A paper published a few years ago in the American Economic Journal has raised eyebrows within and outside of the profession. Combining national accounts data with household surveys, its authors found that the United States redistributed a greater share of its gross domestic product through taxes and transfers to its poor than any of its wealthy, mostly Western European, peers.
As it turns out, the “inequality gap” between the United States and Europe is not explicable by the comparative generosity of the latter’s welfare states, which are in fact funded by more regressive systems of indirect taxation. Rather the key to Europe’s relatively higher levels of equality is a more egalitarian distribution of pretax market incomes.
This will almost certainly come as a shock to most American socialists. Hasn’t the case for economic populism in this country hung on the supposed stinginess of America’s welfare provision, to which social democratic Europe serves as a ready-made contrast? However, what the apparently counterintuitive finding reveals instead is socialists’ rhetorical elision of two conceptually separate methods for addressing economic inequality: redistribution and predistribution. The distinction between the two, which has quietly emerged as a growing area of social scientific and even ethical research, matters a great deal more than the mere change of prefix would suggest.
What do the “pre” and “post” refer to? At any given point in time, we can represent a market economy as a set of agents and their relatively scarce…
Auteur: Virgilio Urbina Lazardi
