Fears of Slippery Slopes Undermine the Debate

As policymakers and advisers thrash out policy options, the debate about the role of government is undercut by those who quickly jump to extreme cases–by those who argue that a policy that goes one more step in a certain direction will put society on a slippery slope to perdition. Granted, countries have engaged in death spirals of government involvement. Poor government intervention causes its own problems, which inspire calls for more intervention, and so on. Often only a crisis, such as a deep recession or manifestly poor performance over a long period compared to similar countries, can generate the political will to break the poor policy cycle.

Although an awareness of the dangers of such poor policies, including an awareness of the political difficulties of undoing policies that create their own political constituencies, is extremely important, it does little good to brand every proposal to increase the role of government as a step toward the slippery slope. Some are, but some are not.

An example of such a reaction is George Will’s op-ed in the Washington Post. here.  A few days before Will’s piece, Elizabeth Warren said that rich people do not achieve their wealth solely on their own merit, they have relied on society for security, for education for themselves and for the people they hire, for infrastructure, etc. Because the wealthy got so much more from society than the poor, she argued, effective federal income tax rates on high-income households should be increased. George Will agrees with the initial position, that the attainments of individuals are heavily influenced by society, but then he goes on to say that this does not “…entail a collectivist political agenda…” an agenda that is based on the idea that “…any individual’s achievements should be considered entirely derivative from society…” and that “…society is entitled to socialize–i.e. conscript–whatever portion it considers its share.”

Did Warren say that? She basically used one of the traditional “fairness” arguments for proportionately higher taxes on high-income families, and she was implying that the current federal income tax structure, which, by itself, levies extremely disproportionate taxes on high-incomes, is not disproportionate enough. This argument can be fleshed out by noting that although roughly the lowest 50 percent of households pay no federal income tax, they pay, compared to high-income households, a disproportionately large share of their income in payroll taxes.

Good arguments can be made against Warren’s proposal. One could point out that an increase in marginal tax rates on income distorts economic decisions and cause resources to be diverted away from their best uses (by encouraging even more people to spend time and money to avoid taxes instead of producing something, or discouraging work effort generally, or causing investment in plant and equipment to be influenced by tax law instead of estimates of the intrinsic merit). This would be a legitimate criticism of Warren’s proposal. Even under current law, a high-income household that lives in a jurisdiction that has high local marginal tax rates, such as New York, may have a marginal income tax rate close to 50 percent. Is that too high? Will that cause costly distortions?

But Will does not hone the debate by bringing up such issues. Instead, he uses Warren’s statement to remind readers that her argument, if carried to extremes, can be destructive. He brings in arguments not directly related to the proposal, but which instead are directed against a caricature of a socialist, which, I guess, he thinks she must be. He argues that people who use the fairness argument to raise taxes on the rich exemplify those who distrust the individual’s ability or willingness to do what is best for themselves, and that people use this argument to justify massive government involvement in the lives of its citizens. Will certainly agrees that there is a proper role for government, but he feels it is necessary to raise a warning that Warren’s argument can lead us down a slippery slope.

But do such warnings help? Do they help us determine which policies are good, or how policies should be designed? Will says that government keeps society strong by facilitating voluntary “…cooperation with roads, schools, police, etc.–and by getting out of the way. This is a sensible, dynamic, prosperous society’s ‘underlying social contract’”.

Sounds good, but what is in the “etc.?” How should government provide roads and schools? How should it raise revenue? Productive discussions of the role of governments focus on those specifics, on analyses that provide anchors for the design of good policies, not in repeated scaremongering of slippery slopes.

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