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has no clear answer, but the economic well-being of loggers will likely
be enhanced.
The post-9/11 emphasis on security also provides a good exam-
ple of market conditioning, and homeland security initiatives have
The Distributional Force of Government 47
already provided a boon to security firms and industries providing
security-related goods and services. Entirely new companies have
sprung up marketing new technologies to increase homeland security.
Small companies have increased revenue by marketing products to law
enforcement. Salient Stills , which is a video-enhancement provider,
began as a spin-off from the Massachusetts Institute of Technology
Media Lab marketing its VideoFOCUS product to media outlets seek-
ing to enhance images for publication. The company currently markets
its product as a tool for law enforcement, security, military, and intelli-
gence, significantly expanding its market beyond media providers such
as newspapers and internet sites. Of course the new focus on security
has spawned millions of dollars in new contracts for traditional defense
contractors as well.
Social Policy
Social policies also produce outcomes that diverge from those of a
hypothetical free market. Though the regulation of abortion is not
often discussed in distributional terms, it is likely a mistake to remove
distributional issues from the discussion completely. Abortion policy
has no explicitly redistributive component (except to the extent that
governments provide funding for abortions to low-income women,
which does not happen in the United States at the national level). But
it is not void of potential distributional consequences.
The availability of abortion may well have an equalizing influence
in the economic realm. A pregnancy is full of economic implications. It
certainly increases medical expenses in the short term and in the long
term if the fetus is brought to term and remains with the mother after
birth. But expenses are not of any concern when the emphasis is on
income inequality. A pregnancy has income implications as well. In the
short term, giving birth almost always requires time away from work.
In the long term, again if the fetus is brought to term and raised by the
parent(s), having a child forces some into difficult economic choices.
How many hours can I work and still be a good parent? How much
time can I reasonably expect to take off from work to deal with child
care, doctors visits, and other aspects of raising a child? The stakes of
these questions become particularly important for those at the bottom
of the income distribution.
48 The Politics of Income Inequality in the United States
Imagine a single, 20-year-old woman who is pregnant with her first
child. Perhaps she is attending college and has a seemingly bright eco-
nomic future. How would having the child influence her? She might not
be able to complete college. This in and of itself hurts her prospects for
future economic prosperity. After having the child she has to find work,
but childcare is expensive and it may be hard to find a job with the kind
of flexibility that is so often needed by someone raising a child on her
own. Of course this is an extreme example. At least some women in this
situation would have support from family or friends that could allevi-
ate some of these problems, but the bottom line is that an unplanned
pregnancy has the potential to derail future economic prospects. While
adoption would be an (often complicated) option regardless of abor-
tion policy, permitting the termination of this woman s pregnancy also
alleviates threats to a bright economic future. Restricting abortion has
economic consequences for pregnant women, and it is an impact that
would likely be felt most strongly by low-income single women with
few social support structures.14
conclusion
This chapter has discussed two mechanisms through which government
can influence distributional outcomes  explicit redistribution and mar-
ket conditioning. Explicit redistribution is the mechanism that is most
commonly considered as an influence on distributional outcomes. In
the first part of the chapter, I described several redistributional pro-
grams and showed their substantive impact on income inequality in
the year 2000. When we focus on explicit redistribution, the programs
that matter most are not welfare programs targeted toward the poor.
The programs that redistribute the most are those that could best be
described not as redistributive welfare programs but as general social
insurance provision  Medicare and Social Security. The reason these
programs redistribute so much is that they are large programs targeted
toward the elderly  a demographic group that earns little in the market
due to their age.
14
This is by no means meant as a defense of abortion, which is a complicated ethical and
moral issue. The only point is that even a policy such as abortion, that on its face has
nothing to do with redistribution, can nevertheless have distributional consequences.
The Distributional Force of Government 49
The market conditioning mechanism, however, receives much less
attention as a mechanism for distributional impact. I argued that every-
thing government does has a direct or indirect effect on the economy.
The economic outcomes that are produced by the market are only
in part produced by free market forces and in part induced by gov-
ernmental action. If government did not exist, nearly every economic
interaction that we observe would likely be different and produce dif-
ferent outcomes. The level of economic inequality that we observe
prior to the effects of taxes and transfers is essentially government
conditioned market inequality.
The real question in the context of this book is whether these mar-
ket conditionings that occur whenever government takes action of any
kind actually produce a systematic influence on distributional out-
comes. I began to answer this question by briefly discussing a few
areas of policy that are not explicitly redistributive but have likely
consequences for the current or future distribution of income. Policies
designed to enhance the workforce influence the characteristics of indi- [ Pobierz całość w formacie PDF ]