Thursday, October 30, 2008

The luck you’ve had: how to talk about redistribution

David Lammy thinks that Labour has a lot to learn from Barack Obama.

One thing worth learning is how to frame the debate about redistribution. (The near-silence from the Government last week when the OECD reported positively on the narrowing gap between rich and poor suggests they lack the confidence to tlak about it.) Linda Hirshman explains:

[Obama’s] idea is that people who are now successful should care for the ones left behind, because they were once the left-behind themselves.
Obama floated this idea for the first time in the exchange with the now-infamous Joe the Plumber. Why should he pay taxes just as he became successful? Joe asked. When Obama suggested the tax increase, at $900, was fairly small, Joe was having none of it: "I mean, I've worked hard. I'm a plumber. I work ten to twelve hours a day and I'm buying this company and I'm going to continue working that way. I'm getting taxed more and more while fulfilling the American dream."
… [Obama] made a deft move, telling Joe that he should consider his extra taxes like a transfer not to some stranger, but to his own, former, less successful self: "Over the last fifteen years, when you weren't making $250,000, you would have been given a tax cut from me, so you'd actually have more money, which means you would have saved more, which means you would have gotten to the point where you could build your small business quicker than under the current tax code.... Put yourself back ten years ago."
This is a brilliant strategy because it takes a middle ground between asking people to act from pure altruism toward others--as any redistributive scheme must ultimately do--and the purely selfish individualism that fueled the conservative movement. While former selves are not exactly us, they are linked to us through the chain of common memories that makes our life story. …
Framing the appeal as sympathy for your former self also invokes the idea of equality of opportunity, rather than equality of result, which conservatives have so effectively rendered illegitimate. Rather than take money from someone who finally made it and give it to people who will never make it, Obama's "former Joe strategy" suggests liberals are actually making opportunity for the striving would-be plumbing contractors to get to the rich (taxable) place faster.
… So what if the argument doesn't work with voters who were always rich (and who will be the majority of people taxed under Obama's scheme)? Trust fund babies, suck it up. There are, of course, people who will not entertain any progressive taxation, regardless of how it is framed. But framing is the business of political revival, and Obama just made a good, fresh move.

Yep. People (on the whole) strive to improve their lot in life. Along the way, everyone has good luck and bad luck; some have much more bad than good. Redistribution may not in itself make anyone more talented or hardworking, but it can smooth out some of the bad luck.

The flip side of ‘taxing success’ isn’t ‘rewarding failure’ but ‘reducing misfortune’. There can’t be many self-made people who couldn’t have gained from a bit less bad luck at some point in the past.

(This is just a way to frame the issue – there’s no one particular policy that it suggests.)

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