Redistribution of Wealth in America

By Uwe E. Reinhardt
The New York Times, September 28, 2012

A recent article in The Washington Post and an audio clip accompanying it on the Web featured an excerpt from a speech in 1998 by Barack Obama, then an Illinois state senator, at Loyola University Chicago.

In that speech he remarked, “I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.”

The article then quotes Mitt Romney: “I know there are some who believe that if you simply take from some and give to others then we’ll all be better off. It’s known as redistribution. It’s never been a characteristic of America.”


Aside from hard-core libertarians, who view the sanctity of justly begotten private property as the overarching social value and any form of coerced redistribution as unjust, how many Americans on the left and right of the political spectrum would disagree with Mr. Obama’s very general and cautiously phrased statement?

In fact, I wonder whether even Governor Romney actually disagrees with that general statement, aside from some dispute over “the certain level” at which redistribution takes place. After all, he has promised elderly voters to protect the highly redistributive Medicare program, which would remain highly redistributive, or become more so, under proposals by his running mate, Representative Paul D. Ryan, for restructuring Medicare.

The fact is that redistributive government policy — mainly through benefits-in-kind programs, agricultural policy and the like — has been very much a characteristic of American life, just as it has been in every economically developed nation, albeit at different levels.

At issue between the two political camps in this election season, then, is not redistribution per se, which is as American as apple pie. Rather, at issue is the “certain level” to which that redistribution is to be pushed. An honest and thoughtful debate on that would certainly be useful at this time. It would be useful at any time.

To be respectful to voters, such a debate should proceed at a level concrete enough to allow voters — or at least researchers and news organizations — to estimate fairly precisely how different families would fare under the different visions of that “certain level.”

It is the minimum voters ought to expect from political candidates.

Comment originally published on the New York Times Economix blog.

Even though Mitt Romney derides redistribution, he too actually supports it. “Romneycare” was prompted by an opportunity to use a larger share of federal Medicaid funds if they could design a program that would comply with federal requirements. Although Medicaid is a program with redistribution to the poor, in this instance it was also a redistribution to Massachusetts from the taxpayers of all other states, since Massachusetts would have had to forgo the funds had they not acted.

Romney is now taking pride in that transfer, but at the same time he rejects “Obamacare,” even though it is a program which ensures a similar redistribution as he supported in Massachusetts, but with a greater degree of fairness in the redistribution between states.

We could dismiss this as the silliness typical of electoral politics, except that the politicians carry through with policy once they are in control. That has consequences. We have the most expensive health care system of all nations, yet also one of the most inequitable, partly because of our failure to adopt policies that would ensure the fairest redistribution through an efficient health care financing system.

The most efficient system that eventually would receive the support of the majority of U.S. citizens would be an improved Medicare program that served everyone. That would be the right way to redistribute our wealth to the benefit of our health, if only we citizens had the political wisdom to demand it.