Poverty: The Modern Surplus
As I worked on my big paper this quarter, something struck me. A theme that I've seen many times in history is that political authorities skim off the surplus from economic activity, mostly farming. As representative governments emerged, though, the surplus could be split up a new way: some kept by the citizens, some spent on programs approved by the voters. As a result, for a given level of production we should see a higher standard of living as the surplus no longer supports a parasitic upper class. I'm sure this isn't a new point, but I don't think I've seen it spelled out anywhere in particular.
Of course, it's not so simple. To start with, the "surplus" isn't necessarily all food production above subsistence level. It's determined by a function in which the kings (or whoever) maximize their revenue, subject to the behavior of the peasantry. If kings can maximize revenue by taking a smaller percentage of the farmers' income, they will do so. This might be because farmers will work harder if they get to keep more of their crop yield, or it might be because farmers will exit the arrangement entirely if they have better options elsewhere. The actual tax rate appears to have been pretty high, though, at least in South India.
Another consideration is how the surplus is spent. Of course, kings who maintain lavish lifestyles for themselves are basically wasting the money, but that's not all kings did. They spent money to defend their countries and maintain the public order (this, I think, is where Hobbes comes in, though you might wonder how much peasants care to be "defended" from one parasite by another). In South India, they also gave a lot of money and land to temples, which then built magnificent structures and provided religious services and entertainment for the people. The temples also spent a lot of money on irrigation projects. The increased yield from these projects was split between the cultivators, the temple, and certain temple donors. We can see that the king's disposal of the surplus wasn't always wasteful.
Finally, representative government comes with its own distortions. Governments spend money to please particular constituencies for electoral purposes, even when in the aggregate such spending isn't beneficial. Knowing this, citizens expend effort to change political outcomes, effort that otherwise could be used for economically productive activity. Worse, even with costly citizen activism, governments are partially insulated from political consequences and thus function, at times, a lot like the old feudal states. Perhaps most importantly, populations have exploded, so that the average standard of living hasn't necessarily increased.
Still, I think we can draw at least two lessons from this. First, representative governments seem to reduce waste and distribute wealth more evenly. If that's so, then it's another reason to support democracy (more in another post), and it should make us sensitive to the consequences of government structure for the allocation of the surplus. Representative government is pretty new in much of the world, so there might be reason for optimism.
Of course, it's not so simple. To start with, the "surplus" isn't necessarily all food production above subsistence level. It's determined by a function in which the kings (or whoever) maximize their revenue, subject to the behavior of the peasantry. If kings can maximize revenue by taking a smaller percentage of the farmers' income, they will do so. This might be because farmers will work harder if they get to keep more of their crop yield, or it might be because farmers will exit the arrangement entirely if they have better options elsewhere. The actual tax rate appears to have been pretty high, though, at least in South India.
Another consideration is how the surplus is spent. Of course, kings who maintain lavish lifestyles for themselves are basically wasting the money, but that's not all kings did. They spent money to defend their countries and maintain the public order (this, I think, is where Hobbes comes in, though you might wonder how much peasants care to be "defended" from one parasite by another). In South India, they also gave a lot of money and land to temples, which then built magnificent structures and provided religious services and entertainment for the people. The temples also spent a lot of money on irrigation projects. The increased yield from these projects was split between the cultivators, the temple, and certain temple donors. We can see that the king's disposal of the surplus wasn't always wasteful.
Finally, representative government comes with its own distortions. Governments spend money to please particular constituencies for electoral purposes, even when in the aggregate such spending isn't beneficial. Knowing this, citizens expend effort to change political outcomes, effort that otherwise could be used for economically productive activity. Worse, even with costly citizen activism, governments are partially insulated from political consequences and thus function, at times, a lot like the old feudal states. Perhaps most importantly, populations have exploded, so that the average standard of living hasn't necessarily increased.
Still, I think we can draw at least two lessons from this. First, representative governments seem to reduce waste and distribute wealth more evenly. If that's so, then it's another reason to support democracy (more in another post), and it should make us sensitive to the consequences of government structure for the allocation of the surplus. Representative government is pretty new in much of the world, so there might be reason for optimism.
posted by James | 2:33 PM
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