Gordon Tullock on Inequality and Redistribution.

AuthorHolcombe, Randall G.
PositionCritical essay

Gordon Tullock states that there are three motives for income transfers: "the desire to receive transfers, charity, and envy" (1997, 6). The motive behind the vast majority of government redistribution, he argues, is the desire to receive transfers. He notes that although most people think of redistribution as transferring money from rich to poor, that type of transfer is "a comparatively small phenomenon if we compare redistribution to the other transfers that modern government makes, not to the poor but to people who are politically well-organized" (1997, 1). Reiterating, Tullock says, "There is no doubt that most modern states do engage to some extent in helping the poor, the classical moral objective of income redistribution, but there is also no doubt that this is a relatively small part of a total government program of income redistribution" (1997, 2). After citing some figures from the federal budget in the United States, he points out, "The poor do indeed receive substantial amounts of money in the United States, but nowhere near the total amount transferred. The bulk of the transfer goes to the politically influential and well organized" (1997, 3). In short, the charity and envy motives are insignificant when compared to the motive that organized interests act on to receive government transfers for themselves.

Tullock dismisses envy as a significant motive for redistribution, saying, "Although envy is undeniably a real motive for redistribution, it is, in my opinion, a rather minor one. It affects primarily transfers away from the wealthy, which, in turn, are a small part of total income redistribution. The major motive for the redistribution of income and wealth in the United States is almost certainly that recipients want to receive it. The second motive is the desire to help various people, primarily the poor (i.e., charity). Envy is, I am sure, a poor third in this trio" (1997, 6).

Any contemporary discussion of the broad topic of income redistribution would undoubtedly cite the goal of equality as a major motive for redistribution. Tullock does not use the word equality, instead substituting envy, which is not quite the same as a preference for equality. In sum, Tullock sees the efforts of organized interest groups to obtain transfers for themselves as the primary motive for redistribution, with charity and envy as additional motives that have a minimal impact on actual government redistribution policy.

The academic literature on redistribution places a heavy emphasis on equality, so one thing to consider in evaluating Tullock's analysis is whether his sidestepping of the goal of equality lessens the relevance of his analysis. Even if Tullock is correct to conclude that redistribution mostly takes place toward politically well-organized interest groups--he provides good evidence that this is the case (Tullock 1997)--a good academic analysis must address the academic arguments that emphasize the goal of equality. Inequality has been a major element in the academic literature on redistribution since the early days of capitalism. Thus, in an analysis of the contemporary relevance of Tullock's views on redistribution, one angle is to see what implications these views have for the frequently championed goal of producing greater equality.

As one of the founders of the subdiscipline of public choice--the application of economic analysis to explain political phenomena--Tullock rests his approach to redistribution solidly on a public-choice foundation. Another key idea from Tullock, again resting on a firm public-choice foundation, is that because in democratic elections one vote has a very small probability of affecting the outcome of any election, people will vote for outcomes they would not choose if the choice were theirs alone. If this theory is applied to redistribution, it means that people will vote for redistribution programs that they would veto if they had the power to do so. This aspect of democratic decision making facilitates charitable redistribution because people can feel good about casting a charitable vote that costs the voter nothing. This paper applies Gordon Tullock's ideas to analyze redistribution and inequality and to evaluate some contemporary ideas in public policy toward inequality.

Other Justifications for Redistribution

Tullock does discuss other possible justifications for redistribution, which he characterizes as justifications rather than motives because they provide some academic arguments that support redistribution, but he argues that few people would engage in the political process to pursue redistribution based on these justifications (1997, 7-16). Note that Tullock explicitly designates the desire to receive transfers, charity, and envy as motives for redistribution. Justifications are not motives. He considers the goal of maximizing total utility, the goal of maximizing the well-being of the least well-off person in a society, and the possibility that some people get more than they deserve, which produces a fairness argument for redistribution. He also notes that redistribution sometimes occurs as an unintended by-product of government programs, but this clearly is not a motive for redistribution, even though some redistribution is the result.

The utilitarian justification for redistribution goes back at least to Jeremy Bentham and was advocated by John Stuart Mill, but Tullock credits Abba Lerner (1944) as well as William Breit and William P. Culbertson (1970) for putting forward carefully developed expositions of this justification. The idea rests on the assumption that people have a declining marginal utility of income and that interpersonal utility comparisons can be made, pointing toward the conclusion that in the taking of a dollar from a rich person and the giving of it to a poor person, the poor person will gain more utility than the rich person loses. Tullock criticizes this justification on several grounds but notes two things about it: first, it is an argument supporting the goal of greater income equality, and, second, it is a justification for redistribution, not a motive that people actually act on to alter government redistribution policies.

The poor never advocate receiving income transfers for the reason that they would enjoy spending the money more than the rich from whom the money is transferred. Similarly, the rich never make that argument either, although private charity toward the needy is heavily driven by the idea that the money can provide a greater benefit to the recipient than the cost imposed on the donor.

Tullock also looks at the justification by John Rawls (1971) that income should be redistributed to maximize the well-being of the least well-off person in a society. Tullock finds fault with Rawls's argument in part because its implications for redistribution are ambiguous, but again note that Rawls's argument is a justification for redistribution, not a motive. People do not imagine themselves behind a veil of ignorance when they contemplate public policies they support. Tullock argues that they know their interests and support policies that further those interests.

Tullock considers other justifications as well, including the idea that people with high incomes do not deserve them. This justification does line up closely with one of Tullock's motives for redistribution: envy. Even if there is some truth to the claim that some people do not deserve the incomes they receive, it appears that by itself this claim offers a minimal motive beyond envy to redistribute undeserved income. Lottery winners would appear to be obvious recipients of undeserved income, yet governments run their own lotteries, which transfer undeserved income from most lottery players to lucky winners. It is not at all obvious that government policy is designed to redistribute undeserved income or why it should be designed to do so. But the larger point is that this is a justification for redistribution, not a motive that lies behind actual government redistribution programs. (1) Among the many reasons people have offered to oppose government lotteries, the fact that winners do not deserve their winnings is rarely one of them.

The point of this section is to add some context and support to Tullock's claim that the three motives for redistribution are the desire to receive transfers, charity, and envy. Tullock recognizes that there are other justifications for redistribution but doubts that they serve as motives behind actual public policy. Further, he believes that charity and envy are minor factors when compared to the desire of well-connected interest groups to receive transfers. So if we look at actual government redistribution, the main driver of actual government policies is the political activity of interest groups that have sufficient political clout to design those policies for their benefit.

More on Charity and Inequality

Tullock's writing on redistribution and inequality contrasts sharply with most writing on the subject because of his public-choice orientation and his well-supported view that actual redistribution by government is primarily the result of interest groups using the political process to have resources transferred their way. In contrast, most economists analyze redistribution with an eye toward the goals of inequality and helping out those who are least well off. Tullock does not consider these goals in much detail because, as noted earlier, he views them primarily as justifications rather than as motives and is interested in analyzing actual government redistribution, not how redistribution might be designed if people were actually to act on those justifications.

Tullock says, "The standard explanation for income redistribution is a desire to help the poor and downtrodden" (1970, 248). But he also notes, "The motives for income transfer, then, are more complicated than simply aiding the poor.... [M]ost people are willing to...

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