Timmy’s leukemia treatment." In his view, this taking is always morally regrettable, even if ultimately justified. It is regrettable, I gather, because the free market establishes a morally privileged baseline of earnings. State-mandated departures from that baseline should be seen for what they are: state-mandated transfers from presumptively rightful owners to some other group of recipients who get to enjoy someone else's resources.

I can't speak for the people Dourado describes as finding pleasure in redistribution as such. But I can say that a great many liberals are not at all like the people he indicts. Many liberals who defend redistributive taxation are like the basketball player who steps over to take the charge---they want to close off the libertarian's preferred baseline by arguing that the baseline set by pre-tax income distribution in a modern capitalist regime does not enjoy the moral sanctity libertarians might claim for it.

Many liberals make this argument by noting the ways actually existing democratic capitalism differs from the laissez-faire of libertarian lore. Many libertarians have no problem with state-protected private property, national defense, schools, and police forces. But modern capitalism evidently requires more in the name of stability and prosperity. These additional institutions and the policies that guide them have so profound an influence on the pre-tax distribution of earnings that they permit questions about the sanctity of the pre-tax baseline. Here are some of the most fateful: 

• The central bank's role as lender of last resort and bailer-outer of financial institutions drunk on moral hazard.  
• The central bank's role in setting the key price in the entire economy, which has been used to put working people out of work (ch. 2) in order to avoid an ethereal "natural" rate of inflation-causing unemployment.
• The state's bestowal of limited liability to corporate entities (ch. 3).
• Government granted monopolies in the form of patents.

Many liberals argue that since no one plausibly has a natural right to these devices of state, they must be used impartially for the common good and in the interest of all. Sometimes this might require tweaking the specific workings of the devices so that a different and more equitable pre-tax outcome is the result. But if productive and allocative efficiency count against this, fair impartiality might require redistribution from the resulting pre-tax baseline. Since that pre-tax baseline is no longer a distribution determined purely by voluntary exchange within a market governed only by natural property rights, the standard libertarian arguments against redistribution are significantly weakened.

Libertarians and others might argue that these devices of state are illegitimate. Fine. But if that's the line, then we need to have that discussion. Other libertarian-leaning folks might accept the need for these institutions while claiming that there is some set of privileged and neutral "rules of the game" that should guide them. Again, if that's the view, let's have that discussion. Liberals, by contrast, will agree with Milton Friedman:

Our principles offer no hard and fast line how far it is appropriate to use government to accomplish jointly what it is difficult or impossible to accomplish separately through voluntary exchange...Our principles tell us what items to put on the one said and what to put on the other and they give us some basis for attaching importance to different items...Just how much weight to give to it, as to other items, depends upon the circumstances. (Capitalism and Freedom, chapter 2).

The inherent uncertainty about the proper policies for "market conditioning"* institutions bolster's the liberal's case that the pre-tax distribution cannot be seen as beyond question. 

I hasten to add that nothing I've said commits me or any liberal to some straw-man version of egalitarianism whereby fair incomes are necessarily equal incomes. So far I am only claiming that crucial but far-reaching devices of state must impartially serve the common good. Many liberals believe that in light of their origin in state policies, pre-tax distributions of income are not particulary sacrosant and may be quite inequitable. The libertarian's main opponent is not the smugly self-satisfied redistributor, but rather the proponent of democratic capitalism who raises sensible questions about the moral standing of pre-tax income in the modern state.

* The term “market-conditioning” comes (via Jacob Hacker and Paul Pierson) from Nathan Kelly, The Politics of Income Inequality in the United States (New York: Cambridge, 2009). 

Comments

[Eli]

Thanks for your comments, Paul, but I don't think I am making a claim about the pre-tax distribution being sacrosanct. In fact, when I write that property rights are not absolute, I regard that as implicitly rejecting what you call "natural property rights." Maybe my post wasn't clear, but I view the issue much more as one of personal virtue. Sometimes people don't want to do what we would like them to do; how should we as individuals react when this happens?

One answer is to coerce or manipulate people to do the things we want them to do. This is a natural human impulse; I, for one, was born with it. But I think that as we mature and (hopefully) morally progress, we learn that the path of greater virtue is often to invest in a willingness to be disappointed. We learn to respect the autonomy of others not because there exists some objective baseline of autonomy, but because at the margin this is the more virtuous path. I think that no one will deny that this is true of our personal relations; my claim is only that it is true of our impersonal ones as well.

[Paul Kelleher]

Thanks for the clarification, Eli. I hope the version of liberal thinking I paint above will help explain why many liberals view redistribution from pre-tax incomes as *required* by a compelling ideal of respect for others. If we are co-participants in a project that employes coercive devices of state to sustain prosperity, then we need a conception of how benefits are to be shared. If fair outcomes are not the same as pre-tax outcomes, then fair social cooperation requires tax policy to address that. This isn't about making people give up what is rightfully theirs. Liberals argue that refusing to depart from pre-tax income amounts to using those who cooperate but do not receive their fair share for doing so. There is no vice--personal or impersonal--in seeking fairer outcomes.

That said, it really is up for debate what fair outcomes amounts to. Glad to be in the conversation with you about that.

[Eli]

Glad to be talking about this with you as well. What I wonder is this: is it really true that there can be no vice in seeking fairer outcomes? Perhaps dispositions, not just outcomes, matter.

Suppose that there is some social safety net known to be objectively the fairest. Suppose further that 80% of the population is on board with implementing this fairest-possible social safety net, but that doing so involves coercion of the other 20% in the form of taxation. Now, let's grant that the 80% is justified in taxing the other 20% in order to implement the social safety net; as you say, this isn't about making people give up what is rightfully theirs. Nevertheless, the 20% believe (wrongly, by assumption) that it is a violation of their rights to take their resources to fund a social safety net of which they do not approve.

Suppose that the social safety net is implemented. What is its moral status? We have already allowed that it is morally justified as an outcome. Nevertheless, to my mind, the disposition of the 80% toward the taxation of the 20% matters as well. The wrong beliefs of the 20% alienate them from the community of peaceful cooperation. The coercion necessary to bring them in line further alienates them. This alienation is regrettable, just as, per the example in my post, it is regrettable when one justifiably shoots a dangerous intruder. On my view, the failure to lament this alienation is a personal failing, a vice. Consequently, if the 80% feels no regret for the alienation of the 20%, that taints an otherwise-inspiring moral achievement of implementing the fairest-possible social safety net.

Empirically, I think there is widespread disregard for the alienation that we cause through our politics (liberals, libertarians, and conservatives are all guilty). That is enough in my view to make taxation morally problematic, even if we grant that it is ultimately justified as an outcome.

[Paul Kelleher]

Eli, I agree that the matter of the issue--whether the taxation is justified--and the manner--the attitudes expressed by various parties--are each relevant. When supporting taxation, one should always be willing to engage with dissenters in respectful ways that responds to their conscientiously raised objections. I'm with you there.

Perhaps we'll get to the point where all parties are part of a wide enough consensus that even when there is dissent, relations remain respectful. But if that is a far way off, then I guess we're back to a balancing act. In that case, it's also relevant that your hypothetical 20% fails to see that their objections are not sound, and that if they get their way we'll have others whose lives are worse than they are entitled to be. The thing is, those at the bottom--who need your hypothetical safety net the most--are those whose complains are most likely to go unheard or even unarticulated (see here for a current example: http://nyti.ms/pTCp2E).

So we may have a trade-off in the imperfect world that is rightly your focus. Either we leave the door open to the alienation of the well-off that you warn about, or to the unjustified neglect of those who are entitled to the resources the well-off refuse to give up. For my part, since the objections of the well-off are by hypothesis mistaken, it's hard for me to see how their resentment compares to the complaints of those who (again by your hypothesis) are entitled to the resources they refuse to give up.