Predictable History, Unpredictable Past: Despite Thomas Piketty, Voters Reject Economic Redistribution

30 May 2014

Despite Thomas Piketty, Voters Reject Economic Redistribution

Give Me Liberty Or Give Me Death...You Can Keep The 'Equality'

By Michael Barone

The opinion pages, economic journals and liberal websites are atwitter (a-Twitter?) these days over French economist Thomas Piketty's "Capital in the Twenty-First Century." Left-wingers cite Piketty's statistics showing growing wealth inequality -- though some have been challenged by the Financial Times -- in support of Piketty's policy response, huge taxes on high incomes and accumulated wealth.

One suspects that many of his fans have another agenda in mind. They'd like to gull a majority of the 99 percent to vote for parties that would put their friends in control of an engorged state apparatus.

There they could stamp out fossil fuels in favor of renewables -- and get all those overweight suburbanites out of their vulgar SUVs and into subways, and out of their ticky-tack subdivisions and into gleaming mid-20th century modern high-rises. (Actually, there is a great city like that: Moscow.)

The only problem is that voters won't cooperate. They don't seem interested in centralized direction from the chattering classes. The protest votes around the world are mostly going not to redistributionist parties of the left but to various anti-centralization parties of the right.

Current polling points to Republican victories in the 2014 off-year elections, and Pew Research reports that 65 percent want the next president to follow policies different from Barack Obama's. Our Anglosphere cousins Britain, Canada and Australia all have center-right governments.

Then there are last week's European Union parliament elections. In Britain, the United Kingdom Independence party, which wants out of the EU and tougher limits on immigration, came in first, ahead of recently redistributionist Labour -- the first time in 30 years the national opposition party wasn't first.

In France, first place went to the more sinister Front National led by Marine Le Pen. President Francois Hollande's Socialist party, which Piketty has supported, won 14 percent of the votes.

The Denmark People's party won there. Parties for which Nazi comparisons are not wholly unjustified -- Jobbik in Hungary, Golden Dawn in Greece -- won seats in those countries. Beleaguered Greece was the only country that lurched to the redistributionist left.

The European fringe parties are not a united lot (UKIP won't caucus with Front National). They express attitudes specific to each nation and lack a common platform. What they have in common is distaste for nanny state liberalism imposed by unaccountable E.U. bureaucrats and executives.

In effect, they are saying that the original purpose of the E.U. -- to unite Europe to prevent a third world war -- is obsolete, now that war in Europe (beyond the former Soviet Union) is unthinkable.

Instead, they see the democratic nation-state as their protector and the legitimate object of their allegiance. And, despite some fringers' admiration for Vladimir Putin, they tend to prefer Capitalism to mandarin-mandated economic redistribution and regulation.

Europe and North America are not the only parts of the world rejecting Piketty politics. In the world's largest democracy, India, 554 million people voted and gave a resounding victory and the first outright parliamentary majority in 30 years to Narendra Modi's Bharatiya Janata Party.

Modi promised to unleash free markets and encourage growth as he had done in the state of Gujarat. The BJP won 282 seats. The Congress party, in power for 49 of India's 67 years, promised more welfare and won 44.

Across the Pacific, a plurality of voters in Colombia favored Oscar Ivan Zuluaga, endorsed by former President Alvaro Uribe, over incumbent Juan Manuel Santos. Zuluaga criticized Santos for negotiating with the FARC narcoterrorists rather than continuing Uribe's tougher policies.

Either could win the runoff June 15. But the weak showing of Santos, widely praised internationally, suggests Colombians put a priority on public safety. Redistribution isn't an issue in a country with great economic inequality.

Not all elections around the world go the same way, and sometimes voters just rotate politicians in office.

Americans have twice elected a leftish president, and last year, New York City elected a leftist mayor.

But over the last 40 years, Piketty's years of increasing economic inequality, the biggest electoral successes have been free-marketeers (Margaret Thatcher, Ronald Reagan) and light-on-redistribution moderates (Tony Blair, Bill Clinton).

Leftists hope the Piketty book will spark an electoral surge for redistribution that will let them install nanny state policies micromanaging ordinary people's lives.

But the lesson of recent history is that, even when the inequality increases in the economic marketplace, there's not much demand in the political marketplace for economic redistribution.

Income Redistribution Is About Votes, Not About Helping The Poor

By Jeffrey Dorfman

Everyone knows the famous Chinese proverb: Give a man a fish and you have fed him for a day; teach a man to fish and you have fed him for a lifetime. So why does the federal government spend so much money on giving away fish and so little on teaching people how to fish? Because Democrats want people to depend on government so that they will vote to re-elect them.

Think of all the redistributive programs we have to help people. The minimum wage, food stamps, housing subsidies, free cell phones, and Medicaid are just a few of the over eighty federal means-tested programs designed to help the poor. Social Security and Medicare redistribute income to the elderly. Federal disability insurance helps people who are too disabled to work. In total, the federal government redistributes about $2.5 trillion per year, which buys a lot of votes.

In contrast, policies that aim to create self-sufficiency are significantly fewer. Job training programs are the obvious example, as they are the epitome of teaching a person to fish. Yet the federal government spends only around $10 billion on job training programs which is less than one-half of one percent of the amount spent on redistributive programs. Other programs that qualify as self-sufficiency increasing are health savings accounts and private retirement programs (such as IRA and 401(k) accounts). These are large-scale programs but no federal spending is dedicated toward them unless one believes in counting the tax breaks they enjoy. If you count that cost, it is around $500 billion, or one-fifth of the amount that is redistributed.

Estimates of total government spending on the war on poverty since its beginning in the 1960s range from $17-22 trillion. Yet virtually everyone lifted out of poverty by all that spending is a simple result of the income or benefits transferred to them; if the support stopped, they would be right back into poverty.

Democrats in Congress are still trying to restore emergency extended unemployment benefits (although they are not trying very hard). This is a classic case of keeping people dependent on government instead of allowing them to learn a skill and get a job. Why are the Democrats focusing media attention on unemployment benefits (a fish) instead of putting that energy intro securing funding for more job training programs (fishing skills)?

The answer is because people with job skills and the income that those skills can produce do not need a politician’s help. Self-sufficient people cannot be counted on to vote for politicians who offer to provide benefits. They might even start to vote for politicians that favor businesses (their employers) and hard-working, independent people.

If people were less dependent on government then big-government politicians (mostly Democrats) would have to work much harder to attract voter support. When people are dependent on government, the politicians can secure their votes simply by promising more free goodies (more fish) and by warning people that their opponents (generally the Republicans) will take away their free fish. This strategy has been a staple of Democrat campaigns for over thirty years, and it has often been successful.

Politicians who want to create more self-sufficiency have a much tougher road. Now that a culture of dependence has been established, for a politician to suggest they want to make people independent is an uphill climb. The people who pay for all the redistribution may be attracted to the message. Some people want to become self-sufficient rather than stay dependent on the government; these people could be attracted to such a message. But how many people do those groups represent?

Only about 52 percent of households pay taxes, meaning they pay to give away the fish. Within that group, some pay taxes but also collect redistributive benefits from the government. In many cases they collect more than they pay. Thus, the actual number of people that have a financial interest in smaller government is a definite minority.

According to recent statistics, 49 percent of American households collect some type of government benefit. That includes households who pay more in taxes than they collect in benefits, but it is still an enormous number.

These numbers mean that the politicians pushing dependence and those favoring self-sufficiency have fairly even numbers of potential supporters. However, most dependent people will be highly motivated to protect their supply of fish. Those who do not depend on government may not be as motivated to vote against the growth of dependence.

All this redistribution was once thought unconstitutional. President Grover Cleveland said, “Though the people support the government, the government should not support the people.” James Madison said “Charity is no part of the legislative duty of the government.” Most famously, Benjamin Franklin predicted the eventual downfall of the republic when he said, “When the people find that they can vote themselves money, that will herald the end of the republic.”

Those days appear to be long behind us. Unless the small-government politicians find a way to convince a majority of voters that government promotion of self-sufficiency is superior to promotion of dependence, government dependence will continually grow.

The road we are on is unsustainable as soon a tiny number of really rich people will be supporting everyone else. Taking freebies away from people once they get used to them is very hard. For the country to survive, we better find a way to accomplish it.