In Defense Of AAP’s Redistribution Policy: Serving The Poor, Maximising Welfare!

The recent victory of the Aam Aadmi Party (AAP) in the Delhi assembly election has created a buzzword called “Politics of Development” or “Politics of Work”. Despite Bhartiya Janta Party’s (BJP) continuous efforts to win the Delhi election, the people of Delhi decided to discard the “Hindutva ideology” and extended their mandate in favour of “Politics of Development”. Home Minister Amit Shah himself has admitted that BJP defeated in Delhi election maybe because of hate speeches given by his party leaders.

Credit: AAP/Twitter

Though some intellectuals are worried about the “Soft Hindutva” practices of Arvind Kejriwal, on the other side, many psephologists have argued in favour of the kind of welfare schemes that have been provided by the APP government in the last five years.

If the opinion of these psephologists is true, then it is clear that the voting choices of both wells off families and marginalized families were determined through the welfare schemes provided to them in the areas of education, health, sanitation, water, and electricity.

The Age-Old Economic Debate

The provision of these welfare schemes by the AAP government reminds us of an old-age economic debate between the utilitarian and libertarian schools of thought. Many traditional libertarian economists have argued that the mere provision of these welfare distributions comes at the cost of economic efficiency and productivity. Because to run these welfare schemes for the poor and marginalized people, the government needs to impose a hefty tax on the rich.

As the rich bear the cost of their richness and the cost of other’s poverty without any personal gain, it discourages the rich to earn or to acquire more wealth.  They argue that the act of this redistribution through these welfare schemes causes wastage and distortion of economic resources and leads people to work less hard and invest capital in less productive ways. Therefore, the libertarian economist puts the argument that any government has to provide only internal security to the people and to maintain law and order situation within the national territory.

Are these arguments worth something in today’s capitalist world where the process of economic liberalization has heightened income inequality between the rich and the poor? Are these provisions of welfare schemes bringing economic inefficiency and hurting overall progress?

We will discuss here how these arguments are not only irrational but also pessimistic. Similarly, we will also argue how the utilitarian approach of redistribution policy is not only philosophically justified but also economically beneficial for the development of the country. Here, our argument will elucidate how the investments made in different social aspects are not wastage of economic resources rather it produces more output in the near future with more efficient and productive ways.

Defending Redistribution Policies

Arvind Kejriwal inaugurating a Mohalla Clinic.

Firstly, the responsibility of any democratic government is to maximize the welfare of the people who are economically worse-off in society.

The basic rights of the people not only includes the basic human and civil rights but also economic rights, including the fulfilment of basic material needs. Hence, if some people in the society are deprived of their basic fundamental rights i.e. right to food, right to education, right to good health, right to employability, right to have safe drinking water, and right to have a decent life, then it is the accountability of the government to provide these basic amenities to enhance the process of social inclusion.

Secondly, many kinds of social expenditure schemes made by the government are a high return investment for society. The expenditure made in the field of “merit goods” such as education, health, free meals in schools, providing safe drinking water, etc. are the expenditures made to boost the human capital of the country. And later on, this productive human capital can be used in the production field and can produce more output.

The best example in this matter is the rising pass rate in Delhi’s government schools due to increasing school budget expenditure by the Delhi government in recent years. Another best example could be the affordable and accessible health care facilities provided by the Delhi government through “Mohalla Clinics”. Imagine how these educated and healthy human resources are going to produce more output efficiently and productively in their near future! Therefore, the social expenditure made by the government is not a liability, but instead should be considered as the future asset of the country.

Thirdly, philosophically saying, the provision of these welfare schemes has a larger happiness effect on poor people’s life. As per the classical utilitarian theorists’ argument, the goal of the society to promote happiness and the goal of any ethical and practical politics is to obtain the greatest happiness for the greatest number of people. An extra income of  Rs. 100 may not produce much happiness for a rich person but it has a larger happiness effect for a poor individual.

Thus, taxing 100 rupees from a billionaire and giving the same amount to a poor and hungry individual would diminish a negligible amount of utility to a billionaire but it would noticeably increase the utility of a hungry person.

Conclusion

Thus, looking into the economic benefit and the philosophical justification of the utilitarian redistribution approach, many worldwide leading economists including the recent Nobel Prize winner Abhijit Banerjee have appreciated the development policy of the AAP government and have advised other state governments to follow the same model.

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