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I notice that a lot of people on this site seem to be both utilitarian and right wing. This makes me confused, as the utilitarian case for a strong welfare state seems extremely strong on its face. By "strong welfare state" I mean something akin to the Scandinavian countries (Denmark, Norway, Sweden) in which the necessities of life (healthcare, housing, minimum subsistence) are essentially guaranteed, while maintaining a market economy.
Premise #1: We want to maximize pleasure (utility) and minimize pain (disutility).
Premise #2: Within the unit of people we care about, we care about everyone equally.
Premise #3: Central planning doesn't work very well, so we want to maintain a market economy.
Premise #4: We already have a fairly industrialized, advanced capitalist economy.
ARGUMENT:
Being in poverty is extremely bad for people's wellbeing, both in terms of physical and psychological health. It is extremely unpleasant for people to be homeless or hungry, or having to make decisions like choosing between heat in the winter, medicine, or food. Poverty sucks -- it is painful not being able to afford the essentials of life.
Being afraid of falling into poverty is also bad for people's wellbeing -- it is a major source of worry and concern because everyone knows that being impoverished sucks and is painful. So the existence of poverty is a cause of pain for a much larger group than those actually impoverished. Fear of poverty also leads people to refuse to take risks to avoid the pain of poverty, which leads to less pleasure.
Diminishing marginal utility. At a certain point, another yacht for the ultrawealthy rich guy is not going to make him significantly happier. Money can't buy love, you can't take it with you, etc. etc. However, charging that guy more in taxes and using those resources to eliminate poverty will make the groups mentioned in #1 and #2 significantly more happy.
We should be OK with high taxes in exchange for eliminating poverty by directly providing the necessities of life for those who cannot afford them. The pain avoided by eliminating poverty outweighs the pain imposed by the taxes (or the pleasure that is lost for the wealthy) because of the principle of diminishing marginal utility. Poverty causes more unhappiness than luxuries cause happiness.
Responses to obvious objections:
a. "Eliminating poverty will cause more pain in the long run because the economy will collapse or at the very least growth will slow, leading to a decline in living standards for everyone." Response: This doesn't seem to have happened in Scandinavia. The Scandinavian countries have been strong welfare states for a long time and are still very wealthy countries, among the wealthiest in the world. They haven't had their economies collapse from having too many layabouts and such.
b. "Charging me high taxes on wealth I created infringes on my liberties/freedom". Response: This may be a coherent objection, but it's not a utilitarian objection, it's a rights-based objection.
c. "The Scandinavian countries only could do this because they are ethnically homogenous, tightly knit societies. Look at Sweden right now, it's falling apart as they let in more immigrants." Response: This goes more to the political problem with instituting this system rather than the desirability of the system itself. The fact that present-day social democrats are pro immigration does not make immigration a necessary part of a social democracy. One can easily imagine a social democracy with Japan-style immigration restrictions.
d. "I only care about those who are deserving to not be in poverty; I don't care about everyone, I'm fine with people being in poverty if they do nothing to better themselves, or if they are in the outgroup." Response: This is also not really a utilitarian objection. Who "deserves" what is a question of justice, of deontology. But here, we are trying to maximize pleasure and minimize pain. This is difficult enough, boiling down all of human experience into two buckets, "pleasure" and "pain". If you add a whole 'nother set of buckets, "good people", "medium people", "bad people"... then you've really abandoned the exercise and are just doing deontology with extra steps. The pain someone experiences from not having housing or food or heat during the winter is plainly real and sincerely felt, even if you believe that that person should have done something different to avoid being in that state.
I don't really believe in diminishing marginal utility in its strong form. I also don't think the modern welfare state does much to eliminate the real sufferings of poverty, its more akin to a heroine drip for addicts. And on top of that, the taxation for a welfare state reduces economic dynamism (as does the welfare state itself, by disincentivizing work for some populations).
Overall, I find the welfare state an overwhelmingly unredeemable invention that only justifies itself with morally monstrous arguments along the lines of "think of the children."
Why not? It seems like common sense to me -- a dollar means a lot more to the guy begging outside McDonalds than it does to Elon Musk.
What are the "real sufferings of poverty", then?
"Diminishing marginal utility" is a misonomer. Economists tend to assume that the marginal utility of everything is diminishing, relative to previous units. (Heroin and the like may be exceptions.) The issue is the marginal utility of money vs. other things. In modern utility theory, money has no marginal utility as such; it only has marginal utility relative to an alternative. And utility is typically defined by modern theorists in terms of relative preference, rather than a psychological state of pleasure etc.
If there is a diminishing marginal utility of money, then why do so many poor people buy lottery tickets and otherwise gamble in games with negative expected value?
Assume that people gamble for the pleasure of taking risks. If there is diminishing marginal utility of money, why would the marginal value of money relative to this pleasure be low for poorer people?
Also, don't middle class and richer people save a higher proportion of their incomes than poorer people? Do they value maintaining their period-to-period monetary assets, relative to their incomes, more than poorer people?
Also, diminishing marginal utility on average is also very different from it being universal. Otherwise, why would many very rich people still work similar hours to poorer people? You can postulate that the former enjoy work, but that's ad hoc, as it doesn't explain why they would prefer paid labour.
I'm not saying that there is increasing marginal utility of money. I'm saying that it is really isn't obvious that money has diminishing marginal utility, even on average.
Of course middle class and richer people save more than poor people. Having barely sufficient income to cover needs, and hence having little left to save, is the definition of being poor.
As for why rich people who work a lot prefer paid labour, the answer is obvious: They get more utility out of paid labor (enjoyment + whatever they buy with their income) than unpaid (enjoyment alone).
Anyhow, talking about rich people not working does not address OP's point about relative utility of X extra dollars for a poor vs more affluent person. I can guarantee you that the local homeless guy would get more out of the $165 I recently earned than I will.
It's not ... directly obvious that this is true. Consider the stereotype of him spending it all on crack or booze. It may also depend on the region. There's probably studies on this; could you link them?
Well, presumably he gets a lot of utility out of crack or booze. Besides, that $165 means that he can now get both crack AND booze. Or crack AND several meals at McDonald's. In contrast, I am able to buy crack and food and booze even if I throw the money away; it has very little marginal utility for me.
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