Dec 13, 2014

The US Budget Deal is atrocious for progressives, and the GOP base

The 2014 US midterm elections were a massive win for the GOP and, rightly or wrongly, gave them a mandate to act on the issues they campaigned upon. However, the big new budget bill is drawing controversy over something few GOP supporters are going to have thought was core to their election mandate: loosening restrictions on investment firms doing derivatives training, and a ten fold increase in allowable campaign donations. 

Appealing to the base was never the point, of course. On the derivatives side, it is the pay off to Wall Street, and all the millions of dollars they just spent on both sides, but particularly the Republicans. This is the reason those millions were spent. The new Congress hasn't even been sworn in yet, but the Republicans are already making sure that the first thing they do is reward their financial backers, and who cares really if this has nothing to do with the mandate they received from the American people. The Dodd-Frank financial reform bill, passed by Democrats after the Great Recession, is far from perfect, but for the most part it's attempt to reign in the kinds of crazy financial engineering from Wall Street that underpinned the recession are commendable. This is a move to partially roll it back. 

As for the order of magnitude increase in the individual political contribution increase from $32,400 to $324,000, this is something that both sides are more or less happy with. The system in its current state operate by funnelling huge amounts of money from the rich and the special interest into the political process (in exchange for favours like the change in derivatives law mentioned above). Republicans do it but so do the Democrats. Of course, with the SuperPAC system, huge amounts of money get to flow in regardless, but this allows more to flow a little easier, and also flow through the establishment political groups easier opposed to the putatively at arms length away that the SuperPACs are supposed to be. 

However, the GOP base largely doesn't like the enormous amounts of money in politics either, it is one of those points where progressives can find common ground. This happens despite the view of the base because the base doesn't matter nearly as much as entrenching the system does. Obama and some Democrats do use this issue as a political talking point, but while attacking the system rhetorically, they also make use of it (I can't really oppose this, putting themselves at a disadvantage would be silly). At the end of the day, though, the nice rhetoric is going to get lost in the reality of a system that is become increasingly entrenched in big money politics. 

There are a few riders intended more for the base that don't come about as a payoff to a financial interest. They effectively block marijuana legalization in DC (against the wishes of the people as expressed through ballot initiative). And they cut funding to the environmental protection agency which fits both bases: the populist GOP base hates the EPA and approves of cutting it, but so does a range of special interests who wants environmental regulation as lax as possible. 

It is interesting that the GOP has worked to form a long deal, funding the government until next September. Effectively what happens is that all the spending levels and the like continue at previously negotiated levels, just with these different riders attached. In previous years since the Democrats lost the Senate in 2010, there have been a series of pretty contentious showdowns with the GOP effectively putting as hostage both the funding of the government and defaulting when the government hits its debt ceiling. The idea was to force substantial spending cuts, including entitlements like Social Security, from the Democrats. This led to the whole business of the sequester which eventually fizzled, largely because even when Obama offered an enormous amount of concessions I and many Democrats opposed, the GOP still couldn't take yes for an answer. 

While it is a lame duck Congress at the moment, the Republicans could easily have opted for a shorter term deal and push the big concessions shortly after taking Congress. Instead, they have opted for the timing that effectively allows for one big showdown halfway through the final two year stint of Obama's presidency and will lay the groundwork and framing for the 2016 presidential battle. 

I think this is good for both sides. For someone on the left like me, I think this tactic is good because I think it will lessen the severity of the concessions the Republicans will demand, that it won't be some enormous Grand Bargain that sets the structure of entitlements for the next generation. It will be a much smaller package of spending cuts and other reforms that will be demand that might hurt, but won't hurt as the kinds of options that were floating around during the Sequester period. In other words, punting to next September is really a punt to the next president. For the right, this is a good tactic as while some may ideologically wish for a bigger win, they are correct to think that the public does not and generally did not take too kindly to them holding the government funding and debt as hostage. A framing in 2016 where they tried to spending cuts by playing a game of chicken with Obama in his last year is not a framing that is particularly kind to them. 

The one thing not decided is the big immigration fight. That one got punted until February and will undoubtably be e big public showdown between Democrats and Republicans for this year. 

Regardless of this political calculus, the earlier issues still slip in. They may hit the status quo button, but things like the changes to the financial markets, changes to campaign finance laws, these happen regardless. 
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Dec 8, 2014

Adorable Coming Out Video from Connor Franta

Because it's always worth taking a moment to reflect on what really matters in life:

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Dec 3, 2014

John Tory's ascension and the Metro's ridiculous narrative

As John Tory is now officially the mayor of Toronto, everyone - particularly the media - is in search of an appropriate narrative to go with it. Some of those narratives are good and some are bad, but the Toronto Metro (a free daily mainly consumed on public transit) choose a just laughably terrible narrative.

Before I get in to it, note that nothing has actually happened to change whatever narratives we had about John Tory before. All that happened was the pomp and circumstance of officially becoming a mayor, and that ceremonial nonsense is more or less entirely uninteresting in terms of telling us something about what the Tory administration might be like. Not that this stopped the Metro.

The cover story doesn't appear to be online (but is maybe loosely based on this). It shows four quirky pictures of Tory smiling with the heading "Tory let's his true face show - His human side". We are quickly told that the "inaugeration taught us a lot about life with our new mayor" and that "bits of his real personality [was] peeking through".

Um, okay. Going through a formal inaugeration ceremony get's at his "real personality", "true face" and "human side"? Well, let's see what this real personality really is all about then! We are told that only partially using notes is somehow meaningful, and he apparently genuinely likes his family in a way Rob Ford apparently didn't. He also dropped a line about people of other skin colours so apparently throwing out a token platitude is getting at his "real personality". Puhlease.

I'm having fun, obviously. Media has to run narratives on events and silly puff pieces about this are everywhere, this is just one of many. It is just sad because these early narratives are so important and to run it as the front page on a newspaper with massive readership when it is so vacuous is frustrating.

The narrative that actually matters:
There actually is a pretty important thing we have learned recently about John Tory recently that will profoundly impact his governance of the city and creates the perfect narrative to talk about. Namely, is first major action is to stuff the executive with conservatives and Ford loyalists, ignoring the left flank of the council. As in, all that bullshit about working together and "One Toronto" was nonsense, as we probably could have guessed. As soon as it came time for real action, it is going to be a very conservative, very Ford-esque mayorship just without the drama (we can hope).

Now that is a real action that one can put a real narrative on. Why isn't this on the front page? Why is it stupid comments about how him walking off camera momentarily to shake someone's hand a sign of him being genuine? Some will be glad he is doing this, other's will hate it, but it is actually consequential in a way that some inaugeration ceremony simply isn't.

Fearing GOP tactics, Toronto style:
Now if all that isn't infuriating enough, you'll like the "expert" analysis from Siri Agrell who was quoted on the front page puff piece but gets into the grittier stuff buried on page 20. Tory is just "hedging his bets, alienating the left to avoid retribution from the right. The people on the left side of the equation will continue to work towards what they want to achieve, but if you spurn people on the right there's a greater possibility that they'll make life difficult for you."

Firstly, how terrible does this make the right look? The right are apparently these little spoiled children who will huff and puff at you if you don't appease them while the left are actually decent enough humans to continue to work towards what they want to achieve. I don't think she is necessarily wrong, but it does make me glad to be on the adult side of the table.

More importantly, this is just terrible strategic advice. Tory is a conservative, OF COURSE the right is going to vote with him. Thinking they are suddenly not going to vote with him if Tory puts in some downtown progressive in the executive is nonsense. The actual problem is that the council has a tonne of left leaning members that he has to win over if he wants to actually accomplish anything. Spurning them for the easy solution of the conservative old boys club is not going to help with that one bit.

This is just such a nonsense strategy, and it is often the strategy we see from the right in the US. Appeasing the right is something that the establishment like Boehner and even moderates like Obama feel they need to do. The Tea Party is given a tonne of deference despite being crazy goons. But the left? No, no, nobody needs to appease those guys. They are going to keep fighting for what they believe regardless. So you get this continual shift to appease the people on the right and do everything to be nice to them and you can't even put a downtown progressive into the executive anywhere.

Rob Ford's fond farewell:
The final issue that is just tickling me is Tory's choice of a first move by proposing a symbolic motion to praise Rob Ford for his service. Are you freaking kidding me? No, I don't think this issue is all that illustrative of Tory's approach to the city either, but symbolically it is just terrible. Rob Ford was literally stripped of every mayoral power council could strip from him due to, well, you know the damned story. He doesn't need an iota of praise, least of all from John Tory who is supposed to be symbolically representing change from that garbled messed. I get it, he wants to try and appease the Ford base or whatever (and clearly doesn't care about Chow's base), but it was still simply the wrong thing to do.

Read more » "John Tory's ascension and the Metro's ridiculous narrative"
Nov 26, 2014

The Conservative's scripted talking points get them into trouble

This little scandal Tories have gotten themselves into is a bit delightful, but underscores a more important point about the dissemination of talking points.

The problem started when a Conservative operative secretly recorded a conversation including, allegedly, Banff-Airdrie Liberal candidate Marlo Raynolds saying some not-so-lovely things about the people benefiting from the Conservative's income splitting proposals. The problem? It now appears it wasn't the Liberal who said it, but the conservative supporter he was talking to. 

In the short time after Sun news put this up, no less than four MPs - including Employment Minister Jason Kenney -  used the quote to mock the Liberals in the House of Commons. Now that they have been caught in error, they are refusing to apologize. 

This is a pretty minor scandal, of course, and mainly gives a source of amusement at the egg-on-face. The larger point though is that this only happens in the scale it did because of the way the Conservatives disseminate their talking points. It isn't as if these different MPs all happened to watch Sun news and each independently thought it was a clever jab they could throw at the Liberals. Instead, it was understood by all that today this was the talking point to use. And each MP in turn dutifully showed up to take their turn at the bat with it.

This process happens every day, and most of the time the talking points are silly. But this time the talking point was also just flat wrong. The larger criticism isn't that one of the talking points turned out to be false; that is going to happen every once in a while no matter how dutiful one is. The criticism is more on the nature of how these talking points get disseminated and how it makes the entire political process - particularly in the House of Commons - so vapid and vacuous where any attempt at a serious dialogue is eschewed in favour of repeating the talking points of the day no matter how ridiculous (and in this case false) they are. 

These days, when something goes wrong in car manufacturing, there are often recalls measuring into the millions. The basic reason is that because of standardization, the exact same part is used in so many different cars and models so that if anything little thing goes wrong, it becomes a massive recall. This is the basic dynamic here. Tory talking points are so quickly and widely disseminated that if one of them proves bad, you have this whole swath of people that need to come forward to apologize. They are in the business of mass production of talking points, and are experiencing one of the pitfalls that comes from that.
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Nov 24, 2014

The NDP's 7% problem

The NDP's biggest problem electorally isn't a question of policy or values or leadership or connecting with voters or just about anything else perennially brought up to explain their difficulties in the polls both federally and provincially across Canada. Their big problem comes down to one stat: only 7% of Canadians think they will win the next federal election, less than a fifth the number the Liberals get. If nobody thinks they can win, there are going to be hordes of theoretical supporters who will vote instead for the person they think might win, typically a Liberal.

Of all the questions you can poll people on, this is the number the NDP polls worst on. Large numbers of people generally like the NDP, generally like Mulcair, and generally like values and policies that the NDP prioritizes. If that was all that mattered, they would be competitive. However, if large numbers of people don't bother actually voting for them because basically nobody thinks they can actually win, none of this matters.

This basic dynamic has long plagued the NDP, but never before have they had as much of an opportunity to reverse it. In 2011 they went to record highs, become the Official Opposition while reducing the Liberals to a seat count in the thirties, and staking the claim as heir apparent to the federal throne. They elected a competent - although not particularly likeable - leader who has received mainly plaudits by the press and had little negative press. And they rightward shift of the NDP puts their policies and values firmly within acceptable territory of the Canadian public when polled.

If there was ever a moment in time where the NDP could reverse the "but they won't win, so why vote for them?" dynamic, this was it. What do they get? Seven percent. Seven heart-sinking, demoralizing percent that cements the dynamic as being as alive as it ever was. The Liberals, by the way, get 39% and the Tories 25%.

Abacus ran the numbers in more depth in Quebec recently comparing the Liberals and NDP and they paint a similar, if less extreme picture. Quebecors would prefer (60%) Mulcair over Trudeau and think his values are closer to their own (55%). But they think Trudeau is more likely to win (67%). The key though is in how they are actually going to vote. 56% of people will vote for whoever they think is most likely to beat Harper.

There are always going to be loyalists who will vote for their party even if they are going to lose. Indeed, while I am not a loyalist, I have written in past many reasons why one might want to vote for third parties beyond them actually going to win. However, a majority of people are not going to do this. They are going to pick and choose between the Liberals and the NDP to find the party they think will win.

The silver lining for the NDP is that latent support for them is likely much higher than election results and polls indicate. Indeed, this is precisely what happened in the so called Orange Wave in Quebec in the 2011 election. When it suddenly became clear that the NDP had a real shot, a huge portion of the country very quickly moved camp to the NDP and there became something of a self fulfilling prophesy where appearing like a possible winner was the key to giving their first huge win in the province. The NDP can only hope something similar happens outside of Quebec in the future, that the base of support for their party is really much larger than sometimes appears, it just doesn't manifest in elections since nobody thinks they can actually win. Gain enough momentum to convince people they might win, and it may become a tipping point that propels them to actually do so.
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Tech on the Side: Airbnb vs Uber and the power of mobile

Airbnb and Uber are similar in many ways. They both use tech (particularly mobile) to solve a distribution problem and they are both market darlings with skyrocketing valuations. They are both massively disrupting the established hotel and taxi industries respectively, complete with significant legal battles in these highly regulated industries that have arguably outdated business models and regulations.

The distribution problem works like this: Airbnb makes it vastly easier for anyone to rent out their property and become effectively a hotel; Uber makes it vastly easier for anyone to rent out their time and vehicle and become effectively a taxi. Previously, the resources (houses and cars/drivers) were plentiful, but there wasn't an effective distribution mechanism to connect customers to providers so we relied on the traditional hotel and taxi industries which provided a distribution system, but a distribution system that cut out small players. You had big dedicated hotels and large taxi fleets, not any old person with a spare room or a car and time to spend.

That said, there is an important difference between the two that illustrates the power of mobile. Uber is entirely dependent upon everyone having a smartphone. That is, the system just wouldn't work with a desktop site because people are calling their Uber rides out and about with their smartphone, they see the car approach on their smartphone, they pay on their smartphone, etc. The smartphone is integral to the entire experience.

Airbnb, however, works just fine as a desktop website. They could have just as easily operated a decade ago. The reason is that booking a place to stay on a trip is something you typically do far in advance, and can easily peruse at your pleasure at home or at work. For the most part*, the service is just as useful on the desktop website as on the mobile app (and there isn't even an iPad app for it). Airbnb in this way is much closer to eBay (which started as an entirely desktop site). Yet, Airbnb didn't exist until the smartphone boom.

Today, huge swathes of computing is being transferred from desktops, laptops, even tablets, to smartphones. This change is not exact, however. That is, people don't switch the amount of computing they did on the desktop to doing the same amount on a smartphone, they typically vastly increase their use. So it isn't just that people start using Facebook on phones opposed to the desktop, they also use Facebook quite a bit more.

This is the basic dynamic with Airbnb. Smartphones are so effective at reducing the friction of computing, that they end up doing far more computing and are much happier using computing solutions to solve problems. Airbnb has made a pretty frictionless system for both customers and home owners to be able to connect the two groups. It isn't that this model doesn't work in a desktop only world - it does - it is just that computing in general is so much easier and more convenient that people can do this from anywhere with the power of their phones. And they do, in droves.

The potential globally of smartphones truly is enormous, and I believe we are still only scratching the surface.

*This is not to say there are not advantages of mobile. Mobile makes finding a place to stay while travelling on the fly far easier, and particularly for hosts they get to manage their bookings without disrupting their lives since it can all be done on mobile.
Read more » "Tech on the Side: Airbnb vs Uber and the power of mobile"
Nov 15, 2014

Dealing with Climate Change and Inequality

Two of the defining problems of our times are wealth inequality (both globally and within the first world) and climate change. With any socioeconomic order - our mixture of capitalism and government being just one - there are going to be consequences both good and bad. There are going to be challenges that the socioeconomic order is particularly good or bad at addressing. The point of this post is to expand on how these two defining problems - global warming and inequality - are products of our particular socioeconomic order, that they are two problems that our system is particularly ill-equipped to deal with.

Government vs Markets:
We have this mixture of systems because markets and governments have different strengths and weaknesses. By using a combination of the two, we are able to try and minimize the weakness of each.

On the market side, a negative externality occurs when the cost of a particular market transaction (going fishing, say) is not directly felt in full by the immediate actors in the transaction, but negatively affects others. For instance, in a fishing habitat, any individual fisherman contributes to a problem of over fishing which lowers the future availability of fish. While in aggregate the externality becomes very negative, the contribution from any individual fisherman is quite small and they would be in their rational best interest to continue fishing since the cost of their overfishing is spread out among so many others. This is the so called tragedy of the commons.

Capitalism as a socioeconomic construct is particularly poor at addressing tragedy of the common problems. Because the system is one where individual and voluntary actions are free to occur, there is no mechanism in capitalism, by definition, to pay the costs of negative externalities. It is perhaps ironic that one of the greatest strengths of capitalism is its ability to finely tune pricing structures to account for the costs that it "sees" with ruthless efficiency, yet one of its greatest weaknesses is the inability to "see" certain types of costs.

In contrast, government is very successful at dealing with these types of problems. By using the fiat power that governments have, they can manage tragedy of the commons situations by, say, putting regulations on fishing in a fish habitat to prevent the negative externality of unsustainable declining fish populations. Indeed, many of these environmental roles like legislating against certain forms of pollution tend to be where the role of government is most complementary to the role of markets and has the strongest cases for government intervention.

Global Warming:
Global warming is the mother of all negative externality problems, where the true costs from our energy consumption paradigm doesn't manifest itself locally, but manifests itself in the "commons" of our global ecosystem. The consequence of climate change is felt widely, but for any individual there is a massive cost with marginal gain for changing their individual actions to help. We all drive to work and heat our homes (in the first world, at least), and each individual contribution to global warming is miniscule. The cost benefit analysis for an individual is clearly to continue. But these effects on aggregate are enormously consequential.

The problem for global warming is that despite it being exactly the type of tragedy of the commons problem that government, not markets, are best suited to address, there simply lacks a sufficiently powerful global governance mechanism to make this happen. It is a global problem, but we don't have a global government to impose regulations by fiat.We have been reduced to try and form some agreement between countries to voluntarily act together.

This has been, for the most part, rather unsuccessful and actually suffers from a tragedy of the commons problem itself, just at a larger jurisdiction. Thinking of countries as individual actors in a larger market, the tragedy of the commons problem returns. Any individual government would be massively advantaged if it didn't have to pay the cost of dealing with climate change while everyone else did the heavy lifting. Somewhat unsurprisingly, no comprehensive agreement has yet been made.

I previously wrote about how the dominant role of government (both descriptively and normatively) is wealth distribution, providing a massive net equalizing force on our world that taxes disproportionately from the wealthy but distributes education and infrastructure and healthcare and so on relatively equally. This underlines just how staggeringly powerful the tendency for capitalism to be unequal really is. The basic dynamic (which can be expanded on at some length) is that the tremendous opportunities that capitalism provides are easiest to take advantage of from those who have resources, which means that the benefits of capitalism disproportionately accrue to those with resources.

Within a country like Canada, inequality is a problem but it is a problem that is mitigated considerably by our redistributive government policies. As a progressive, I believe we should do more, but we are undoubtedly doing a lot already. Between countries, however, inequality falls to the same problem that global warming does, namely a lack of sufficiently powerful governance at the inter-country level. It isn't exactly zero; the UN, the WTO, and the like, curb some of the rough edges. There is a small (relative to GDP) trickle of wealth voluntarily from rich to poor countries. However, these redistributing effects are nothing like what they are within countries, and help explain why there is such staggering differences between the countries, and between whole continents.

Both of these two problems are problems coming from the market side of our socioeconomic system, problems that would normally be left for the government to try and ameliorate but due to their scale are particularly difficult to deal with. This shouldn't be taken as a criticism of capitalism per se. Indeed, we have some pretty striking examples in history of one way things can go horribly bad when the role of government is taken to far. Nonetheless, for our mixture of the two, the two biggest problems of our times are products of market side that the government side is ill equipped to deal with. Indeed, perhaps together they make the case that we should strengthen considerably our inter-country governmental organizations.

Read more » "Dealing with Climate Change and Inequality"
Nov 1, 2014

Income Splitting and Progressive Taxation

The motivation behind the idea of Income Splitting is quite reasonable. Namely, under the current scheme, two families with identical total income can be taxed at substantially different rates, depending on how that income is distributed between both parents. Given the fact that families do very often function as a singular economic unit dividing up total income among the family and not individual income, this makes little sense. 

The problem is that in Harper's attempt to fix this asymmetry - a problem probably worth addressing - further asymmetries were introduced. In particular, the bill is highly regressive. At the bottom it helps single parents not one iota. And it helps low income families whether neither parent makes a higher income not one iota. But it helps families with one high income earner and someone who stays at home to raise the kids a tonne. That is, much more often than not it is helping out higher earning families than it is helping lower earning families. 

The result is a shift that makes our tax code less progressive on average. I have long advocated for policies that attempt to be at least neutral on the progressive/regressive spectrum. I would be OK with trying to remove that asymmetry, or at least removing it to some degree, if it was coupled with further policies that didn't tilt the spectrum so badly. For instance, one could imagine switching to the US model of allowing joint fillings (a sort of uncapped Income Splitting; Harper's version caps it at $50,000 transferred and $2000 profited), if this was coupled by a change to the income tax code that made it more progressive, or added benefits to single families or other ways to help out lower income families. Doing this would help to limit the odd asymmetry that the Conservatives have identified when motivating this policy, without the consequence of making our tax code less progressive.

Even the premise - that families with equal income ought to be taxed equally - doesn't necessarily hold. There are meaningful differences between a family with two parents who make $30,000 a year and a family where one parent makes $60,000 a year, such as the fact that in the former you probably have twice the number of hours being worked. I'm not convinced these two situations really ought to be taxed identically, nor that this asymmetry is a more important one than many others such as the asymmetry between single parent families and dual parent families which often have stark differences in the length to which resources go. 

In many cases, what can seem "fair" when one looks a specific policy such as a specific tax, turns out to be rather unfair when looking at society as a whole. Consider the idea of flat taxes, where everyone is taxed at the same proportion of their income. When thought of one its own, this seems like a very fair tax system and indeed many on right advocate for it and to some extent I can see why. The problem is that we live in a rather regressive world. The case for progressive taxes is to in some sense balance out the inherently regressive nature of our capitalist society so that when considering all these factors - and not just taxes - we get something a bit more equitable. So a "fair tax" may not actually be all that fair, and Income Splitting is precisely one such example. 

The political angle:
As Harper starts gearing up for a new election (and years of squeezing and some fancy accounting after many years of Harper deficits give us a surplus once more), he has been dribbling out various populist policies like this one. They are all tax cuts (he is a Conservative, afterall) but ones that are very targeted. There is the increase of the child fitness tax credit (which I support in principle, but rather it wasn't a tax credit which is an inherently regressive move when one has a progressive tax system). There is the increase of the TFSA to $10,000 per year which I have opposed with qualifications here. And now we have the income splitting move. 

These are quite different than Harper's initial big tax moves which cut the GST (which I support as the GST being a flat tax is bad for the regressive/progressive system) and cutting corporate tax rates (which I oppose). Both of those are big moves. These are much more targeted. And they are targeted right at their upper middle class, largely white Conservative base. To someone making $100,000 a year with a stay at home wife, they can get taxed less by splitting their incomes, get tax savings when they save, get tax savings when they put their kids into hockey, and so forth. To the single parent struggling to make ends meet, none of these do anything. It is one demographic being helped and another (one much more in need of help) being ignored. And it is a demographic being helped that the Conservatives know will help them win elections. 

While I can see the motivation and the appeal, I don't believe this is being done because the Conservatives think it is the right thing to do. Even former Finance Minister Jim Flaherty infamously believes it is not the right thing to do. They are doing it because it is a good political move. 
Read more » "Income Splitting and Progressive Taxation"
Oct 29, 2014

Government's dominant role: redistributing wealth

The dominant effect of government on society is to redistribute wealth from the richer members of society to the poorer. One can support or oppose this idea, but as a simply descriptive point about what the effect of governments are, this is by far the dominant one. We live in a capitalist society that has a lot of forces which create inequality (which, again, one can support or oppose) and governments act as a partially countervailing measure, reducing the degree of inequality but hardly eliminating it.

There are two major sides: taxation and spending. From a taxation perspective the point is obvious; we have a progressive tax system that has a disproportionate share of government revenue coming from the wealth portion of the population. However, almost all major government spending programs also result in great equalizers. There are obvious things like social assistance programs for the poor, the elderly, the disabled and so forth. But everything from education and healthcare to minor aspects like government parks are predicated on a system that dispenses the value largely equally (everyone gets K-12 education regardless of income, everyone gets to enjoy government parks) despite being pair for rather unequally by the rich.

Healthcare: the great equalizer:
In a country like Canada, healthcare is one of the biggest equalizers of all. I have cancer (well had, it's all good now), which was unfortunate for me. I lost the lottery, if you will, and on this particular aspect of my life was less lucky than my noncancerous friends. However, despite being unlucky in this sense I was not put in any further financial inconvenience, and I only had to suffer through my surgeries and that was it. The excellent healthcare I received was, in effect, paid for by those who remain healthy and didn't need it yet are still taxed for it.

This is a good thing. If we had to choose a society under the veil of ignorance (ie we don't know what place we are going to have, such as whether we do or do not get cancer), we would want a society where the consequences are minimized when one is unlucky enough to get cancer. It smooths out the costs so that it is only the medical consequences, however daunting, and not added financial costs paying for healthcare, that affect an individual.

A point not always stated:
This point is fairly obvious, I think, but doesn't always get stated. It is perhaps one of those 'can't see the forest for all the trees' situations. In different ways, both the left and the right tend to downplay this basic reality.

People on the right tend to rail against the very idea of wealth retribution (Obama's infamous "spread the wealth" gaffe to Joe the Plumber is a prime example) despite offering only incremental tweaks to a system predicated on just that. Rhetoric from some parts of the left may give the idea that our government system is one that privileges the rich and the corporations on the backs of the common folks when in fact the government system is a massive distribution of wealth downwards.

An equalizer, but we are still unequal:
Despite the fact that we have this massive wealth distribution machine at the centre of our economy that taxes progressively more from wealthier people but spends either equally or more towards poorer people, our society is nonetheless still strikingly unequal. This is a function of having a capitalist society, as I will expand on more in a further post.

What the exact degree of inequality we ought to have is probably unknowable, there are certainly arguments that the status quo is still too unequal. On this blog I tend to argue that we should have more government action that results in reducing the level of inequality in our society. I advocate for a more progressive taxation system, a more robust social safety net, and stronger institutions that benefit wide swathes of the population, all of which works to reduce the degree of inequality in our society. One can agree or disagree on this normative point of what we ought to do, but I think the framing is nonetheless important. Those that advocate cutting of such programs and adding flat or regressive elements into the tax code should own the fact that they are reducing this equalizer and risking a more unequal society.

Unequal most where governments don't act:
Consider some of the most egregious places where inequality occurs, such as the contrast between the first and third world or the concentration of wealth in the top, say, 1000 people in the planet. It is in these most egregious examples where the great equalizer of government is either not present or isn't functioning meaningfully.

Take inequality between first and third world countries. Because governments largely operate at a national or smaller level, the act as equalizers within countries, but not between countries. Instead, the third world rely on only a small (often 1% or less of GNI) in charitable transfer from the first world. We don't have a global government structure that counteracts the global inequalities in the way that we have a national government structure that counteracts inequalities without our country.

For inequality at the very top, our progressive tax structures tend to max out in the hundreds of thousands in income. Indeed, there are various tricks whether capital gains taxes in the US or using offshore tax shelters and the like where the richest end up managing to game the system to pay an amount that ends up being rather far from progressive.

Social equality:
Governments have long had a role not just in this more economic transfer of wealth, but in various forms of social inequality. A lot of the inequality comes based on differences in race, gender, sexual orientation and the like. Before government action, society adopted structures that perpetuated this inequality. While it is perhaps minor in comparison to the big earlier wins in, say, the civil rights era, simple and obvious issues of equality today like marriage equality mean that gay people receive the same kind of equality that others do. 

In many ways inequality is one of the defining issue of our times. We can disagree on what we think is the best way to combat it, or to what degree it even needs to be combated. But to even start that conversation, we must understand how one of the biggest forces affecting the balance is the government. It is it's defining role.

Read more » "Government's dominant role: redistributing wealth"
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