Debate Over Taxes Could Be Solved With This Simple Test

Impact

In his seminal political text Political Liberalism, and in the following restatement Justice as Fairness, John Rawls laid out his distributive principle for economic fairness. The distribute principle is roughly this: say you have two economic systems, system I and system II, and three classes, class A, B, and C, in each system. Now say that, in nominal terms, the classes in system I have these levels of economic prosperity: 62 for class A, 30 for class B, and 15 for class C. Now say that in system II, class A has 42, class B has 36, and class C has 23.  According to Rawls, even though system I adds up to a greater overall economy (107) than system II (101), system II is the more just economy because the least well off are better off in system II than in system I.

What does this thought experiment have anything to do with the American economy?  A lot, actually. 

America still has the biggest economy in the world, but the economic gains are largely accruing to the most well off. According to nobel laureate economist Joseph Stiglitz, 93% of the economic gains made during the recovery after the 2008 crash have accrued to the top 1% of earners in the United States (Rawls is probably turning in his grave). People may look at overall GDP as an indicator of economic health, but if almost all of the economic gains are going to a very small portion of people at the top of the income bracket, then GDP does not represent a very good indicator of social health. It is widely realized by economists today that wages have largely stagnated for the middle class over the past couple decades, while the poor are being sapped by efforts from the right to cut benefits of the welfare state, from unemployment checks to food stamps. Therefore, the American economy today looks an awful lot like economic system I in the thought experiment. Class A, the upper class, are carrying the heavy gains that make system I an overall greater system than system II, but the classes below it are lagging in the process.

The argument from the right is that the welfare state will diminish our capacity to be a dynamic, growing economy in the future. The debt we are accruing will have to be paid off somehow, someday, and those taxes will largely fall on the shoulders of the millennial generation. 

The right, I believe, has a genuine concern that posterity will lag behind other countries, like China, in economic competitiveness. But economic competitiveness is not the only concern that a government can have. 

A government, first and foremost, must care for its citizens. And though the upper classes may have to pay more taxes, which will diminish the size of the overall economy, the welfare state is necessary to provide for those citizens who cannot care for themselves, whether because of disability, old age, or under-education. This is the justice as fairness that John Rawls envisioned.  By no means a Marxist as characterized by conservative scholars in the academic sphere, Rawls was a liberal who saw the need for protecting the interests of the least well off. 

Thankfully we have a president who, if his inauguration address is anything to go by, will likely do the same in the public sphere.