The Political Economy of Income Redistribution Policies

Abstract

During the decade of the 1960s, a variety of public policies were adopted to alter the American distribution of income. A history of these policies begins with the man power programs of the early Kennedy administration and ends with President Nixon's 1974 budget. An examination of the economic and political history of these programs reveals a vari ety of reasons for their publicly proclaimed failure. Means and ends were never sufficiently distinguished; no consistent decision was ever made about the aspects of the income distri bution to be altered; the political process wanted to pretend that income could be redistributed without reducing anyone's economic position; funds could never be concentrated enough to have a visible impact; and the public was simply unwilling to make investments of the size that would have been neces sary to solve the problem. The elimination of poverty may be a good investment socially; financially, it is a bad invest ment. Increases in productivity do not cover the costs of the necessary programs. The Family Assistance Plan was a rad ical departure from previous attempts to alter the distribution of income, but it was fatally flawed by internal contradic tions. Eventually, it proved to be a political liability for pol iticians of all parties.