How ‘distributionalism’ killed long-term thinking

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When the Labour Government gained power in 2024, Matthew Syed proposed in his Times column the creation of a ‘Department for Long-Term Thinking’: a department that would take government out of the fog of the 24/7 news cycle and encourage policymakers to focus on the bigger picture.

Although translating that idea into practice would probably mean creating yet another quango that adds to the burden of public spending, Syed was right to identify a deeper problem in modern governance: the inability to think long term. But the real obstacle is not the news cycle. It is the habit of viewing every policy through the lens of distribution.

One can trace this mentality, in its modern form, to the rise of distributional analysis pioneered by organisations such as the Resolution Foundation. The underlying assumption is that every policy should primarily be judged by how it affects different income and wealth groups. Want to evaluate tax reform? Examine its impact across income deciles. Welfare reform? Measure how different social classes are affected.

The premise begins innocently enough: growth alone is not sufficient; we must also ask who benefits from growth and who loses. But over time, this way of thinking has evolved into something broader; what I would call distributionalism.

Distributionalism has pushed governments, Conservative and Labour alike, toward short-term policymaking. Once the main metric for judging a policy becomes its immediate distributional effect on different groups, long-term thinking becomes almost impossible. Implicitly, the assumption becomes that even if a policy benefits everyone over time, it is undesirable and inappropriate if the wealthy gain proportionally more than the poor in the short run.

The clearest example is taxation. Most economists agree that some of the most economically damaging forms of taxation are corporate taxes and high taxes on income, because they discourage investment, saving and productive activity. Economists across different schools have long argued that broader-based consumption taxes are generally less harmful to growth.

Yet distributional analysis immediately blocks such reforms because they are seen as benefiting higher earners more than lower-income groups. The same logic applies to welfare reform. Any attempt to reform the welfare state is rejected before the debate even begins because the immediate costs are concentrated among poorer groups, regardless of the longer-term economic effects.

The result is an unhealthy short-termism that has paralysed economic reform in Britain. Supply-side reforms are dismissed because, through the distributionalist lens, they appear politically unequal in the short run. But this misunderstands the nature of economic growth itself.

Growth is not something governments mechanically distribute. It is a spontaneous and dynamic process driven by innovation, entrepreneurship, investment and the creation of businesses and opportunities that cannot be predicted in advance. Distributionalism attempts to engineer growth toward preferred social outcomes. But once growth is engineered toward predetermined distributive goals, it ceases to function as genuine growth at all. It is hardly surprising, then, that Britain has become accustomed to growth rates below 1%, and that even marginal improvements are treated as major economic achievements.

There is also a deeper philosophical problem with distributionalism: it assumes that the primary purpose of government is redistribution. Roger Scruton once argued that one of the greatest achievements of Ronald Reagan and Margaret Thatcher was changing the assumptions of the intellectual class, which had become ‘devoted to the distribution of wealth, on the assumption that this is the main task of government and that government is uniquely competent to embark on it’. As Scruton noted, ‘the fact that wealth can be distributed only if it is first created seems to have escaped their notice’.

Modern governments have become trapped in endless debates about which group deserves what share of the economic pie, rather than concentrating on how to expand the pie itself. At this point, the knowledge problem becomes unavoidable. What exactly is the ideal distribution of wealth? Who decides which groups should possess which share of resources? The truth is that nobody knows. Even among advocates of social justice, there is no agreement about what a perfectly just distribution would look like.

The usual answer is simply ‘more equal than now’. But when is equality sufficient? Where does the process end? As Robert Nozick wrote, ‘There is no central distribution, no person or group entitled to control all resources, jointly deciding how they are to be doled out’.

That is why distributionalist politics becomes a never-ending game: it has no natural endpoint. Yet the economic distortions it creates are very real. If governments genuinely want to tackle short-termism, they should begin by abandoning distributionalism as the central framework of policymaking.

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