I’m increasingly dissatisfied with programs to redistribute

wealth from the rich to the poor. To be sure, redistribution

can increase aggregate happiness and opportunity, since an extra dollar

makes much more of a difference to a poor person than to a rich one.

Also, there is some evidence that inequality

reduces health and longevity (regardless of the total amount of

wealth in the society). Nevertheless, I think that aiming for more

redistribution is politically foolish, since a majority of American

households are now wealthy enough that they do not imagine themselves

as the beneficiaries. Even some of those who might benefit from redistribution

consider it undesirable. It’s coercive; it’s divisive; it may be economically

inefficient (at best, it’s zero-sum); and it makes the recipient feel

beholden and dependent.

The alternative would be to increase people’s opportunities

to become creators of wealth. There could be two parts to

this agenda. First, we could strive to lower barriers to entrepreneurship.

This is a Republican goal, identified especially with Jack Kemp (who

has done good work). The problem is the standard Republican solution,

which boils down to tax cuts. Cutting taxes does nothing to increase

opportunities for people who don’t have much money to start with.

The Hope Street Group,

an organization of business executives, is working on much more serious

ideas for expanding real economic opportunity. They say:

"Equality of opportunity" is the notion that all Americans

should get a genuine chance to make the most of their talents and

efforts to benefit themselves, their families, and their communities.

It requires that children have the educational opportunities that

allow them to realize their own potential. It requires fair access

to job markets, capital markets, and the home market. It requires

that government lighten the burden of those who are just beginning

to build up their earning power and their savings. It requires a

system in which people can bounce back from failure, so that they’re

not afraid to take risks and to invest in themselves in the first

place.

While helping more everyone to contribute to the market economy,

we could also increase citizens’ opportunities to make public

goods. To do this, we would encourage public service by expanding

(rather than brutally cutting) Americorps; by opening new routes into

professions such as teaching and nursing; and by making such professions

more desirable and satisfying. Indeed, we would encourage all

the learned professions to recover their civic and public purposes.

And we would increase public contributions to the government itself,

for instance by asking citizens to collect GIS data on environmental

issues, or by assigning important regulatory issues to citizen juries.

Not all public goods are created in the state sector. For example,

as I’ve argued in several articles (for instance, this

one), there is a "digital commons" composed of the protocols,

the open-source software, and the free webpages of the Internet. The

Internet was built by volunteers, including teenagers and poor immigrants;

by nonprofit associations; by the government; by profit-seeking entrepreneurs;

and my major corporations. All these players were doing what Harry

Boyte calls "public work,"

that is, working together to build an accessible public good. The

Internet commons is now in grave danger from several directions (spammers

and virus-makers, corporate monopolists, government censors). However,

groups such as the New

America Foundation have lots of concrete ideas about how to expand

and protect the Internet and other public assets.

Putting all these policies together, we could have a movement

whose goal would be to make everyone a creator of wealth.

I was wondering whether the states that tax their residents

at high rates tend to have higher or lower income levels. I

suppose a crude form of free-market economics would predict that states

with lower taxes would tend to generate more personal income. This is

not the case. Although the relationship between tax rates and per capita

income is not significant, generally the states that take the biggest

portion of income in state and local taxes also have the most per

capita wealth. States like Alabama have been low-tax zones for at least

a hundred years, yet they remain among the poorest of all states.

This isn’t "social science." It’s just playing with a computer

to get a quick answer to a simplistic question. Still, the graph poses

a real question for supporters of laissez-faire economics: if low taxes

create wealth, what explains Alabama? (Sources for the tax

rates and the per

capita income stats.)

A lot of people’s eyes glaze over when they hear about a “budget”—whether

it’s for a business, a club, or the government of the United States.

Yet the government has enormous influence on our lives because of the

way it collects our money and spends it for various purposes. Its spending

priorities are reflected in its budget.

Unless you understand roughly what the budget includes, your opinions

may be completely irrelevant. For example, according to an

excellent survey by the Program on International Policy Attitudes

(PIPA), a majority of Americans believe that the US spends too much

money on foreign aid. They estimate that 20 percent of the federal budget

goes to foreign aid; they would reduce this amount to 5 percent. In

fact, the federal government devotes less than 1 percent of its budget

to foreign, nonmilitary aid. Anyone who calls for aid to be cut to 5

percent has an irrelevant opinion, because he or she doesn’t understand

what the government does.

Here, then, is how the federal government spent an average

tax dollar during the years 1998-2004 (2003-4 are estimated).

The data come from this

OMB document, but I have made decisions about what programs to put

in each category. The federal government is responsible for about two-thirds

of all taxation, although it gives some of its funds to states. States

and local governments together raise about one third of all taxes. (Source:

OMB.)

The "all other" slice in the chart above is distributed as

follows:

Here is how an average state tax dollar is spent. Data from National

Association of State Budget Officers, State Expenditure Report, 2001

(Summer, 2002).

And this is an average county budget from 1996-7, based on the US Census

Bureau’s survey of county officials