Monday, October 02, 2006

 

Why doesn't this make sense?

Why do Democrats frown upon wealth transfers from the future to the present (deficit spending) while they are perfectly fine with wealth transfers from the rich to the poor? Are "we" not richer in the future, given the fairly steady rate of economic growth since WWII? If so, shouldn't the current generational wealth transfer be something of a Democratic ideal?

I hoped someone else had made this observation, and of course someone had:

"Some have also made a philosophical argument that even if there is an intergenerational wealth transfer, it is justifiable, because our children and grandchildren will almost certainly be wealthier than us, and (oversimplified) that they "wouldn't mind" lending us some money today, just as we leave money for them in our wills. [I would add that we make them better off through innovation as well.] This doesn't seem to be particularly persuasive to me, but it is one argument that is occasionally made to justify even deficits that fund current consumption."

I'm not saying that deficit spending is justified or that the argument works; I'm only saying that the Democrats are inconsistent on this. It's not that the future generations "wouldn't mind." It's more that Democrats shouldn't care if they do mind, since they like taxing rich people and spending money on the underprivileged (the present??). Also, people of the not-so-near future can't vote yet, which is handy.

Semi-related food for thought.


Comments:
Your argument assumes that our children will be the "haves" to our "have nots". Why should that be the case?

Not only will government borrowing money to finance current consumption not help our children become richer, but deficit spending could also crowd out private investment by putting upward pressure on the interest rate, which might retard economic growth.

So why couldn't Democrats simply respond that they think fudning government consumption with deficit spending will make it LESS likley that our children will be wealthier than we are? Or, at the least, that deficits will make it less likley they will be wealthy enough to redistriute from.

And what about more philosphical objections? Why are you assuming Democrats assign the same moral weight to future generations as they do to current generations? Or heck, why assume Democrats are trying to achieve some equitable distribution of income at all? What if they advocate re-distribution for different reasons?

Nah, I don't think this is a serious problem for Democrats.

Interesting way to frame the question though. As "Democrat problem". ;)
 
The point is more solid than you think.

"Why are you assuming Democrats assign the same moral weight to future generations as they do to current generations? Or heck, why assume Democrats are trying to achieve some equitable distribution of income at all?"

I've heard Democrats denounce deficit spending as "passing debt to our grandchildren," which would mean that they at least say they care about future generations. Are they deliberately misleading me when they say this?

Second, they also outwardly say that they redistribute wealth to achieve equitable ends. Why else redistribute? Are they less than honest on this point?

"Your argument assumes that our children will be the "haves" to our "have nots". Why should that be the case?"

In a nation-wide sense, they almost have to be. Growth has been steady despite deficits so far, so why do you think that would change?

"Not only will government borrowing money to finance current consumption not help our children become richer, but deficit spending could also crowd out private investment by putting upward pressure on the interest rate, which might retard economic growth."

I'm not saying that deficits should be higher. Crowding out probably does seriously retard economic growth, but the point is we're still growing; hence, our "children" will indeed be richer in a collective, taxable sense. You're proposing a scenario where crowding out completely reverses economic growth, and this would take some devastating deficits. I'm talking about the current, fairly mild ones that have not reversed growth.

It's not necessarily a "Democrat problem," just an inconsistency. It's only a problem if they care about being consistent.
 
Or put more clearly...

Your argument assumes that our children will so much richer than us that a Democrat should seek to re-distribute wealth from the future ("the rich") to the present ("the poor"). But that argument makes a lot of assumptions about economic growth that Democrats don't have to accept.

After all, isn't one major concern that deficit spending will crowd out private investment and slow economic growth? Like I said before, a Democrat could simply argue that deficits make it less likley that our children will be rich enough to re-distribute from.

That isn't even considering other, more philosophical, objections to your characterization of the Democrat position.

I think the guy you linked to has it right. This is a complex issue that involves a lot of empirical questions that need to be answered before one could decide whether deficit spending is a "good" idea. This leaves a lot of wiggle room for both parties to support deficits under some situations and oppose them under others.
 
Travis,

Good points, but let me leap to the economic heart of the argument.

"In a nation-wide sense, they almost have to be. Growth has been steady despite deficits so far, so why do you think that would change?"

"You're proposing a scenario where crowding out completely reverses economic growth, and this would take some devastating deficits. I'm talking about the current, fairly mild ones that have not reversed growth."


Actually, Democrats do not need to contend that deficits REVERSE or even stop economic growth, they only need to argue that deficits slow economic growth enough so that our children are no longer rich enough to re-distribute from. After all, re-distributionist Democrats only seek to make the distribution of wealth more “equitable”, not totally equal.

If you disagree that deficits will slow growth that much, and you want to argue that our children will be rich enough to for Democrats to redistribute from (how rich is that again?), then we have come full circle to the post you originally linked. This debate rests largely on different answers to empirical questions and different parties can disagree without any internal inconsistency.
 
Let's be clear that I was using "children" in quotation marks for a reason--because I was using the word loosely to mean future generations.

And I'm not 100% sure what Democrats mean by "equitable" distribution of wealth, but surely we are unequitably more wealthy (by their standards) than the people living 50 or 60 years ago. I don't think this is a wild or fanciful idea.
 
Travis,

You're a sly one. And here i thought you were only talking about my kids. ;) Just so we both know, I am using the word the same way. It provides a convenient and intuitive shorthand for "people that live in the future that ain't us".

On your second point, are you saying that economic growth will keep the same pace for the next 50 years? Why do you say that? Why do you suppose Democrats should also believe that?

And if we can't even define what these re-distributionst Democrats believe to be "equitable", how can we determine which intergenerational distribution of wealth they would prefer?
 
Travis,

There are some other good points in your previous post I didn't address for lack of space. Here is a reply.

I've heard Democrats denounce deficit spending as "passing debt to our grandchildren," which would mean that they at least say they care about future generations. Are they deliberately misleading me when they say this?

You misunderstand my argument. I was saying that Democrats might assign more moral value to future generations than to their contemporaries. For example, they may think (for some reason) that future generations deserve more wealth than the current generation. Not an unbelieveable argument once you consider how much wealth people, on average, transfer to their actual children upon their death.

Second, they also outwardly say that they redistribute wealth to achieve equitable ends. Why else redistribute? Are they less than honest on this point?

Democrats like Bill Clinton emphasized improving the opportunities of the poor and middle class over directly improving outcomes. Therefore, Democrats like him could easily support programs that tax the rich to benefit the poor without seeking any particular income distribution (inter-generational or otherwise). Maybe their policies could be based on something like Armatya Sen’s capabilities argument? I don't know, but it's certainly possible.

Now this isn’t to say to that some Democrats are not being inconsistent in their beliefs. Maybe there are some. But I think we run the risk of creating straw men when we start attributing homogenous belief systems to a heterogeneous group of people.
 
I hate the straw-man fallacy as much as the next person, so let's be specific now.

People who:

1) believe that wealth ought to be distributed from the rich to the poor
2)value all human beings equally
3)estimate that future generations will be far wealthier than their own, and
4)denounce deficit spending as a burden on those rich future generations...

are inconsistent in their beliefs.

These just happen to usually be Democrats. I didn't mean to pick on them solely; any other human being with this set of beliefs is also inconsistent, regardless of their political party.

But I see what you mean, Student. If people value future generations more highly than their own (violating #2), then it breaks down.

That's easier to visualize on a personal level (your own kid above you) than a policy-minded, national level (a poor woman's kid above her). Does this necessarily violate #2?

According to #3, the very poorest people that we can still help are living in the present, not the future.
 
Then we are in agreement. :)

I think it's a very clever argument. Props!!

I would also point out that many Republicans could fall prey to the converse of the argument (that intragenerational transfers are objectionable but not intergenerational transfers). Of course, that argument would require just as many conditionals and the Democrat argument.
 
Totally.
 
Post a Comment



<< Home
CrispAds Blog Ads

Does someone you know deserve flowers?
Web Site Hit Counter
Dell Canada

This page is powered by Blogger. Isn't yours?