Sunday, October 5, 2014

Choosing between redistribution and multiculturalism

Just as Milton Friedman said "It's just obvious you can't have free immigration and a welfare state." You can have a generous welfare society or an expansive immigration policy but you can't have both without bankrupting the system. I wonder if there is another more current formulation.
You can have a multicultural society or you can have a redistributive society but you can't have both.
With generous redistribution you are taking from some and giving to others which cultivates zero-sum competition, regulatory capture and rent seeking, all of which are substantially detrimental to civic and economic well-being. It also creates a significant potential for corruption.

It seem to me that we are seeing some of the acerbity of that right now. We have multiple advocacy groups such as feminists, diversity advocates, LGBT advocates, all of whom appear to be cultivating a personae of victimhood (which is problematic in itself) in order to fostering the cult of group identity by race or gender or orientation.

My thought process while walking this morning is something like the following.
Most people necessary to the continuity of a society (those that are self-supporting, productive, and have children) seek to generate sufficient surplus from their productivity to ensure the well-being of themselves and their children.

They invest in their children in a multitude of ways but usually towards the end of increasing the odds of their children being productive in the future.

Because there is high variability in both the effectiveness of parenting and high variability in childhood development, there are highly variable outcomes. However, high investment parents tend to have high productivity children.

When you tax the productive to redistribute to the unproductive, in terms of families, you are effectively reducing the degree to which productive parents can invest in their child's future success in order to subsidize others who are less willing or less able to make such investments.

When you have a relatively homogenous population, this may foster class resentment, but may still be acceptable as the price to pay for collective self-insurance and advancement.

Where there is a multicultural society and those different cultures foster different time discounts, disparate perceived parental obligations, varied acceptance of behaviors and values that foster productivity, then by redistributing income, you are explicitly subsidizing one group's low productivity at the expense of the well-being and future success of high productivity groups.
This is not a race issue, this is explicitly a disparate culture issue brought to mind by Megan McArdle's article yesterday, Coming to Your Town: Change.

In a multicultural society with a major redistributive policy (60% of the Federal budget) you cannot fail to be seen to be subsidizing some groups at the expense of others in a zero sum game. We have managed to mask this trade-off for years by increasing the national debt. At some point though, you run out the credit line and have to make the trade-off decisions. At that point you are then essentially casting all groups into a zero-sum battle with one another which is not a desirable outcome.

It seems to me that you can either reduce the multiculturalism or you can reduce the redistributive policy or both. What you can't do is nothing.

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