Tuesday, 24 May 2011

Why redistribute?

Labour leaders, from Atlee to Blair, have all favoured a form of income redistribution as a means of building a fairer society.

While the Labour leaders of old were more open - sometimes infamously so - about redistribution, New Labour was much less candid, favouring a controversial strategy of redistribution by stealth.

Although the New Labour approach was quite successful in boosting incomes at the bottom, its problem was its inherent deviousness. You can’t win an argument on fairness if you don’t allow the public to debate in the first place.

Moreover, there has always been a deeper problem with Labour’s commitment to redistribution, linked to the perceived purpose of what redistributing aims to achieve. In striving for a straightforward, linear redistribution from the pockets of rich to the pockets of the poor, there appears to a somewhat uninspiring moral vision.

And here’s why I think this is: redistribution, argued for in the name of fairness, tacitly accepts the nature of the society we find ourselves in. In other words, it is silent on the type of society which should be built and what a good society might look like. Progressives thus tend to agree with conservatives about the nature of how we live; we simply believe that some people should have more money to spend than others, as a matter of fairness and greater freedom.

However, when it adopts this approach, Labour ceases to articulate a vision of the society it wants to build. Redistribution fails to be an architectural tool to build a different society, instead it is a mechanical process, tinkering with what exists, rather than seeking to transform it altogether.

This is not an argument for abandoning redistribution as a policy aim. Rather, it is rethinking why we want to redistribute at all. Do we want to redistribute to correct for market unfairness, as Labour has argued in the past? Or, do we want to redistribute because inequality is damaging in another way, in how it estranges people from each other and makes us lead increasingly separate lives?

So while Old, New and Blue Labour would all support redistribution to build a more equal society, the policy consequences of a blue, communitarian programme would be qualitatively different. In the past, the social democratic understanding of the purpose of redistribution led to policies of a slight tax increase here, more tax credits there and perhaps a change in how we uprate benefits.

However, the aim of altering income distribution, and leaving it at that, ignores the real fallouts from a neo-liberal, Conservative society: individualism, decrepit community life, urban homogenization, the ascendancy of market morals and civic discord. While a fairer tax-benefit system is a noble endeavour, it does not address these problems on its own.

So if Labour wants to be Robin Hood, it should no longer simply seek to take from the rich and give to the poor. Yes, we should continue to argue that it is right to take from the rich, but instead propose to use the bounty in a different way. Rather than tampering with the tax system, we should offer a bolder claim on redistribution. As the philosopher Michael Sandel says, we should use redistribution for a:

"Consequential investment in an infrastructure for civic renewal: public schools to which rich and poor alike would want to send their children; public transportation systems reliable enough to attract upscale commuters; and public health clinics, playgrounds, parks, recreation centres, libraries and museums that would draw people out of their gated communities and into the common spaces of a shared democratic citizenship.”

So there it is. Redistribution to invest in the institutions which would build a shared, cohesive society with stronger relationships and better communities. I think most of us would agree that this offers a more convincing and powerful rationale for redistributing wealth than the arguments which the left has become accustomed to - and has espoused - for far too long.


  1. This sounds like a quite marvelous idea. Can you outline a few more details of how it would be funded, e.g. I am assuming you would continue to pay benefits to the people who are still dependent on them, so in the short term it would be more expensive but in the long term it would be far less expensive.

  2. Thanks for the comment. I think redistribution of this kind would be funded by (a) a higher and more progressive tax system and (b) means-testing some universal benefits and using those savings to build new, universal civic institutions and services.

  3. It shouldn't be about redistributing wealth. Instead, it should be about redesigning markets and institutions so they produce more socially just outcomes.

    For example, break up the banks into 100s of competing units. Remove charitable status from independent schools and tax them for what they are: businesses providing a service that its customers are willing to pay for, rather than charities supplying a service that the market or the state does not supply.

    Separate the energy retail companies from the energy wholesale and generation companies. Allow new entrants to the retail market to buy wholesale and distribute.

    Reform lobby regulations so that all lobbying has to be done through one's local MP so that the power of large business interests can not subvert the democratic will of the electorate via direct access to the PM and ministers.

    Invest massively in building high quality social housing with very low rents for poor people. The investment funds can be borrowed by government. Contrary to popular belief, public debt is not high by historic standards or when compared to other mature democracies.

    Introduce 2 tier boards of directors into corporate governance. The non-executive board should appoint the executive board. The non-executives should be elected in equal numbers by a firm's shareholders and employees. There should be a statutory obligation on the employee representatives to maximise employment opportunities for the local community and to protect employee interests whenever closure/relocation decision are being considered. The combined board should determine the executive directors' remuneration annually and should have the power to fire them without compensation.

    Reduce class sizes in state schools to a maximum of 15. This can be done by shrinking the mandatory curriculum to Maths and English so that every child leaves school with a good command of English and Maths and so can not be designated as "unemployable" by employing organisations.

    Reform prisons so that they house only the "bad", not the "sad" and "mad" as they do currently. Provide proper services for these people so they can participate fully in employment and other opportunities.

    Place a bar on privately educated civil servants so as to reduce the incentives for parents to send their children to private schools and to purchase privilege.