Economic Inequalities are Legal Inequalities

Economic inequalities then—inequalities in freedom as producer and as consumer—are embodied in unequal legal rights. In assigning and enforcing legal rights to the fruits of transactions, the law is doing more than protect the winnings in the game of production and exchange. It is dealing unequal hands to the players. Further state intervention to alter the distribution of rights and liberties, to the advantage of those whose liberty is most restricted as a result, in part, of state action cannot be properly described as “statism” in any obnoxious sense. There may, however, be good reasons of policy against disturbing many of the present inequalities. But elucidation of this matter will require another chapter.

Freedom Through Law: Public Control of Private Governing Power, Robert Hale

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David Truman on Democratic Efficiency

The incomplete incorporation of nonparty groups into explanations of the dynamics of democratic politics has many and complicated causes. One of them, however, probably lies in the nineteenth-century heritage, largely English, that the study of politics shares with economics. In crude terms the classical theories in both fields implicitly or explicitly started from the isolated individual. Both economic man and political man, it was assumed, exercised rational choice and acted independently for the maximization of individual advantage. No one man, behaving in this fashion, could affect significantly the general result, whether it was a governmental policy or a price in the market; only the aggregate of individual behaviors was determining. Deviations from these behaviors were increasingly recognized by both economists and political scientists, but for a long time they were treated as pathology rather than as evidence that the underlying theory did not account for the observed facts. The values associated with these theories were heavily loaded with emotion, and modification was therefore both a slow and a painful process. The reconstruction of classic explanations to accommodate group behavior [i.e. mediating institutions] has been common in recent years, however, to both economics and politics, although in the latter field it has proceeded rather slowly.

David Truman, The Governmental Process: Political Interests and Public Opinion

The Economics-Politics Distinction: The Shift from the Welfare to the Predator State

If “economics” is isolated from other aspects of social life, then the criterion for policymakers becomes the simple one of efficiency. Expenditure, and government policy generally, is to be viewed in terms of whether or not a program pays, whether it creates incentives for the private sector to expand output and employment. In a market economy [sic], government must depend on tax collection, and this in turn depends on the level of economic activity–which depends on the expectation of profit. In the economist’s view, if tax incentives can attract or retain business, they should be granted. The income redistribution effects [sic] of such policies may be regressive but this is simply an unavoidable consequence of a market economy: government can step in after production decisions are made and through tax expenditure policies rectify any damage that may have resulted. How much and what type of action it will take will be decided in the political arena.

Yet government, especially at the local level, in under constant pressure not to redistribute from the rich to the poor.

–William K. Tabb, The Long Default : New York City and the Urban Fiscal Crisis.