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10.2.2 THE WILLINGNESS TO REDISTRIBUTE IN FAVOUR OF PUBLIC GOODS (THE ACCEPTABILITY OF TAXATION)

Another reason we can identify for forming communities is the common public interest, which can include the acquisition and operation of public goods (positive externalities).

The main problem with public goods is the deviousness (pragmatism) of Olson's "free rider” who tries to benefit from public goods without helping to pay for them.[1] Free riders endanger the production of a necessary public good by reducing the general level of mutuality and people's willingness to sacrifice their own prosperity for the benefit of the community. The size of the community also reduces this willingness — the larger the group, the harder it is (ceteris paribus) to ensure that a public good is produced; conversely, the smaller the group of individuals with a common interest, the greater the probability of collective action.[2] If the individual costs are too high, the externality and the related community do not even come into existence. Olson refers to such communities as latent groups.

From his deliberations about the notorious free rider, Olson concludes that a condition for the existence of large groups is that a small group inside this large group must have the opportunity to gain a bigger share of the benefits arising from organizing the production of public goods. There need to be selective incentives for individuals to work for the group's interest (e.g. the high prestige of the corresponding public office, satisfaction of the ambition to hold power).

Small groups and organizations are necessarily more effective in achieving their goals. The larger such communities are, the lower are the per-person costs associated with public goods, but the more opportunities there are for free riding. In addition, large groups are also easily subject to "asset stripping" by well-organized subgroups, which can gain a privileged position in large groups. Alongside free riding, this "oligarchization” — the for mation of privileged groups within a community having a fixed management hierarchy — is the second important factor of destruction of mutuality, especially in large communities.

If a shared public interest (shaping the community's identity) and potential collective action (strengthening the community's identity) are sufficiently attractive, they help to shape a collective identity (perceived mutuality) and foster a prevailing departure from the purely egoistic interest of individuals. The acceptability of redistribution to the individual is strengthened.

Although it is possible to model such preferences using generalized microeconomics, it is difficult to interpret the extinction zone of the public economy. When applying the model of maximization of the Pareto probability of survival in this way, we need to treat the boundary of the extinction zone as the limit beyond which public finances — in the opinion of the economic agent whose decision-making we are modelling — will collapse. The problem is, however, that for each agent this boundary is in a different place. Consequently, we have to model the tax-evading free rider in one way and the responsible taxpayer in another.

The a for ementioned classification of the motives for altruistic behaviour and for the willingness to give up one's own prosperity in the context of redistribution is not disjunctive, as a combination of several types of motives is often present

Based on the preceding considerations and on our own experience, we will for mulate several (certainly debatable) hypotheses relating to the willingness to pay various types of tax. We argue that taxes that are beneficial to the economic survival (economic prosperity) of a community which we feel part of and whose welfare is integral to our personal welfare or whose extinction would be a great personal loss to us, are acceptable.

  • [1] See Olson, M.: The Logic of Collective Action. Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press, 1965.
  • [2] This applies to all public goods except for security; for externalities of a security nature the opposite tends to be true.
 
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