Tuesday, May 24, 2016

Opportunity, Access, and Public Goods

Sometimes all I need is the air that I breathe

In his column on BloombergView, Noah Smith offers:
The purpose of an ideal of equality isn’t to serve as a blueprint for the creation of a utopia, but to nudge us in the direction of policies that will make society feel more fair. And it’s here that I think equality of opportunity shines. 
What the focus on opportunity has consistently led to is prioritizing children rather than adults.
I agree with Mr. Smith that public policy should always focus on posterity (blog posts here and here to start), with an emphasis on equal opportunity for all. But I think the discourse over equal opportunity and equal outcome gets clouded by emotion and the notion of fair play – that is, I want to keep what I worked so hard to get.

So let me offer this idea: equal government services for all. Though this probably isn't a new idea, I'm too lazy to dig deeper this morning. Look at it this way: our military protects all citizens; the Environmental Protection Agency protects the air we all breathe (to the consternation of many who would pollute it); and so on.

Not all government services are provided equally: there are 14,000 public school districts in the United States, each with its own source of funding – the majority of which is local funding. Wealthy school districts provide better for their students than poor districts. Barring wholesale redistribution, the federal government can help with equal and free access to teaching materials, curricula, and best practices; whether the locals avail themselves of these resources is up to them.

An interesting idea for retirees is guaranteed equal retirement income. (I saw this article a few months ago, but dang it if I can find it now.) For this service, all retirees are treated the same and get the same amount in retiree benefits no matter how long they worked or how much they made doing their working years. And this doesn't change the concept of Social Security as an intergenerational transfer – that is, those who work now pay for current retirees. (Bad news if you thought Social Security was a funded retirement system.)

Taxes and deductions also deserve a place in the discussion on equal treatment. Social Security and Medicare taxes (FICA at 15.3 percent for employee and employer combined) are applied to the first dollar of wage income (not all income) and stop at $118,500. Much has been made of the fact that many people do not pay income taxes: this is true not  just of low income households but also high income households with many deductions. Nonwage income and wage income are taxed at different rates. And voluntary income tax compliance is judged to be only 68 percent: avoiding taxes is just another way to have a tax rate of zero. All these add up to unequal contributions from which government services are funded.

Sorry if I strayed a bit here. But by focusing on tangible delivery and funding sources rather than abstract ideals, a debate over equal government services for all could be a breath of fresh air.