Gauging ATPN members' economic worldview: greatest aggregate benefit, or most equal benefit distribution?

[glenn1]

This is sort of a generic question to guage ATPN feelings in a general sense.

You're the decision maker, and have a choice between three different policy prescriptions. For our discussion, total aggregate benefit and equality of benefit distribution have a perfect negative correlation. That is, any attempt to make the benefits more equally distributed reduces the total aggregate benefit amount by an equal amount.

Policy A would create the greatest possible total aggregate benefit, but be the least equitably distributed. Let's say of the total aggregate amount, the richest 10% would receive the vast majority of the total benefit, the remaining 90% of the people get what's left over.

Policy B would offer average total benefit, and average equality of distribution. The poorer 90% would receive a larger portion (but still not equal) of a reduced total benefit amount.

Policy C would offer the greatest possible equality of distribution, but create the smallest aggregate benefit amount. The poorest 90% get an equal share compared to the rich folks, but the total benefit amount is far smaller than would be the case in Option A.

So which do you feel is more important, total benefit amount or equality of benefit distribution?

 

[Todd33]

People don't want to distribute the money, they want everyone to have access to the same opportunities. At least that's the typical liberal idea.

 

[MonkeyK]

What are we benefiting?

 

[glenn1]

What are we benefiting?

It doesn't really matter, money would probably be the easiest to work with but for sake of argument we can use anything which could be assumed to have an economic value.

 

[MonkeyK]

I asked because I tend to think that it varies with how important the benefit is for living.

A trivial thing like baseball cards I would rate very differently than I would rate a non-trival one like health care.

 

[zephyrprime]

Originally posted by: MonkeyK
I asked because I tend to think that it varies with how important the benefit is for living.

A trivial thing like baseball cards I would rate very differently than I would rate a non-trival one like health care.

I think Glenn means everything. Baseball cards & health care & everything.

 

[MonkeyK]

While I think that it is an interesting idea to step back from just considering money, I still think that how to distribute depends on how important the benefit really is.

 

[MonkeyK]

Thinking about it more, I guess that my real beef is how "greatest possible total aggregate benefit" is interpreted.

"equality of distribution" is a concept that I readily get (% of the population)

 

[glenn1]

Thinking about it more, I guess that my real beef is how "greatest possible total aggregate benefit" is interpreted.

"equality of distribution" is a concept that I readily get (% of the population)

Total aggregate benefit is the amount/value of what's being divided up.

For those that can't answer the questions without being able to quantify the benefit, I'll make up some just to make it easier to get your arms around it. Again, the actual numbers involved don't matter, it's a rhetorical question and you could substitute any numbers you wanted.

Option A: $1,000,000 total aggregate benefit, of which 90% goes to the richest 10% of the beneficiaries.
Option B: $200,000 total aggregate benefit, of which half goes to the richest 10% of the beneficiaries.
Option C: $100,000 total aggregrate benefit, which was shared equally among all recipients.

 

[BaliBabyDoc]

Here's an example of C: clean air and water. Measured in typical economic methodology it would provide the lowest aggregate benefit although it would be equally distributed throughout the population. But the sole reason it has the lowest aggregate benefit is b/c few people have means (or care) about measuring it "accurately". An expert is likely to say it produces the best distribution and aggregate benefit.

The typical coal-fired plant owner says keeping air clean is a cost that has NO benefit. The typical mine owner says keeping the water clean is a cost that has NO benefit. If compelled to pay the "cost" of nonpollution then they merely re-distribute the expense to consumers . . . or go out of business. But considering the consumers of these products enjoy the benefits of the postive (products) and absence of the negative (pollution) consequences . . . it's clearly the superior moral AND economic perspective.

A good example of Policy A is current tax reductions on capital gains/dividends.

A good example of Policy B would be a reduction in the payroll tax.

A geopolitical example would be Bush War 2003. Best evidence is that big winners were: Israel and the military-industrial complex. Big losers were: Iraqi civilians, Palestinians, American GIs and their families, US taxpayers. Although it is certainly conceivable that Iraqi civilians will be BIG winners in the future . . . that is by no means certain NOR likely. It's a certainty that the other big losers will be paying for this war well into the future.

 

[Isla]

Damn good examples, BabyBaliDoc.

 

[Czar]

very interesting poll, but its hard to say without actual numbers and what we are talking about in general, very fuzzy

and like BaliBabyDoc wrote it depends alot on what context this applies to

 

[Kibbo]

I think that this is a very valid question, though phrased a little poorly.

At the end of the day, when you strip away the economic rhetoric (called theory by economists, and fact by the neo-cons), how much redistribution happens in a society is a question of values.

Of course, too much redistribution and you undercut the well-being even of the worst off in society. Glenn's question didn't allow for the option of maximizing the welfare and/or opportunities afforded to the worst off. This would be the option I would have selected. Option C allows for the interpretation that the redistribution could be of such a great magnitude that even the poor are worse off. This is possible (see the USSR).

Also, Doc's environmental examples are not really appropriate for this discussion. I think that economic efficiency was implicitly assumed in this survey. Environmental externalities are situations where the price of the good in question does not actually reflect the cost to society to produce it, and as such are inefficient by definition.

 

[BaliBabyDoc]

I think you are on the wrong track, kibbo, with the possible exception of "values".

You believe Option C is exemplified by the USSR but I would say Cuba is a better example. In the absence of the US embargo, Cuba would be close to an oasis in the blighted Carribbean. As it stands, Cuba is still an oasis in the blighted Carribbean: VERY good healthcare, very low crime. But material wealth accretion to the people is quite retarded under the Castro regime . . . not to mention civil liberty.

Your assumption that these options are merely examples of economic efficiency is way off the mark and the notion that environmental concerns do not interact with economics is a proven fallacy.

The Amazon, Everglades, SuperFund sites, Chernobyl, Sumatra/Borneo, much of West Virginia, much of Africa are examples where tremendous wealth extraction has taken place OR the negative impact of wealth extraction has been manifest. What is the COST of blood diamonds? How about the lack of a viable ecosystem in Haiti?

You cannot call these "externalities" and pretend they have no effect on the economic cost which must be subtracted from the total benefit.

Bush41 was honest (for the most part) about the Persian Gulf War. Saddam was an arsehole but it was about protecting our supply of oil. Powell gave him sage advice, "you break it you bought it" and "we really cannot afford it." Bush43 (and his minions) had to know our current plight was a "potential" consequence of Bush War 2003. Dead soldiers (minimal cost), dead civilians (essentially no cost), military hardware (justifies big DOD budget).

glenn1's thread is quite interesting but we all know nobody does calculus this way (economic or otherwise). What most people do is say, "what are the costs to ME" and "what are the benefits for ME?" Accordingly, a vast majority of economic "calculations" are by definition inaccurate and as a matter of consequence "inefficient". Notable exceptions are certainly available. Arguably, Paul Krugman is one economist more likely to properly calculate aggregate cost/benefit as compared to say the Concord Coalition.

One prime example would be public education (sort of). K through University is extremely expensive but the benefits are exceptional (although difficult to fully calculate and typically underestimated). To the contrary, our system of criminal justice is obscenely expensive but the benefits are often suspect (except for the communities that host prisons).

Credit unions are also pertinent. Less than a decade ago banks pushed through legislation to restrict credit union eligibility. Why? When people had access to a "consumer-friendly" credit unions they migrated away from banks (particularly high fees). Banks used the legislature to protect their profits.

In general, the government has to compel banks to broaden their lending practices. To the contrary, credit unions often have quite liberal (albeit still responsible) requirements.

 

[Thump553]

Excellent post BaliBabyDoc. It is interesting to have someone take a nondogmatic look at Cuba, even such a cursory one. I have often heard Cuba's medical system touted as a role model, being one of the most efficient use of limited resources, and certainly Castro cleaned up the cesspool of corruption and criminality Cuba was when he took it over. Obviously all is not roses-the economic and social stagnation, and outright repression, are clear, everpresent and undeniable. But it is extremely rare in the United States for anyone to admit that Cuba and Castro have ever done anything right.

Another factor to consider in the original poll is whether we are talking short term or long term benefits. A total redistribution of all wealth equally may at first look most equitable, but does it deprive society of its financial and motivational engine to sustain and grow economic development? A simple example-a village has 50 villagers and 100 sacks of grain. The utopian system of distributing two sacks to every person would make full bellies this year, but leave no seed for future generations-and no motivation for individuals to produce more than their "quota."

My overall world view can't be simplified to your poll answers, but it goes along these lines: First, political corruption must be as close to zero as possible, regardless of what the political system is. Secondly, the society needs stability. It is the absence of these two factors that contibutes to much of the problems nearly all countries in Africa have. Third and finally whatever system produces the greatest good for the most, considering all the legitamite costs (including environmental damage, etc) is the best. This system will neither be unrestricted capitalism nor socialism, but rather some form of regulated social democracy such as we have in the USA, Canada, Europe, Japan, etc. There must be the ability to accumulate wealth, as that is important to motivation, but excessive wealth concentration is destructive and counterproductive.

 

[piasabird]

Sounds like communism. We all know this does not work.

 

[BaliBabyDoc]

Originally posted by: piasabird
Sounds like communism. We all know this does not work.

Give an example of a true "Communist Manifesto" version in the 20th century? I'm not a proponent of Communism but the rhetoric about North Korea, China, Vietnam, and Cuba is overblown. None have ever practiced Communism as Marx and Engels detailed it. IMHO, a perfect Communist state wouldn't work anyway (on a large scale) but a mixed socialist/capitalist system has potential. Assuming you don't allow either side to get out of hand . . .