In keeping with recent posts about egalitarianism, I wanted to revive an old Demos article Matt Bruenig wrote years ago. While all his work from that site has unfortunately been long removed, I dug through the Wayback Machine and painstakingly yet fortunately found the exact article.
I love me some welfare and never bore talking of it, but a truly egalitarian approach must be all encompassing with regards to other socialist objectives that include unionization, taxation reforms, etc. Indeed, that was the point of Matt’s article as the welfare state encompasses what we’ve called before transfer income, income that isn’t derived from the market but via welfare benefits since children, the disabled, the elderly and so forth don’t and can’t work. Before delving in, below is a recreation of his chart that further includes the types of policies in each particular income bucket (click on the picture if too small to read):
Basically, we start with all the income in a given polity, the national income. Immediately, we can separate market income from transfer income as alluded to. Market income makes up both labor and capital income, the former received actively through workers, farmers, the self-employed laboring and the latter passively through owners of capital – rents, dividends, interest, profits, etc. While capital is highly concentrated and varies widely within its own context, labor income generally falls on a distribution from low to high earners – e.g. the janitor, the teacher, and then the engineer.
Going back to the first row, the main theme is simple – knocking market income down through higher taxes, a portion of which is then paid into greater welfare benefits (plans for a solid welfare state can be found here). Under market income, we deal with greater policies that affect the wider economy. For labor, we want to relatively increase against capital income via full employment and unions, particularly through sectoral bargaining that extends collective bargaining agreements across whole swaths of the economy. Within labor income, we want to compress the income distribution for, again, egalitarian purposes through lifting the wage floor through minimum wages and unions for low-to-middle earners while tamping down on high earners through jacking up the top tax rates.
Finally, returning to capital income, we deal with the most controversial yet game-changing policies, specifically social wealth funds gradually socializing stocks and bonds around markets to effectively socialize the economy. Capital taxes are then useful to suck up the remainder of capital flows such as land value taxes to take up rents, steep inheritance taxes, and wealth taxes to further limit the top echelons of society and guarantee genuine equality of opportunity.
As a supplement since we’ve mentioned welfare, I did incorporate the blue box off to the right. The welfare benefit examples under transfer income are only or mainly cash benefits hence this all falling under income. Since not all welfare is cash though, I included this box to give honorary mention to indispensable universal services (in-kind benefits) that contribute to the egalitarian project – universal healthcare, education, childcare, and social care are the most notable here.
And that’s pretty much it – taxes, unions, wealth funds, and the welfare state.
The Market Socialist 