Widening my purview

Is that spelled right?

I want to add additional subjects to this, since I only write about dating when I don't like it!

So, here's my latest rant... anyone who knows anything about what I'm talking about will think I have no idea what I'm talking about in terms of "veil of ignorance":

The veil of ignorance/original position as applied to taxes and (more broadly) social justice. What is the appropriate level of taxes? Who knows? Is it 30%? Again, who knows? The fact is that if you just ask people if they should pay more or less, of course they say they should pay less. Why wouldn’t they? If you ask someone if they think $1.00 is a fair price for a can of soda, they may say yes. But they are more likely to say yes if the price is $.85, right? If someone offers you a bottle of wine for $10, your decision will be influenced by what you are getting. “Two Buck Chuck” is clearly not worth it. A bottle of 1989 Petrus clearly is. But as we get closer to which wines you’d pay $10 for, at some point, you’d have to consider how much money you have. The Chateau Petrus is worth thousands of dollars. And some people really think that’s worth it—but they have thousands to spare. Other people consider the $10 wine a splurge, perhaps because they have less to spare. If you’re loaded, you’d think that spending $1,000 on a bottle of wine every night is ok. If you’re slightly less loaded, you might splurge on a $1,000 bottle, and on down the scale. Since there are people all up and down the income scale, it makes sense for there to be wines that meet different folks’ budgets—just like there are cars, houses, chocolates, hotels, breads, coffees, etc etc.

So think, if you don’t know how much money you have, would you want every bottle of wine to be priced at $1,000? $100? $10? Yeah, I don’t know, either. My answer is, I want a spread. That’s a veil of ignorance applied to wine quality and wine prices--even if it's not the best possible solution, it's the least bad solution at every income level.

My theory is that we look at taxes backwards. Again, if I ask if you’d rather pay $1 or $.85 for a soda, you’d say $.85—all other things being equal. And that’s the way we’ve been thinking about taxes. Things aren’t equal, though. If I told you that $1 bought you a nice, cold Coke, but the $.85 bought you a warm generic cola, most of us would choose the $1 Coke.

Or, to look at it another way, imagine we start with $.50 for unsanitary tap water. Making it safe costs $.15. Fair? Of course. Sweetened, and with cola flavor, another $.15. Carbonated, $.05. So we’re up to $.85, no questions. But that’s for a warm, generic soda. Based on sales, Coke is clearly worth it to the vast majority of consumers, despite the “extra” $.15 in the cost. Throw in the chill, it’s a no brainer. And that’s how we should think about taxes. There are services that everyone—almost everyone—thinks are clearly worth it. But for some reason we’re starting with the price, not the services.

To draw out the analogy, some of us would be willing to pay $.01 for lime flavor, and another $.01 to ensure that it comes in a glass with ice, and so on. Those may be luxuries, or not. And that’s the only place that a discussion of numbers—of tax rates—should occur, discussion which services are “worth it” to the consumers of those services, the taxpayers.

When we start at a certain level, it always makes sense to reduced taxes. But if we start at zero—no services, no government, and create government services from scratch, like a menu, we might come to a very different conclusion about our tax burden.

So, at zero, we’re in a Hobbesian world—life is cheap, but it’s also nasty, brutish, and short. There are no police. Everyone hiring their own guards is too expensive—so we all agree to throw in, say, 1% of our income for taxes. No roads for the police to get to your house? Another 1%. Schools for your kids, 1%. Someone to protect our borders, at a minimum level that would please even the most ardent pacifist, another 1%. Making sure our food and water is safe, another 2%. And so on.

How about .01% to make sure everyone has health care? And another .01% for maintaining a minimal level of childcare so poor, two-income families can ensure that their children are being cared for and educated and mentored? We still don’t have a total. The question is, do we need one yet? The Republicans among us seem to argue that we do, that deciding whether to do anything requires knowing the total. But, what I am arguing, is that (setting aside the questions of government efficiency and private provision of certain services that a government could provide) as long as we’re still “adding value” by paying for additional services, services that reduce our costs of being safe, fulfilled, and happy, why shouldn’t we? At some point, we’re paying too much, and then the government has to buy everything for us in return. At some point, no private enterprise or spending hurts the economy. And, at some extreme point, there is no more money to be spent.

But we’re not there yet. How do I know? Because, given a “veil of ignorance” none of us would select a tax/government/economic system that didn’t ensure that everyone could be healthy and happy. So if the government comes to me and says, for an extra .01%, I can ensure that all children, regardless of their own incomes, will have health insurance, I will say yes. Would you? I have insurance, and if I had children, my employer would cover them as well. But I’d pay it. Maybe I wouldn’t at 5% of my income, but it wouldn’t be. Any rational, moral person should see that the marginal .01% is worth it at every level—it’s certainly a moral imperative to provide effective health care to everyone who needs it; it saves money in the long run, as preventative care prevents long-term costs of emergency healthcare later; healthy children grow up to be productive, tax-paying members of society, and so on.

So, when we cut taxes, what are we cutting? And when someone argues that a given service would increase taxes, so what? There is no divinely-established level of taxes. It’s an accident of history that we didn’t select a different “menu” of services from our government before today. (and, as an aside, if we keep cutting taxes, where does it stop? If cutting taxes is, by definition, good, and we cut taxes now, why shouldn’t we cut more taxes later? And then where does that stop? Back at nasty, brutish and short.) If the US had, say, a system of privately funded schools that covered 80% of children, and it was proposed that we create a public school system, would you argue against that, just because it would raise taxes? Because it would. But, imagine that world, though, where the members of the "church of tax cuts", arguing that taxes would go up, and therefore it’s a bad idea? Since when is paying for a valuable service bad?

Finally, there is the question of how much we should pay to cover others. Again, before the veil of ignorance is applied, we know there will be haves and have nots. How much extra would you pay as a potential “have” to ensure that you would receive basic services and protections as a “have not?” I’m not going to argue a specific level, but I know that I am not unusual in believing that I’d pay something. I know that I’d want health care, police, schools, roads, no matter how much I’d have. In other words, I know that if I’m going to get a random can of soda, I want it to be at least the $.75 generic cola. We probably can’t afford to give everyone a Coke in a tall, cold glass with lime, ice, and a straw. But I know I don’t want to take the chance on the rusty tap water. Would you?

An additional problem, of course, is when the government tries to do too much—give us a straw—when it can’t afford it. That’s called a deficit. We have one.