Public programs for the prosperous

Just as the private economy has a thriving luxury-goods sector, governments should pay attention to things that rich folks like and that only governments can provide.

There’s been lots of discussion so far this campaign about the distribution of the tax burden as between the rich and the rest of us. (Not enough discussion, I’d say, about the distribution between the merely prosperous and the 90-something percent of the population below them on the income scale.)

But that’s only half the discussion about the distributional side of taxation and spending. How should the benefits of public programs be allocated among the income classes?

Now, if you’re a good liberal, as I often am, your immediate response will be, “As much as possible to the poor, who need it most, as little as possible to the rich, who need it least.” I want to argue that our common impulse is analytically wrong.

It’s right about cash transfers, of course, or their equivalents in policies that monkey with relative prices. But what about programs that actually produce goods, services, and amenities? There the question gets more complicated.

Rich people are willing to pay a lot for what they want; that’s why the luxury-goods trade can live nicely off such a tiny demographic slice. But that’s no less true when it comes to publicly-provided stuff; a rich person may not enjoy clean air or quiet or high-quality television programming any more than a normal person, but his willingness-to-pay is much higher, simply because the opportunity cost of a dollar is lower when you already have a bunch of them. Here’s one way to think of it: there are undoubtedly public goods that rich and prosperous people enjoy enough so that they would support providing them even if those programs were supported by a special tax on the well-off. And the question whether to impose that rich-guy tax to fund a bunch of rich-guy programs is logically distinct from the question of how much to tax the well-off for programs that help the not-so-well-off.

Candidate programs might include: saving endangered species, high culture including both pure science and the arts and the educational enterprises that support them, health (and especially longevity) research, public buildings that don’t look as if they were built by the low bidder, noise reduction, air quality (both for health and for visibility), wilderness preservation, space exploration, and economic aid to poor countries. I say “might” because, as far as I know, there’s very little attention paid to figuring out what rich people really want that only the government can provide. That leads to inefficiency at best and to Republicanism at worst.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: