maxsaw wrote:
>
> > From: Robin Hahnel <[EMAIL PROTECTED]>
> >
> > > By 'proportional share,' do you mean we are
> > > financing everything via head taxes?
> > >
> > An important first step is that income is distributed equitably in the first place
>-- which we believe it is in a participatory economy. . . .
>
> If incomes are judged 'fair' but still differ, do
> you still want head taxes? I grant that less
> dispersion in incomes makes head taxes less
> objectionable, and zero dispersion makes them
> kosher, so how much does a regressive tax
> framework flout your system?
Now I see what you're getting at. You're right that if equitable income
distribution were exactly equal income distribution head taxes would be
proportional taxes, but if there are differences in income, head taxes
are regressive rather than proportional much less progressive.
Ordinarily progressive taxation is more equitable than proportional
which is more equitable than regressive. We're so used to that truism
that it's second nature -- and should be. But that is because we live in
an economy where higher pretax incomes are almost always too high from a
moral view, and lower pretax incomes are almost always too low from a
moral point of view. So progressive taxation ameliorates the inequity in
the income distribution somewhat -- in the world we actually live in.
But in a participatory economy the only reason some would have more
income than others is because they choose to deliver less effort.
Essentially people with lower incomes in PE are simply opting for more
leisure -- which is their perogative. If I choose more leisure and less
consumption, and consumption is entirely individual, that is easy to
arrange. But since collective consumption is by definition, collective,
all in the same collectivities must consume the same amount of
collective consumption -- those who would have more leisure and consume
less as well as those who would have less leisure and consume more.
[All this is further complicated by the fact that while all consume the
same package of public goods that does not mean they benefit to the same
extent from consuming the same package. But let's abstract from that
little difficulty for the moment, and assume that if you and I live in
the same neighborhood, ward, city, state, nation -- we benefit equally
from consuming the same package of local, state, and national public
goods.]
The choices would seem to be:
(1) Charge people for their proportionate share of the social cost of
the public goods they consume -- which was my original statement, and
which you correctly pointed out was equivalent to a head tax and was
therefore regressive. I'm tempted to add the adjective "technically"
regressive. This could be justified on grounds that while those with
lower income would be paying a higher percentage of their income for
public goods than those with higher incomes, everyone had equal
(consumption benefits minus work burdens.) That something we might call
"net economic benefits from participating in the economy" was the same
for everyone, and viewed from that perspective proportionate charges
were the most equitable.
(2) Charge people their proportionate share multiplied by the ratio of
their income divided by average income. This would yield proportional
taxation considering only income as the measure of people's economic
benefits.
(3) Charge people their proportionate share multiplied by the ratio of
their income divided by average income multiplied by numbers greater
than one and rising at some rate for above average incomes as they rise,
and by numbers less than one and falling for below average incomes as
they fall. That would provide progressive taxation considering only
income as the measure of people's economic benfits.
All would be equally easy to do from an administrative point of view --
even though the last sounds complicated.
I can see no strong argument for any of the methods over the others. As
I think about I don't find #1 inferior by any means. The idea that
consumption benefits minus work burdens is the appropriate bench mark
seems more appealing now that I realize that was the implicit basis for
the proportional charge system. I would not protest against either #2 or
#3 since I personally think people have been pushed beyond their natural
inclinations to overwork in capitalism (a la Julie Schor's work) and in
the beginning in a PE would all be wise to democratically impose upon
ourselves some correctives for a time -- which is what #2 and even more
strongly #3 become -- disincentives to choose more income and less
leisure and incentives to lighten up a little.
>
> On the free-rider issue, it sounds like your
> scheme presumes that public goods are optimally
> assigned to types or levels of government.
Of course -- if it were non-optimal PE would be less than perfectly
efficient. Why would we ever choose that?
I'm joking. You're right again. We have assumed this, and pesky reality
would probably go and violate our assumption, as usual.
> Naturally the assignment itself is the object of
> political controversy. With imperfect
> assignment, you could still have free-rider
> problems. For instance, local jurisdictions
> understate their preference for super-highways.
I don't think this can happen. Super highways are a national public
good. Residents of a state might vote few or none and get out voted by
residents of other states in the national federation of consumption
councils. But this is just the old problem of different people having
different preferences for public goods -- and therefore some benefiting
more and some less from the package the majority settles on. As I said
before, I claim no cure for that equity problem -- it is not an
efficiency problem. Although as I mentioned we can talk about demand
revealing and pivot taxing mechanisms for PE.
[I was told this story by Ed Clark who works for some government agency
with offices in the Old Executive Office Building next to the White
House: Ed Clark was the original person to dream up what are now called
demand revealing mechanisms. Years later Groves and Ledyard were the
first to publish the mechnanism in a professional journal. Clark
originally wrote up the idea for a doctoral dissertation at the
University of Chicago. I believe he said it was Joe Stiglitz who told
him his idea was impossible and he could not get his idea accepted as an
approved dissertation. He left U of Chicago ABD and went out to work.
Some years later he received a letter from Stiglitz apologizing for
Stiglitz' mistake offering to accept his original dissertation and grant
him a PhD from Chicago -- which he accpeted. A rare case of intellectual
honesty and honor among the neoclassicals?!]
> Or West Virginia declares that it is in charge of
> environmental policy within its confines, so
> forget about taxing coal. That's somewhat arcane
> and maybe not too important.
Also impossible. West Va. might well argue and vote against a carbon
tax. But if that was the decision of a majority in the national
federation of consumers' councils, West Va. is out of luck. Actually, PE
doesn't have pollution taxes exactly, but it does have charges for
external effects that all are subject to.
>
> What I was more focused on the typical play of
> interests, log-rolling, and political
> strategizing in any decision-making process,
> income or property ownership aside, which would
> still be present in your setting.
I think there are some interesting problems to think through in this
regard. These issues need to be considered in terms of how sectoral
interests might play out inside federations. But the context is very
different in PE than they one's we're used to. In the participatory
planning process no group of workers or consumers has any greater power
to influence outcomes than any other group. As I understand game theory
this makes it hard to identify any stable coalitions to manipulate the
process.
Moreover,
> while tax shares might be equal, benefit shares
> would not. The nature of the public provision,
> such as whether the new swimming pool is two
> blocks from my house or from yours, could still
> lead to free-rider difficulties.
See my comments above. I agree the problem of unequal benefits of public
goods persist -- though I don't think it is a free rider probelm.
> Finally, your
> 'vote-with-feet' option is not much of a
> departure from present circumstances either.
Agreed. But I can say the same thing by pointing out that any and all
exit options open in capitalism are open in a PE and there are many more
options for effectively exercising voice in PE -- although Doug will
then beat me over the head with the stick of too many meetings as his
interpretation of "more voice." To which I respond that Doug doesn't
have to go to any meetings or post any responses on bulletin boards that
he doesn't want to. [I truly intend this in good fun.]
> > As a footnote: There are some interesting theoretical tax schemes --
> > "demand revealing" and "pivot mechanisms" -- that make adjustments > >to
>proportional charges for public goods in ways that might be > > >considered more
>fair, or ways that might enhance the incentive for > >people to develop a greater
>variety of preferences for public goods, > >that do NOT trigger the free rider
>incentive and attendant > >inefficiencies. I think a participatory economy is a much
>more > >friendly and likely insitutional setting for different localities and >
>>states to play around with these variations than market systems.
>
> Probably so. If we went that far, why not a
> little further? Re: Clarke taxes, my
> understanding is the Mr. Clarke's dissertation
> proposing such a thing was rejected by his
> committee. He had to slink away to some other
> university to get his degree.
See above.
> I don't mean to nitpick. I do intend to read
> Looking Forward.
Looking Forward is intended for activists who are not economists. The
Political Economy of Participatory Economics (Princeton University Press
1991) is intended for economists. Read the latter.
> See you in Chicago.
Not in a cold January you won't! You have fun.
> MBS
