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September 30, 2011


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T. Meyer

Isn't this a false dichotomy? The provision of public goods usually is redistributive. That is because we do not consume the good produced in proportion to our contribution to its provision. Consider national defense, a classic public good. We all consume roughly the same amount of the good, insofar as we are all equally protected. But those who pay higher taxes pay for more of the good. Redistribution is therefore occurring from those who pay for more of our national defense system (through higher taxes) to those who pay less (through lower taxes). Indeed, it is the fundamentally redistributive nature of public goods that makes providing them such a problem. Those capable of paying for the provision of the good don't wish to provide it at efficient levels because they do not fully internalize the benefit of providing the good (i.e., the problem of free-riders).

Thus, to the extent that we think of the provision of a quick and fair court system as a public good, it shouldn't be surprising that the provision of the good is inadequate. Too many people try to access the system without paying the full cost of the burden they impose on the system. Those who pay higher taxes subsidize the use of the court system by those who pay lower taxes. Furthermore, a court system is not a pure public good. Pure public goods are non-excludable, meaning that we can't stop those who don't contribute to its provision from consuming the good, and non-rivalrous, meaning that my consumption of the good doesn't reduce your ability to consume the good. National defense is non-rivalrous, but a quick court system is not. More people using the courts leads to congestion and reduces the ability of others to get quick access to justice (the point of the Economist article). The provision of a quick and fair court system is thus doubly-jinxed as a matter of political economy. You can't exclude those who can't pay for it (actually, you can and we do as a society in certain ways, but we don't limit participation to those who can pay for the amount of the good consumed), so you have free-riders. And unlike in a pure public goods context, those free-riders cause congestion, further reducing the value of the good and therefore the incentive of those who can afford to provide it to do so.

Calvin Massey

Professor Meyer: The supposed inherently redistributive nature of provision of public goods is a product of a progressive rate tax system -- a conscious political choice. By contrast, a flat tax, or a head tax, with no deductions or exemptions, is minimally redistributive (only to the extent that some taxpayers pay more because their income is higher), but everybody contributes at the same rate. So, I don't think that providing public goods is inherently redistributive. It may be that a "quick and fair" court system is not a pure public good -- there aren't many pure public goods -- but it's close enough to be put in that category. There are always free riders -- even in a flat tax system some people will use roads more than others. That doesn't detract from the point that governments should prioritize their expenditures and, in my opinion, spend first to provide public goods and then consider the more obvious, blatant, and intentional forms of redistribution.


"Maybe if we spent a bit less on redistribution and a bit more on the provision of basic public goods we wouldn't have this problem."

How much have we "spent" on redistribution versus, say, our two ongoing wars?

T. Meyer

Professor Massey, I think we are in agreement that government should prioritize its expenditures differently, and I certainly agree with your point that the nation's court systems should receive further public investment even if revenues are not increased. But I am not sure that I agree with you that the redistributive nature of public goods follows from the progressive tax system. You yourself offer an example of how the provision of a public good can be redistributive even under a flat tax system. If people are all taxed the same (however "the same" is defined) and those tax revenues are used to provide goods such as free roads that are used by some more than others, then we have redistribution. The person who only takes the subway is having the portion of his taxes that go towards roads redistributed to those who use roads. This is why we have toll roads and bridges -- they allocate the cost of providing the road or bridge to those who use it in order to avoid the redistribution that exists if the roads or bridges are paid for out of general tax revenue. Avoiding or minimizing the redistributive problem also solves the political economy problem of generating political support for the provision of a particular good. The problem where rule of law is concerned is that we generally don't think that people should be charged the full cost of access to justice, meaning that those costs have to be shifted through the tax code to those able to bear the cost. Congestion pricing thus probably isn't a politically available solution where courts are concerned in the way that it can be for certain kinds of infrastructure projects (although perhaps the move to arbitration can be understood as a kind of implicit congestion pricing). More generally, I don't think one can definitively say that redistribution is occurring in the production of a particular good simply by looking at how taxes are levied. Instead, one must ask whether taxes are levied in proportion to the consumption of the goods that the taxes pay for.

Matthew Reid Krell

Professor Massey, I can agree with your broader point (that public goods should be funded first, regardless of their redistributive properties, before any traditional redistribution takes place). But I have noticed that most of your posts here elide their reasoning - this one included. I was only able to conclude that I would, in fact, agree with your conclusion after Professor Meyer interlocuted and drew more of your reasoning from you. I know you're not this sloppy in your research (in fact, it's quite good) - do you have that little respect for your audience here?

Or do you simply assume that the "liberal bias of academia" will prevent anyone from evaluating your arguments on the merits and therefore there's no point in presenting the full chain of your reasoning?

Or is it simply that you're too busy to be bothered?

I have a tremendous amount of respect for the Calvin Massey whose research I read, grapple with, and enjoy. I have almost no respect for the blogger Calvin Massey, because it seems like he's less interested in actually engaging than in just picking fights with liberals.

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