No one has yet given the most basic answer: maximize utility.
There are two effects at work here that are pretty much undisputed in mainstream economics:
1) Redistribution distorts economic incentives, lowering total production. This produces the Laffer Curve.
2) Individual wealth is subject to diminishing happiness/utility returns.
Taken together, these lead to an optimal level of redistribution that's greater than zero but somewhere short of the peak of the Laffer Curve.
There are various other effects we might consider, but probably none as widely accepted as these two. For one example, there are worries on both left and right about the effects various policies will have on politics.
Deficit spending is essentially orthogonal to the issue, entangled only by politics. Budget balancing is indeed associated with the fiscal right in the US, but as long as taxes are as high as spending, it's possible to have a balanced budget with any level of GDP-relative spending. |