Confusion with an Ugly Face

The other day I was thinking that I am a purple person - neither red nor blue - and that I don't really fit into either party in the United States. Of course, I'm a bluish shade of purple, but I should probably figure out what my core political beliefs are. I administered a simple test, and found that I'm a pragmatic liberal.

Here's the test. I said, "Socialism with a human face." I immediately felt a surge of emotion. Dubcek! Redistribution! The new socialist government in Spain! Gay marriage! Health care! Separation of church and state!

Not the most coherent reaction, but the emphasis was definitely on the power of government to engender equality and improve people's lives. On the other hand, though, I have a great deal of sympathy for traditional liberalism, meaning strong protection of individual rights, including property. The question is whether I can reconcile these beliefs. If not, I have to choose one.

Some people, libertarians I suppose, don't think that government should be in the business of redistributing wealth. This absolutist position is untenable, I think. First, the government can't help redistributing wealth through inflation. Changes in the rate of inflation benefit either borrowers or lenders. This redistribution can be minimized, but not eliminated. This is true of many government activities, not just monetary policy. More fundamentally, redistribution is called for when it is a public good. The idea is that people can free ride on the charity of others; when a philanthropist builds a new homeless shelter, many people feel better knowing that the homeless people are safe (or, more crassly, that they're not visible). Thus there will be suboptimal redistribution in the absence of government enforcement (or social norms; more on that below). This idea is not mine, I borrowed it from Milton Friedman.

Of course, I've assumed away the problem. By allowing economic concerns to outweigh liberty concerns, I've already endorsed the idea that property rights aren't absolute, even against government redistribution. I might defend this idea further, but for now I'll just say that I can't accept the absolutist position that no redistribution is tolerable.

This doesn't mean that massive redistribution is desirable. Redistribution tends to be costly, and it tends to draw resources into wasteful political battles. On the other hand, a wealthy country like the United States can afford to provide substantial opportunities and protections for its poor with relatively little pain to the better off. My answer on redistribution ends up sounding like Scalia on sex discrimination: redistribution is a good idea when it's a good idea.

Why can't social norms evolve to bring about optimal redistribution? I suspect it's because most social norms evolve within a close-knit community. Charity to individuals outside that community is nice, but it's not the subject of strong social pressure. Furthermore, there's no particular reason to expect charitable norms to evolve. We have observed efficient norms in some situations, but we have also observed wasteful norms, and certainly in the aggregate we should be surprised when norms work well. More on this soon!