Perm – redistribution also changes the underlying conditions of market power

Martin O’Neill, “Power, Predistribution, and Social Justice,” Philosophy, vol. 95, no. 1, January 2020, pp. 76-78, https://www.cambridge.org/core/journals/philosophy/article/power-predistribution-and-social-justice/02449FCC840979032236220D38D11A4F.

Imagine a society in which healthcare benefits are provided in a haphazard way by an inefficient system of private insurance, with many people’s access to even a minimally decent level of healthcare provision being tied to their employment status. Imagine that in such a society, against all previous expectations, a democratic socialist candidate is elected to the presidency, and that one of his or her first policy priorities is to create a national health system that ensures that all workers have access to an excellent level of universally available healthcare, provided free at the point of use through direct public provision, funded by general taxation. What would be the implications enacting this kind of policy? Well, obviously something would have to happen to the tax system in order to fund this new system, and the new system would bring benefits to many individuals who were comparatively disadvantaged by the previous system No doubt there would be some general efficiency gains in moving from a splintered private market to a coherent public system of healthcare provision, and so there would be a certain amount of ‘levelling up’, and the removal of the deadweight loss associated with the rent-seeking private bureaucracies associated with the previous system. What there would also be, in terms of direct effects, would be a de facto economic transfer from those who were especially advantaged by the old system (e.g. by the unreasonable suppression of top rates of taxation) towards those relatively disadvantaged individuals who would be most advantaged by the new system.

But something else would happen as well, which would directly parallel what would happen when Ukania moved towards a more Rhenish or Nordic model of employment relationships. The bargaining power of labour would go up. When workers’ access to healthcare depended directly on their employment status, and where employers had a role as gatekeepers in terms of access to more adequate and attractive health insurance plans, workers obviously had a direct incentive against ‘rocking the boat’ in their workplace, given that the effective costs of even a short period of unemployment could be so high. By contrast, after the enactment of our imagined National Health Service – or Medicare for All – in USania, the costs of exiting from a bad employment relationship would be much lower for workers, and hence their bargaining power against their employers would go up, in much the same kind of way as if a change had been made more directly to the regulation of that employment relationship.

The tax-funded provision of public services is not of interest to progressives or egalitarians only because it is directly a way of benefitting everyone at a cost that falls disproportionately on those who have more, but also because of second-round effects that the provision of public services can have in terms of the structure and distribution of power in economic relationships within that society. The public provision of services such as healthcare, education, and childcare, or even provision of goods such as public transportation and public parks,27 creates the background conditions against which different groups and different sectional interests fight their corner and negotiate their economic relationships. Public provision is not just a way of undertaking a transfer against the backdrop of a market with a particular kind of shape and structure, it is also at the same time a means of shaping markets, and changing the relative bargaining power of different groups of market actors. Therefore, if predistribution is centrally about the role of government in what we might call ‘market-shaping’, then there is not a relevant contrast to be drawn with a different kind of activity (imagined presumably as purely redistributive) that government undertakes when it goes in for the provision of public services funded by taxation. Public service provision is in general both about transferring benefits, per se, but also about shaping the background within which market transactions take place, and therefore it is misleading rather than illuminating to draw a sharp contrast, at the levels of types of policy, between policies that have a redistributive role and those that have a ‘market-shaping’ role.

A pessimistic diagnosis at this point is that the idea of predistribution as presented in Hacker’s revised and more promising formulation ends up trading on a merely shallow distinction between different kinds of government action. If it turns out that precisely what is interesting about the predistributive effects of changes in labour regulation can also be seen at work in the classically ‘redistributive’ provision of public services, then we apparently do not have a way of dividing government policies that affect economic outcomes neatly into the two categories of ‘redistribution’ and ‘predistribution’. Advocates of predistribution as the proper zone of focus for progressive or egalitarian politics, in distinction to the previous focus on redistribution, might therefore be seen as relying upon a superficial conceptual distinction that does not illuminate a deeper contrast in how policies function.