Matt Bruenig — Distributive Institutions Are to Blame for Income Inequality, Not Power Couples

The distribution of income in society is a function of two things: distributive institutions and everything else. By distributive institutions, I am referring mainly to the laws that pertain to the distribution of resources in a society. Distributive institutions include such things as bankruptcy law, corporate law, securities law, property law, contract law, tax law, benefits law, and so on. Put another way, distributive institutions are the distribution-specific subset of the "rules of the game" that structure economic activity in society.….

The fact that distributive institutions are not a suprahistorical constant should be an obvious point. But it's a point that is constantly missed, especially in the poverty realm where I spend most of my time. In the poverty realm, most of the respectable discussion is about how to change "everything else" so that it delivers lower poverty within our existing set of distributive institutions. Little attention is paid to the fact that the national income of the US is so high that even slight changes in our distributive institutions could bring sweeping anti-poverty gains. In fact, anti-poverty efforts that focus on the country's distributive institutions are almost absent from mainstream poverty discourse. Even poverty experts who know better often exclude distributive reform because it is "against American values" (which is to say too counterhegemonic to happen in the short term). 

The inattention to distributive institutions in inequality analysis is a critical mistake. If you want to create and, more importantly for the present point, maintain an egalitarian society, you must be prepared to reform distributive institutions fairly regularly. This is because "everything else" in society is dynamic: technologies change, demographics change, ways of living and relating to one another change. Some changes will improve distributive fairness within the existing distributive institutions while others will threaten it. Where a change threatens distributive fairness, institutional reform must meet the threat. 

For libertarian types that think altering distributive institutions is tantamount to violent theft, the prospect of repeatedly tinkering with them may be a bleak one. But for everyone else, this kind of tinkering should be welcomed as a great facilitator of personal freedom and dynamism.…

PolicyShop: The Demos Blog
Distributive Institutions Are to Blame for Income Inequality, Not Power Couples
Matt Bruenig