Fair Enough? Support for Redistribution in the Age of Inequality
The public’s reaction to rising inequality in countries like the U.S. or G.B. has perplexed many. Commentators find it surprisingly muted and ponder why support for redistributive policies has not increased. Following President Trump’s election and Brexit, other pundits worry that the public’s reaction is forceful, but misguided. According to this account, immigrants and racial minorities have become easy scapegoats for voters left behind by globalization and technological change. Fair Enough? seeks to advances our understanding of the public’s multifaceted response to rising inequality.
Mass attitudes toward redistributive social policies, I argue, are shaped by at least two motives: self-interest and fairness reasoning. On the one hand, people support (oppose) policies that, if implemented, would increase (decrease) their own expected income. On the other hand, people also support (oppose) policies that, if implemented, would move the status quo closer to (further from) what is prescribed by shared norms of fairness. Whether an outcome is perceived as fair depends on how well it fits the norms of reciprocity and proportionality. The reciprocity norm applies to resource pooling through social insurance and requires that cooperative behavior be rewarded more than uncooperative behavior. The proportionality norm applies to the marketplace and prescribes that rewards be proportional to effort. Because people hold different empirical beliefs regarding the fairness of the status quo, they also disagree over which policies to support or oppose. Given that beliefs about the fairness of the status quo are often disconnected from an individual’s own position in the income distribution, fairness reasoning only incidentally produces the types of policy preferences political economists might otherwise expect. Only when policies are high stakes will individuals consider the benefits of deviating from what is fair. Combined and studied “in context” (e.g elite discourse, social policy and even survey design), self-interest and fairness reasoning help explain the mismatch between expectations and existing evidence.
Given this simple model, should we expect an increase in support for redistribution in reaction to a rise in income inequality? I identify two factors that hinder any thermostatic reaction from the public. One factor is fairness reasoning itself. Fairness reasoning, I show, is two faceted and only one of these two facets has strong egalitarian implications. In many high-inequality countries, fairness reasoning, as shaped by elite rhetoric and, to a smaller extent immigration shocks, has mostly depressed support for egalitarian solutions to growing income inequality. In addition, political elites face limited incentives to try to reverse this trend by increasing the relative salience of the more egalitarian facet of fairness reasoning. The other factor is fiscal pressure on existing social programs, which can result in a slow erosion of what I call institutionalized social solidarity.