THE ARGUMENT OVER HOW TO REDISTRIBUTE FAIRLY WILL ONLY BECOME MORE IMPORTANT...:

But Romney is actually advancing a more ambitious idea, which bears more than a passing resemblance to the thesis of Alberto Alesina and George-Marios Angeletos's essay on "Fairness and Redistribution." The abstract is below:

Different beliefs about how fair social competition is and what determines income inequality, influence the redistributive policy chosen democratically in a society. But the composition of income in the first place depends on equilibrium tax policies. If a society believes that individual effort determines income, and that all have a right to enjoy the fruits of their effort, it will chose low redistribution and low taxes. In equilibrium effort will be high, the role of luck limited, market outcomes will be quite fair, and social beliefs will be self-fulfilled. If instead a society believes that luck, birth, connections and/or corruption determine wealth, it will tax a lot, thus distorting allocations and making these beliefs self-sustained as well. We show how this interaction between social beliefs and welfare policies may lead to multiple equilibria or multiple steady states. We argue that this model can contribute to explain US vis a vis continental European perceptions about income inequality and choices of redistributive policies. 

Essentially, Alesina and Angeletos are contrasting a government-centered society and a market-centered society. They're suggesting that a society can shift from one to the other as taxes increase, as the state takes a larger role in aiding politically favored firms, etc. Some will argue that the stylized portrait offered by Alesina and Angeletos is oversimplified. But it does seem like a good way to think about the political evolution of market democracies. Is there some point at which a shift to a government-centered society because irreversible? How long does it take for the new worldview to become entrenched?

Something like the Alesina-Angeletos thesis might explain the generational divide in U.S. politics. Older people tend to favor low redistribution and low taxes, yet many of them are the beneficiaries of large transfers, both direct (in the form of Medicare and Social Security) and indirect (in the form of housing wealth that flowed from tax expenditures, exclusionary zoning, etc.), that have effectively disadvantaged younger voters, who will be forced to pay higher lifetime net tax rates than their parents and grandparents. It thus seems important to make younger people understand this complex interaction between social beliefs and welfare policies. Instead of embracing more redistribution to counter the (arguably) unfair redistribution of the past, perhaps they should favor reforming redistribution policies so that they are more genuinely equitable and less tilted against the young, rolling back licensing restrictions and other measures that undermine open labor market competition, etc. But first someone has to make the case that layering more redistribution on top of the old system without reforming it might make matters worse -- that is, it might get us mired in an ugly equilibrium. 

Follow @brothersjudd