Why Redistribute Inefficiently?

When I was younger, I used to get mad at liberal ideas for moral reasons. "Its wrong to steal my property!" I would proclaim. Now that I've grown up and become a consequentalist, I get mad about different things. Its OK if most people have different aims for society than me, but why do they choose such terrible methods of pursuing them?

Education is a perfect example. You want to give everyone an equal start - not my thing, but sure. Except...that isn't what state-funded education does. Because state-run enterprises have no incentive to perform well, the public schools all stink, and so only the rich can afford the good schools. Isn't that the opposite of the desired result?

It's so sad because there is such a simple, effective way to get the result they want. Just use a voucher or a tax credit to redistribute a certain amount for each student. Then let parents pick the schools. You get a more level playing field, and that level is far higher because of the power of a competitive market.

The same idea holds in many areas. You want to force people to save? Sounds unnecessary to me, but hey, go for it. Now, we want them to get the most retirement for the least work, right? Then shouldn't we invest their savings in the most effective wealth-building option available, namely stocks? Instead, they must invest in the government, a massive wealth waster, with the result that old people have less money. Indeed, because of the odd mathematics of exponential growth, I suspect the difference is quite large.

If you are going to redistribute, why not be efficient about it? A difference in goals I can live with, but sheer pointless waste makes me sad. Fortunately, there are some liberal countries which display less economic ignorance. Sweden, for example, with one of the highest tax rates in the OECD, has school choice [PDF] and a social security system which is fully funded and individually investable instead of being based on a pyramid scheme.

GNXP suggests that we pitch these ideas to the left as "Hey - even Sweden does it!". I think its vitally important to communicate them somehow. There are an awful lot of people who believe in wealth redistribution, and we are unlikely to convert them all to libertarianism. But if we can teach them economics, they'll at least go about it less wastefully - and some will learn enough to understand why its a bad idea.

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Nicholas, Yow! With the

Nicholas,

Yow! With the author's name being Adam Swift I can't easily shake the suspicion that the original piece could be satire. It certainly reads like an editorial from a Randian villian like Elsworth Toohey.

Taking him at his word, he makes my point. He really does want to give everyone an equal start and his proposal will better achieve that than Patri's.

And why shouldn't people prefer Adam Swift's ends to Patri's?

What incentive do they have

What incentive do they have to learn economics? Are you getting better political results than the economically uneducated? Seems to me you get the same wealth redistribution that they do, which would seem to mean that learning more efficient means of redistribution doesn’t improve the individual’s lot.

True, but I am a member of a tiny, ineffectual political group. Liberals are one of the two strong political forces which rule the country. Hence if the idea that economics is to making laws as engineering is to designing bridges gets into liberal minds, it might actually have an effect. Economics is mostly used to argue against liberal ideas, hence they dismiss it instantly. If instead we use it to point out how they can better accomplish their goals, perhaps they'll be more receptive.

And this is true in other countries - ie look at the amazing free-market reforms in NZ, despite their very non-libertarian views on social issues (ie national health care).

In the first paragraph

In the first paragraph quoted above you say that state funded education doesn’t produce the desired result. In next paragraph you prescribe state funded education to produce the desired result.

Yes, I should have said "Current state-funded education" or "state-run education" the first time. Run and funded are very, very different.

Won’t state funded schools strongly tend to be state run schools in the long run? When public funding starts flowing into currently private schools wont’ those schools actually be migrating from the private sector to the public? Is it reasonable to expect the state to pay the piper and not call the tune?

Not at all! By this same argument, you could say that any private business which government employees patronized was really a state operated business. After all, public funding is flowing to those businesses.

What matters is not where the money comes from. What matters is whether there is a competitive market in how to spend it. Government employees can choose among many business to spend their state-given funds. Parents with vouchers can choose among many schools to spend their state-given funds. In both cases, private individuals are choosing how to spend based on perceived quality - that's a competitive market.

It seems to me that if we’re not going to reject this end (equality in education) out of hand then the best way to achieve it would be to stamp out or socialize the private schools that already exist. Force the rich to put their kids in the same public schools as everyone else.

I'm sure some loony has suggested that, but I'm not trying to reach them. I'm trying to reach the reasonable majority, who, as Micha says, mainly want the poor to get a decent education.

Micha, Your point is a good

Micha,

Your point is a good one, and the arguments would be persuasive if it was true that the advocates of socialized health, education, retirement savings, etc. genuinely cared more about the results than about how power is distributed.

Unfortunately, I don't think that they do.

How will learning economics

How will learning economics bring a liberal individual any closer to his political goals than it's brought you? Don't the incentives of collective politics systematically encourage ignorance?

So you don't think the state

So you don't think the state will impose any additional standards on schools that accept public vouchers?

Let's say you get your vouchers, children now in public schools disperse into private schools. Five or ten years down the line the ACLU or some other group brings a case to the Supreme Court which then decides that separation of church and state demands that religion not be taught in publicly funded schools. At this point most of the kids in religious schools are there with vouchers. Now these schools are faced with imploding or abandoning religious instruction. Is this far fetched, or just not a problem?

"I’m sure some loony has

"I’m sure some loony has suggested that, but I’m not trying to reach them. I’m trying to reach the reasonable majority, who, as Micha says, mainly want the poor to get a decent education."

Why is serious egalitarianism loony? Is there a standard by which your chosen ends should be preferred to Adam Swift's?

Sounds like you've adopted "It's loony..." as a replacement for "It's wrong...", but how is the former more justified than the latter?

JTK, I believe the Supreme

JTK,

I believe the Supreme Court, in a fairly recent decision, ruled that school vouchers do not violate any establishment clause issues. Of course, the Court could always change their opinion in the future, but for now, the issue is settled.

How will learning economics

How will learning economics bring a liberal individual any closer to his political goals than it’s brought you?

As I just said, there are more liberals than libertarians. Libertarians have no power. Liberals have some power. Therefore ideas which influence the liberal orthodoxy have more effect on the world than any ideas libertarians have.

Don’t the incentives of collective politics systematically encourage ignorance?

Yes, I totally agree. But this doesn't mean that ideas have no power, only that they have less.

So you don’t think the

So you don’t think the state will impose any additional standards on schools that accept public vouchers?

They will impose some standards. But the result will still be to maximize school performance within those bounds. The problem with public-run schools is not that the government assigns standards, it is that there is no incentive to perform. Even if the government assigns stupid standards to voucher schools, they will still provide vastly better educations.

These standards could include not giving parents the freedom to teach religion, as you suggest. That would be unfortunate, but I don't see how it changes the vast superiority of this system over the current one. Religious parents can always supplement education on their own. At least they'll be supplementing a good education instead of a terrible one.

Why is serious

Why is serious egalitarianism loony? Is there a standard by which your chosen ends should be preferred to Adam Swift’s?

Yes the standards of most people in the world.

Sounds like you’ve adopted “It’s loony…” as a replacement for “It’s wrong…", but how is the former more justified than the latter?

So if I said "That dinner was gross", would you immediately assume that I was saying that everyone must agree with me? Of course not. Why do you see absolute proclamations in my subjective statements?

When I say something is loony, that means that I think it is loony. Loony, or crazy, generally means either that I think it is foolish/illogical/strange, or that I think it is very different from the general opinion. The former has a strong element of subjectivity. The latter is an objective statement, but it is one with a very different meaning than how you use "wrong".

I'm pretty ignorant on the

I'm pretty ignorant on the issue, but what about charter schools? At least in CA, we've got charter schools, which are state funded but privately run. Not very many of them, but they're around. Anyone know how these schools perform compared with state-run schools? I guess it's not a true comparison since there is so few of them, and so much money still being 'wasted' on state-run schools.

"When I say something is

"When I say something is loony, that means that I think it is loony. Loony, or crazy, generally means either that I think it is foolish/illogical/strange, or that I think it is very different from the general opinion."

You hold many opinions which are very different from the general opinion, don't you?

I don't see what basis you have to call someone else's chosen end foolish or illogical, nor do I see why you would call an opinion loony simply becasue it's a minority opinion. I assume you favor a number of minority opinions.

Jon, Charter schools are a

Jon,

Charter schools are a mixed bag. Reason magazine has done a few expose's (sp) on their well-publicized failures, Since they are directly funded by the government, unlike voucher schools, which are indirectly funded by the gov't and chosen by the parents, there is less of a free market with charter schools and less creative destruction.

"They will impose some

"They will impose some standards. But the result will still be to maximize school performance within those bounds. The problem with public-run schools is not that the government assigns standards, it is that there is no incentive to perform."

There's more than one way to maintain a monopoly and one is by imposing standards. This will harm existing private schools.

"These standards could include not giving parents the freedom to teach religion, as you suggest. That would be unfortunate, but I don’t see how it changes the vast superiority of this system over the current one."

When someone else's ends differ sufficiently from your own I don't think you take them seriously, thus you find it attractive to trade A) their existing liberty to pursue their ends for B) ends you prefer.

"There are an awful lot of

"There are an awful lot of people who believe in wealth redistribution, and we are unlikely to convert them all to libertarianism. But if we can teach them economics, they’ll at least go about it less wastefully - and some will learn enough to understand why its a bad idea."

What incentive do they have to learn economics? Are you getting better political results than the economically uneducated?

Seems to me you get the same wealth redistribution that they do, which would seem to mean that learning more efficient means of redistribution doesn't improve the individual's lot.

As it happens my pension is

As it happens my pension is based on investment in the market by a public sector body. I suppose strictly speaking it is 'on behalf of' because the fund managers are an arms length organisation. It is also a final salary scheme.

There are now problems with the pension funds - including large deficits - but these are at least in part down to a disciple of Hayek (Mrs Thatcher) who insisted that local government employers had a contributions holiday when the funds were doing well. Now I'm not an economist, but I always thought the idea of a fund was to smooth out variations over good and bad years. It seems pretty stupid to take out money in the good years and then blame the greedy employees because they want what they have paid for and have a contract with their employers to receive.

"Education is a perfect

"Education is a perfect example. You want to give everyone an equal start - not my thing, but sure [*]. Except…that isn’t what state-funded education does. Because state-run enterprises have no incentive to perform well, the public schools all stink, and so only the rich can afford the good schools. Isn’t that the opposite of the desired result?

Its so sad because there is such a simple, effective way to get the result they want. Just use a voucher or a tax credit to redistribute a certain amount for each student. Then let parents pick the schools. You get a more level playing field, and that level is far higher because of the power of a competitive market.

In the first paragraph quoted above you say that state funded education doesn't produce the desired result. In next paragraph you prescribe state funded education to produce the desired result.

Won't state funded schools strongly tend to be state run schools in the long run? When public funding starts flowing into currently private schools wont' those schools actually be migrating from the private sector to the public? Is it reasonable to expect the state to pay the piper and not call the tune?

It seems to me that if we're not going to reject this end (equality in education) out of hand then the best way to achieve it would be to stamp out or socialize the private schools that already exist. Force the rich to put their kids in the same public schools as everyone else.

You're not really taking egalitarian ends seriously. The best way to achieve equality of outcomes is to push the outcomes down to the lowest common denominator. It's easier to cripple the rich than to figure out ways for everyone to keep up with them.

Note that JTK's reductio

Note that JTK's reductio argument (why not abolish private schools to stop the rich giving their children better opportunities) was made not too long ago, in all seriousness and with lengthy attempt at justification, by one of the posters at Crooked Timber. The first Googled link is here:

http://www.crookedtimber.org/archives/000826.html

and IIRC there were a few other threads on this topic around the same time.

How I wish these sorts of things were only strawmen.

The thing is, if you talk to

The thing is, if you talk to most lefties, few are actually interested in egalitarianism for egalitarianism's sake. Rather, they just want the poor to have enough resources to live a decent life. Their defense of public education is rarely that all children, both rich and poor, must recieve the same quality of education. Instead, they are concerned with providing education to those children whose parents can't afford it. The same is true with health care, retirement savings, etc.

But then they take the next step of not just forcing the rich and middle class to pay for these public programs, but also allowing the these groups to participate in the programs along with the poor. Why? It makes no sense given the goals these programs were intended to achieve.

The best explanation I have heard is that these programs are offered as "universal" because its easier to get taxpayers to fund them when they feel like their getting something in return. A pure welfare/charity program would not be as politically popular. But, of course, all these programs are are welfare programs with the added cost of having to pay for people who could otherwise afford the service themselves.

This is what frustrates me the most--not just that they're inefficient--but that they obscure what should really be a welfare program. Bill Gates does not need free public education, health care, or retirement savings.

You hold many opinions which

You hold many opinions which are very different from the general opinion, don’t you?

Absolutely, and I get called loony for them all the time! Looniness is in the eye of the beholder.

I don’t see what basis you have to call someone else’s chosen end foolish or illogical, nor do I see why you would call an opinion loony simply becasue it’s a minority opinion. I assume you favor a number of minority opinions.

If someone's end is to exterminate the human race, why shouldn't I call that loony?

I should clarify that when I said that crazy could mean "minority opinion", I was speaking more for the general use of the term. Personally, I call things crazy when I think they are crazy, whether minority or majority.

But I don't understand why I'm not allowed to think that some ideas are nutty.

There’s more than one way

There’s more than one way to maintain a monopoly and one is by imposing standards. This will harm existing private schools.

Only if we ban private schools. You seem to be assuming that the standards applied to schools which accept vouchers will be applied to all schools. I would expect that schools which don't accept vouchers would be free to keep operating under whatever standards apply to them right now. How have they been harmed?

When someone else’s ends differ sufficiently from your own I don’t think you take them seriously, thus you find it attractive to trade A) their existing liberty to pursue their ends for B) ends you prefer.

Again, there has been no change. Parents right now are allowed to pay to send their kids to religious schools. Parents under a voucher system would be allowed to pay to send their kids to religious schools. They might not get this new extra option to have the state pay for part of private schooling, but they haven't had any liberty reduced.

Your belief about my willingness to trade away liberty seems to be based on an incorrect understanding of my proposal.

If I wanted to more fully

If I wanted to more fully socialize education, here's how I'd go about it. First I'd supply a generous voucher for every student with no strings attached. Within a couple of years almost all of the vouchers will be in play, hardly anyone is going to leave that money on the table and pay out of pocket. So all the shools will be getting a big chunk of public funding. *Now* you start expanding national rules and standards on the schools. Now the transaction costs are enormous for any school that wants to opt out of public funding. So they don't. And the control keeps coming.