Why taxes are better than charity

This year's graduation ceremony at Columbia University honored individuals who have made major contributions in physics, history, music, math - and money. Like the rest of the country's most prestigious universities, Columbia has been flooded with contributions from rich alumni for years now, and they barely know what to do with the money. One popular choice is to aggressively expand existing campuses, often at the expense of neighboring communities. Columbia is trying to seize part of Harlem, Harvard is building a major addition in Boston's Allston, Yale is undertaking a massive remodeling and expansion, and even the relatively poor University of Chicago is expanding its presence in Woodlawn and just bought Harper Court in Hyde Park, which it will replace with new buildings and retail. What these universities are not doing is investing in meeting the needs of the often poor neighborhoods they are expanding into.

The huge amounts of money being invested by universities - much of which has gone toward science and health research facilities - makes a strong contrast with the massive underinvestment in basic infrastructure that is plaguing the country, as bridges collapse, mass transit systems stagnate even as ridership hits record highs, and public housing is quietly dismantled. The striking difference between the capacity of private and public institutions to realize their priorities is nowhere more clear than in New Haven. As shown in this article, the impoverished city government must beg Yale for scraps and leave many important projects unfinanced, while Yale has complete freedom in its building plans.

But this contrast is simply a powerful symbol for what the neoliberal economic restructuring of the last generation has wrought. Almost all of the increased wealth of the last 30 years has gone to the super-rich, even as taxes on them have been slashed. All levels of government, starved of funds and fully captured by business interests, have cut social programs, neglected basic maintenance on infrastructure, and spent what resources they have on beautification efforts for the well-off.

Public interests are now thoroughly subordinated to the priorities of the wealthy, and investment decisions that were once made by our elected representatives have been taken over by unaccountable private interests. This does give us the chance to see the results of the conservative/libertarian fantasy of low taxes, with public needs being met by charity. Rich people aren't interested in donating their money to the sewer fund, the subway fund, or a fund to provide health insurance to the poor. In fact, for the most part they don't want to donate their money for anything - they spend most of it on luxury goods. But those who do donate tend to give money to universities, museums, arts organizations, and medical research (see this list of the top donations of 2007).

These are all worthy causes, but they tend to make the social hierarchy steeper rather than distributing resources and opportunity to those who are excluded. Good universities, good cultural institutions, and advanced medical treatment are things that the already-privileged can easily access, while members of the working class and underclass find it much harder to benefit. What they need most - good primary and secondary schools, good transit infrastructure, affordable housing, health insurance - are exactly the goods that are being neglected by both the government and by charitable donations.

So the experiment in getting rid of equity-promoting goods and services provided by a redistributory government and replacing them with the whim of rich people is a failure. But underlying this policy argument is a basic ideological issue: should we look on the distribution of personal income according to market forces as natural and just? Or should we interpret the creation of wealth as a social product that is currently distributed according to the logic of capital, which is no more "natural" than any other distributory mechanism - unless you regard the war of each against all as humanity's natural state.

Market forces decide incomes not based on merit, but according to the amount of bargaining power one has - which is why people who work incredibly hard will make almost nothing if there are many others willing to the do the job and they aren't unionized. Those crushed by the invisible hand are victims, not shirkers, so we must use the state to mitigate the injustices of the market until we attain a truly just system of producing and distributing wealth.

In the meantime, concentrating ever more wealth in the richest universities is not useful - those resources should be going to the cash-starved state universities and other unglamorous capital investments that serve society much better. Taxes should be raised sharply on the rich so we can start to undo the massive upward redistribution of wealth of the last 30 years, and those resources should be poured back into the social needs that have been starved for decades.