Don’t penalize people advocating for one kind of policy

In ‘Who Really Cares About the Poor?: A Socratic Dialogue’, Bryan Caplan, an American economist, let two characters, Glaucon and Socrates, discuss a public policy to help the poor.

Glaucon, a left-wing politician, wants to increase money transfers to the poor, paid by taxes, but was blocked by the right-wing majority. Glaucon complains about those uncaring right-wing politicians and claims that they are only voting for their self-interest.

But Socrates argues that it could well be possible that right-wing politicians just don’t believe the lift-wing policy would actually work. Maybe their opposition is genuine and not about their self-interest.

Moreover, Socrates argues that if Glaucon is sincere about the effectiveness of his proposed policy, Glaucon can still help the poor by giving away his own money to the poor. Surely, Socrates argues, it won’t cure poverty, but it will help at least some poor families.

This reasoning set out by Caplan is a classic argument against people wanting
a policy that needs extra taxes: why don’t they pay more taxes themselves? It was exactly the same argument against Warren Buffett when he said the US needs higher taxes on income from capital gains (the so-called Buffett rule): he could already do it himself.

Will Wilkinson argued against this kind of reasoning, referring to the fact we face a collective action problem: one individual giving extra money will not solve anything.

I think there is an additional argument against the reasoning of Caplan. If Caplan’s reasoning would be followed, then no one could advocate for a policy which increases taxes, without paying more taxes herself. This would impose an individual penalty on those advocating for higher taxes. Consequently, this would decrease the probability one would advocate for this kind of policies, whether the policy is good or bad.

A more striking example is the following: in Belgium, newspapers receive a lot of subsidies for physically distributing newspapers (about 400 million euro’s for a country of 11 million people, each year). Assume a newspaper is against these kind of subsidies, because they think there is no market failure that justifies the subsidy. Stopping these subsidies and, for example, lowering taxes on wages would be a much more efficient outcome.

Following Caplan’s reasoning, this newspaper could not accept the subsidies, because not accepting the subsidies would lead to lower unjustified subsidies. This would lead to lower taxes on wages, increasing overall welfare.

But not receiving those subsidies would lead to a much more expensive home-delivered newspaper compared to their competitors, putting themselves at a disadvantage. In a competitive environment, they would certainly lose market share or even go bankrupt. So following Caplan’s reasoning, not accepting subsidies would lead to fewer papers being sold that advocate for lower subsidies.

[You could also see this differently: the newspaper argues for a world where not one newspaper receives subsidies. They do not argue for a world where everybody is receiving subsidies, except one. To stretch the argument a bit: the true rational individual, but selfish position would be to argue for subsidies for oneself and for no one else. But knowing that this is never to be accepted, the second best is that no one receives subsidies.]

The goal should be to create an environment where the debate on policy is on the policy itself. For that to succeed, two conditions should be met:

  1. One point Caplan makes clear in his dialogue, is that you should not accuse political opponents of being morally inferior. Let us assume that in all political parties there will be more or less the same share of politicians who just want to make the world a better place for everybody. They just differ in the way to accomplish this.

  2. Don’t penalize people advocating for one kind of policy, because it creates a disadvantage for advocating that policy. For example, you cannot set a penalty on those wanting to increase taxes, because that would lead to less people willing to advocate for higher taxes, even though this could be the right policy.

To conclude, the political battle field should be: will your policy work the way you say? And what is your theoretical and empirical evidence to support your claim? Questions on the personal reasons why someone is arguing for a specific policy is an argument ad hominem, hindering an honest debate.

One thought on “Don’t penalize people advocating for one kind of policy

  1. Permalink  ⋅ Reply


    November 8, 2015 at 5:43pm

    Im not sure your counterargument holds water.

    1. I don’t think Bryan Caplan argues that you can only advocate a policy of higher taxes to redistribute wealth to the poor if you already donate an equivalent amount voluntarily. As I understand it, Socrates suggests to Glaucon that he can still do his duty, even if there is no tax, by voluntarily giving away the equivalent money. He draws a reasonable conclusion from the fact that Glaucon seems unwilling to do so.

    2. If I understand you correctly, you argue that the relative disadvantage to which those who would voluntarily give up what they would owe in the proposed tax is detrimental. It is quite clear that, in your example, refusing the subsidy would put a newspaper at a serious commercial disadvantage by increasing their costs in comparison with their competitors, possibly to the point that they’d go out of business. However, no such detrimental effect exists in the case of private citizens: if the proposed redistributive tax were set at a reasonable level, then nobody would suffer unduly.

    3. It *is* true that the difference in wealth between someone who voluntarily donates the amount that would be taxes, and someone who doesn’t, would increase. Suppose the proposed tax would be 15000 euro per year for someone on your income. If you were to give up that amount each year and donate it to the poor in your city, while the family next door, earning the same income, would not, they would be able to have a really nice holiday, and you wouldn’t. But so what? Under the proposed tax you would not be able to afford that holiday either – so there is no difference with and without tax. Sure, your neighbours would not be able to afford it either, but in what way is that *really* detrimental to you (other than, possibly, a certain sense of envy)? Besides, there are people who can afford much nicer holidays than you right now as well. Is that detrimental to you? There are probably people who earn the same as you and who give less to charity than you do — is that detrimental to you?

Leave a Reply

Your email will not be published. Name and Email fields are required.