What is the difference between distribution and redistribution

The baseline distribution can also be specified synchronically, by comparing the prevailing distribution to a distribution that would have held had different circumstances obtained. Since circumstance could have differed in many ways, judging whether redistribution in this sense has occurred will require identifying a more specific subjunctive baseline situation that can serve as the basis for these assessments.

With respect to the question of whether the redistribution of income occurred in the U. Let us first examine the subjunctively defined baselines 1 - 3. Determining whether redistribution occurred relative to each of these baselines can be extremely difficult in practice, since the counterfactuals upon which they depend are quite complex.

This is not always adequately recognized. It is sometimes assumed, for example, that baseline 2 is identical to the pattern of gross pre-tax incomes, so that difference between gross and net income will count as redistributed income according to it. But this is mistaken.

The presence or absence of income tax will itself substantially influence many market outcomes, including the availability of economic opportunities to persons with different sets of skills and personal characteristics, and the gross incomes that can be earned in different jobs.

Had no income tax been in place, altogether different jobs and economic opportunities would most likely have existed, and gross incomes would most likely have been very different. This is because there is no obvious way of determining how much some individual has contributed to production.

In cases of interdependent production, things become even more difficult, since there is usually no non-arbitrary way of determining the contributions of different factors of production for example, labor, capital, raw materials, so-called public goods, and so on that jointly lead to total output.

But this, too, is mistaken. First, in conditions where there are increasing or decreasing returns to scale, not everyone will be able to receive what they contribute.

Where there are increasing returns to scale, for example, it will be impossible for people to receive what they contribute at the margins since the marginal return is greater than the average. Second, while assessments of the marginal productivity of different inputs can be useful for deciding how to use additional resources so as to maximize profit, they do not show how much each resource has produced as a proportion of the total output. Putting aside the manifest difficulties involved in characterizing the pattern of holdings that would obtain in these subjunctive baselines, would the fact that redistribution has occurred relative to any of them count for or against them as such?

Similarly, that a pattern of holdings differs from the pattern that would have obtained in the absence of any taxation would not in itself seem to give us reason to look upon the pattern of holdings that obtain with the tax positively or negatively. For although few would insist that all should receive exactly what they contributed to production, or that valuable social goals ought never to be pursued when they require that some receive more or less than what they contributed, many might feel that an economic system in which people regularly receive much less than what they contribute to production would be unjust.

But granting basic moral significance to the set of holdings that would have obtained had all received what they contributed to production is less plausible than it may initially appear. If, for example, a society allowed educational opportunities for technical training only to members of certain ethnic groups, or if poorly designed education system puts these opportunities out of reach for the vast majority of people, then the fact that those who received such training might then be able to contribute more to production would not seem to entitle them to proportionally higher incomes.

Second, the contribution of some person to total output will depend not only on the value of their labor, but also on the value of the resources that they own. And the claim that owners of resources should receive the marginal contribution of their resources to production is especially problematic: The existing distribution of such resources is tainted by its historical evolution. As Sen , p. Discussions of redistribution have often focused on the permissibility of levying taxes.

And it may therefore be tempting simply to identify the baseline with pretax income. Not all taxes, however, are generally considered redistributive. Benefit taxes are typically understood Biehl , Cappelen as user charges: taxes that are paid to cover the costs of the use of public and private goods, services, and enabling social conditions for example, security, the legal system, social cohesion, public health that are secured by the government or taxing authority.

These taxes are, in effect, user charges. Determining whether tax-and-transfer has occurred requires identifying 1 the extent of the benefits enjoyed by different people within a social system or the costs that they have imposed on others ; 2 the costs of providing these benefits or averting imposed costs; and 3 the contribution of each person to the provision of social benefits and compensation for costs imposed.

Redistributive tax-and-transfer occurs whenever people have paid taxes that are above and beyond what is required to cover the costs of the public benefits that they have received and the costs they have imposed on others.

Sometimes the baseline that is invoked in claims that redistributive policies are undertaken is the set of holdings that would have obtained had they received that to which they were entitled.

Redistribution, then, is understood as the transfer of holdings that infringes property rights. In this sense, of course, resources could be re distributed from taxpayers to recipients without the taxpayers ever having these resources in their physical possession at all.

Though people normally get a paycheck for their net income, and thus never have access to their gross income, they do, according to some, have a claim to their gross income, and thus the difference between gross and net income represents the transfer of holdings to which they were entitled.

Determinations of whether rights infringing transfers have occurred will clearly depend upon an account of the nature and scope of property rights. This requires specifying 1 who has the right; 2 what the right is a right to the object of the right ; and 3 the kinds of obligations that others have to the right-holder as a result of the right.

Most seem to agree that it would. Nozick , p. Thomas Scanlon , p. But the fact that there is such a continuum is no reason why we must be indifferent between any two points along it. The latter is a much less brutal assault upon the person.

Both sides of this debate err, however, by simply assuming that welfare and other social programs are redistributive in either of these senses. It is often claimed, for example, that welfare and other social programs are clear examples of tax-and-transfer, because such programs are usually funded by revenues that are raised from those who will seldom, if ever, make use of them. But this assumes an overly narrow understanding of how people can benefit from such programs.

In particular, it overlooks the indirect benefits that these programs provide to those who fund them. Suppose, however, that those who pay taxes that support a social minimum can insulate themselves from the risks of crime, or are unaffected by the other social benefits engendered by these programs.

Would this show that the taxes that they pay to support these programs are redistributive? Perhaps, but it could also be plausibly claimed that insofar as they do not support such programs, their remaining taxes help to support a set of institutional arrangements that harm those that suffer from significant deprivations.

Take, for example a social system that features a market economy whose structure tends to produce significant inequality and poverty.

Under this system, many lack — through no fault of their own — access to basic educational opportunities, health care, and the foodstuffs required for them to meet their minimal nutritional needs. Some would argue that insofar as those who are extremely badly-off are not compensated or efforts are not made to provide them with enhanced opportunities, they are harmed by the social system.

Those who support the social system by paying taxes, complying with its rules, and through other means are thus harming, rather than merely failing to benefit, less advantaged participants. Taxes that ensure that persons can meet their basic human needs may therefore need to be added to the economic system lest its imposition constitute a harming of the poor Pogge These theorists call for corrective action to offset what he regards as the cost of policy shifts that have worked to the benefit of the very wealthy while undermining the position of the disadvantaged, for instance by reducing their organizing rights.

In this context, tax and transfer could be seen as compensating for regressive changes in the predistribution of rights which would otherwise harm disadvantaged people. A tax on these transactions is not, according to this view, redistributive, since its purpose is to correct for and minimize harms that these markets can engender if left unregulated.

Similar claims have been made on behalf of resource extraction, fuel, carbon, and even global income taxes. The policy proposals mentioned above are quite controversial. They suggest, however, that the very concept of benefit and compensatory taxation is a rather complex idea, presupposing a baseline against which specific policies and institutional arrangements can be seen to benefit or harm persons.

Different baselines will yield different verdicts about these arrangements. The authority may be a single individual, e. The central authority may not be interested in accumulating wealth for themselves, but use the distribution of goods and services to create interdependence among the parties involved.

The Big Men of Highland Papua New Guinea redistribute goods they have accumulated to create and maintain alliances in an area where conflict with other groups occur relatively frequently.

In industrial societies, progressive income taxes are an example of redistribution—taxes are collected from individuals dependent on their personal income and then that money is distributed to other members of society through various government programs. Charitable donations function similarly.

Dancers in ceremonial dress at a Tlingit potlatch, Klukwan, Alaska, October 15, The potlatch is a specialized form of redistribution that was common among native cultures of the Pacific Northwest. Native tribes living in the coastal areas of what is now known as Oregon, Washington, British Columbia, and southern Alaska created a competitive system involving elaborate feasting and gift giving that was used to increase status of the giver.

The giver often took years to accumulate all of the goods necessary for the potlatch. Statuses were easily determined by who received the most goods. An element of negative reciprocity was involved in the potlatch as it created an expectation that in the future, receivers would give back to the giver more than they received. While that suggests that the potlatch impoverished families, the relative continual redistribution of goods throughout the society ensured that people were taken care of; the potlatch created interdependence among members of the society.

Francisconi, Michael Joseph. James Birx, Skip to main content. Chapter 7: Economic Organization. Search for:. Your current browser may not support copying via this button. Search within book. Subscriber sign in You could not be signed in, please check and try again. Username Please enter your Username. Password Please enter your Password. Forgot password? You could not be signed in, please check and try again.

Sign in with your library card Please enter your library card number. References Index. Distribution and Redistribution Distribution and Redistribution Chapter: p.

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