Economics, Morality, and the Equality of Opportunity...

[solemole]

Economics and Morality - NYTimes.com

January 10, 2011, 12:03 PM
Economics and Morality
Mark Thoma directs me to Eric Schoeneberg, who argues that the right is winning economic debates because people believe, wrongly, that there’s something inherently moral about free-market outcomes. My guess is that this is only part of the story; there’s more than a bit of Ayn Randism on the right, but there’s also the appeal of simplicity: goldbuggism is intellectually easy, Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it.

Still, Schoeneberg is right about the tendency to ascribe moral value to market values, and the need for a counter-narrative. I’m going to think about that; but right now, let me describe how I see the US income distribution in terms of justice or the lack thereof.

The first thing one should say is that our system does reward hard work, up to a point. Other things equal, those who put more in will earn more.

But a lot of other things are, in fact, not remotely equal. These days, America is the advanced nation with the least social mobility (pdf), except possibly for Britain. Access to good schools, good health care, and job opportunities depends on lot on choosing the right parents.

So when you hear conservatives talk about how our goal should be equality of opportunity, not equality of outcomes, your first response should be that if they really believe in equality of opportunity, they must be in favor of radical changes in American society. For our society does not, in fact, produce anything like equal opportunity (in part because it produces such unequal outcomes). Tell me how you’re going to produce a huge improvement in the quality of public schools, how you’re going to provide universal health care (for parents as well as children, because parents in bad health affect childrens’ prospects), and then come back to me about the equal chances at the starting line thing.

Now, inequality of opportunity is only one reason for the inequality in outcomes we actually see. But of what remains, how much reflects individual effort, how much reflects talent, and how much sheer luck? No reasonable person would deny that there’s a lot of luck involved. Wall Street titans are, no doubt, smart guys (although talking to some of them, you have to wonder …), but there are surely equally smart guys who for whatever reason never got a chance to grab the 9-figure brass ring.

So economics is not a morality play; the social and economic order we have doesn’t represent the playing out of some kind of deep moral principles.

That doesn’t mean the order we have should be overthrown: the pursuit of Utopia, of perfect economic justice, has proved to be the road to hell, while welfare-state capitalism — a market economy with its rough edges smoothed by a strong safety net — has produced the most decent societies ever known. The point, though, is that anyone who claims that transferring some income from the most fortunate members of society to the least is a vile injustice is closing his eyes to the obvious reality of how the world works.

More Thoughts on Equality of Opportunity - NYTimes.com

January 11, 2011, 9:15 AM
More Thoughts on Equality of Opportunity
Lots of good comments on this post. But I think there’s a bit of an intellectual trap lurking here. As I pointed out, the typical conservative line about equality of opportunity, not results, really implies the need for a radical restructuring of our society, which doesn’t offer anything remotely resembling equal opportunity. At this point, however, there’s a tendency to think about what that restructuring would involve — and because it’s basically impossible, to throw up one’s hands.

The point is that you don’t, in fact, have to be that radical once you drop the rigidity of the conservative position. If you admit that life is unfair, and that there’s only so much you can do about that at the starting line, then you can try to ameliorate the consequences of that unfairness.

My vision of economic morality is more or less Rawlsian: we should try to create the society each of us would want if we didn’t know in advance who we’d be. And I believe that this vision leads, in practice, to something like the kind of society Western democracies have constructed since World War II — societies in which the hard-working, talented and/or lucky can get rich, but in which some of their wealth is taxed away to pay for a social safety net, because you could have been one of those who strikes out.

Such a society doesn’t correspond to any kind of abstract ideal, whether it’s “people should be allowed to keep what they earn” or “from each according to his ability, to each according to his needs”. It’s a very non-Utopian compromise. But it works, and it’s a pretty decent arrangement (more decent in some countries than others.)

That decency is what’s under attack by claims that it’s immoral to deprive society’s winners of any portion of their winnings. It isn’t.

Yes, I am a Krugman admirer.

 

[Canadiens1131]

At its heart, life is indeed not fair.

The pure free market economy (which doesn't really exist BTW), and the idea of 'American exceptionalism' are all fine and dandy on paper, if every baby born to every new family had an equal shot at working hard as a young adult and succeeding.

I don't want to dispute the traditional American values of hard work and dedication, and those will indeed eventually pay off for many people who ascribe to them.

But to continually push this idea of 'American exceptionalism' is ludicrous The idea that the guy making 48,000 K / yr in his 40s will still vote Republican because he wants a flat tax rate, just in case he becomes successful in business and incredibly rich before he dies. It speaks to how well the corporate and super-rich lobbies control the PR spin coming out of D.C., especially right of the isle.

The free market economy is not a level playing field from the start of the game, and to pretend that everyone has an equal shot by holding up a few popular examples of 'rags to riches' people is just being out of touch with reality.

 

[Moonlit_Angel]

So when you hear conservatives talk about how our goal should be equality of opportunity, not equality of outcomes, your first response should be that if they really believe in equality of opportunity, they must be in favor of radical changes in American society. For our society does not, in fact, produce anything like equal opportunity (in part because it produces such unequal outcomes). Tell me how you’re going to produce a huge improvement in the quality of public schools, how you’re going to provide universal health care (for parents as well as children, because parents in bad health affect childrens’ prospects), and then come back to me about the equal chances at the starting line thing.

I find his idea that oddly enough it's the conservatives whose ideas would be most likely to urge a radical change in society interesting. And fully agree with that. It's kind of amusing how almost anarchy-esque the conservative worldview tends to be sometimes.

(I imagine some would probably answer that we need to privatize everything, or nearly everything, then. Which, of course, wouldn't be feasible)

Like Canadiens said, hard work is admirable and laudable. I fully support everyone working as hard as they can to help contribute to their own lives and the lives of those around them to produce the best life and society possible. You should work hard to help achieve your goals.

But I also know that sometimes life throws you a curveball. Sometimes things you thought were going to be set fall apart very unexpectedly. Every single person, at one time or another, is going to struggle with something. And there is absolutely nothing wrong with being humble and admitting you need help, nor is there anything wrong with offering help.

I just don't see why it bothers some people so much to suggest that they give back to the society that helped them get where they are, to help others in society be able to achieve the happiness and good life they've found. Nobody ever achieves greatness and success all on their own, everybody gets help somewhere at some point, no matter how minor it may be. I don't see why it has to be one or the other, why our society can't be a mix of both individual hard work and societal support.

Angela

 

[AliEnvy]

a market economy with its rough edges smoothed by a strong safety net — has produced the most decent societies ever known. The point, though, is that anyone who claims that transferring some income from the most fortunate members of society to the least is a vile injustice is closing his eyes to the obvious reality of how the world works.

The Class War Launched by America's Wealthiest

What’s wrong with the rich getting richer?

Slate's Timothy Noah, in "The United States of Inequality," wrote, “Income distribution in the United States [has become] more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador.”

Take a look at that list.

Countries with wide income inequality don’t lead the world in research, technology, industry, and innovation. They’re unstable. They have large underclasses. They have high rates of crime. They have little opportunity.

In such countries the rich have disproportionate power. They take control of all aspects of society, especially government, the police, and the judiciary. They become self perpetuating.

If current trends continue, “The United States by 2043 will have the same income inequality as Mexico.” (Tula Connell, Mar 12, 2010, AFL-CIO Now.)

Countries with high levels of income inequality are third-world countries.

Here’s how regular people can deal with cultures of high inequality. The primary, and best, weapon is a progressive tax structure. As people move up the income ladder they pay a higher rate at each rung. Unearned income –from dividends and capital gains – is taxed at least as high as earned income (money that people actually work for.) Tax cuts for the wealthy mark, with great precision, the decline in fortunes of ordinary Americans. Tax cuts for the wealthy mark, with equal precision, the increase in inequality. We had a chance to slow the process by letting the last round, the Bush tax cuts, expire. We’ve lost that round.

If you read the papers or watch the news, you will see an anti-public service union story almost everyday. These are the people who teach your kids, pick up the trash, clean the sewers, drive the buses and trains, they’re the police and fireman. The stories will tell you their pension fund liabilities will bankrupt the states; that it’s unionized teachers who have ruined our schools. Charter schools – without unions – are the new favorite charity for billionaires.

When a country is, or becomes, a third-world country, the other thing people can do is run. To some place richer and freer. Like America.

But when America becomes Mexico, where you gonna run to?