Redistribution and Pre-Distribution

Does the process of stopping Covid-19 and restoring the economy offer opportunities to create a more peaceful and equitable society? Two recent blog posts (Here and Here) cited several such opportunities, including making headway toward reversing the continuing slide into inequality. In the WorldPost, a partnership of the Berggruen Institute and The Washington Post, Editor-In-Chief Nathan Gardels referred to President Franklin Delano Roosevelt’s accomplishments in the 1930s: “The mark of visionary leadership during a crisis is the ability to see through the fog of uncertainty and imagine the path to a better future not before considered possible.”

One particular proposal that has been discussed in recent years is a universal basic income, or UBI. The UBI would guarantee a basic income for all individuals regardless of current earnings.  Previously considered somewhat radical, the concept was reintroduced by Andrew Yang, a candidate for the Democratic nomination for U.S. president. A recent Bloomberg article indicated the Trump administration is considering UBI, according to economic advisor Larry Kudlow.

The UBI is basically a redistribution of income from taxes on higher-income individuals and corporations, distributed to lower-income households and individuals. The Berggruen Institute is exploring a concept called “pre-distribution.” Pre-distribution suggests affording those with lower incomes the skills and support to increase their earnings to make redistribution unnecessary. Pre-distribution would include raising the minimum wage, providing access to resources such as good education from pre-K and up, and universal healthcare.

The term pre-distribution was created by Yale professor Jacob Hacker in a 2011 paper. His aim was “to focus on market reforms that encourage a more equal distribution of economic power and rewards even before government collects taxes or pays out benefits.” The idea was introduced in Great Britain in 2012 by Ed Miliband as part of a Labour Party platform. In the early days of the 2020 Democratic Party primary race for the party’s presidential nomination, Elizabeth Warren raised the idea of pre-distribution. Thus, as the U.S. heads into the 2020 presidential election, both major political parties are considering major programs addressing income inequality.