More on Equality

Someone asked what I thought of an essay by N. Gregory Mankiw: “Spreading the Wealth Around: Reflections Inspired by Joe the Plumber” (Eastern Economics Journal, 36(2010)). Here are the comments with which I responded:

The fundamental issue here is the moral status of equality/inequality. My view is that equality per se has no moral significance. If someone owns something, or otherwise has a moral right to distribute it, then, under certain conditions he has a moral obligation to distribute it and, when he does, to distribute it in certain ways. Sometimes, his moral obligation is to distribute it equally. If he does not own something, or otherwise have a right to distribute it, then the question of how he ought to distribute it does not arise, except hypothetically. E.g., if you have some medicine, A and B are healthy, while C will die without (all of) it, then you might be morally obligated to distribute 100% to C and 0% to the other two. An equal distribution would be morally impermissible. (What might be morally permissible for others to do to you to get you to distribute as you ought is, of course, a further question.) Often, there are no moral constraints on whether and, if so, how one distributes what he has. If you feel like giving away your jelly beans, you may, as you please, give the same number to A, B, and C, or 90% to A, 10% to B, and 0% to C, as you prefer. There are scenarios in which a distributor is obligated to distribute equally, but I suppose that these are relatively rare and typically occur in some institutional setting which imposes on him precisely that obligation, e.g., you are the father of A, B, and C and an unequal distribution will cause psychological harm to the child who gets less than a sibling, or it will simply send the false—or at least best left unexpressed—message that you value the child who gets more more. Perhaps the best that can be said on behalf of equal distributions in general is that when there is no reason to make an unequal distribution the equal distribution seems less arbitrary than other possibilities. But such arbitrariness is not necessarily morally problematic.

There’s plenty of talk of how “we,” or “society,” i.e., the government, ought to distribute something, but it depends on the implicit and false assumption that the wealth of the nation is collectively owned and that it really belongs to the government to distribute, or redistribute, as it sees fit. This is the case whether it aims at equality or anything else. And it would be true even if it were true as well that an equal distribution of things is morally superior to an unequal distribution. At least the bare fact that some situation would be morally superior to another does not justify any particular means to achieve it. If A has no kidney and B has two kidneys then, all things being equal, it would be morally better if the kidneys were distributed so that A and B have one apiece, yet this tells us nothing about which means to bringing about the redistribution are morally permissible; presumably, some are and some are not, and there is no general guarantee that those that are morally permissible are also effective.

There’s no simple route from moral judgments about distributions in the sense of situations to those about distributions in the sense of acts of distributing.

A further source of confusion lies in the fact that unequal distributions do sometimes correspond to need. But A’s problem, out of which arise moral demands on the rest of us, is not that B has two kidneys while he has none; it’s that he has no kidney. He’d be no better off if B’s kidneys simply vanished so that kidney-wise, he and B are equal. Poverty, insofar as this means that people are in need, morally matters, but inequality per se doesn’t. A society in which the poorest individual gets $100,000/yr while the richest get $10 billion/yr is at face value morally preferable to one in which everyone gets $1000/yr. Because of envy, someone might prefer to be needy but equal, but envy is neither rational nor morally good. (In A Theory of Justice, Rawls tries to justify a qualified egalitarianism (his “difference principle”) by treating some of the things others call envy as matters of self-esteem, which he construes as rational and morally worthy.)

The other way inequality is associated with what does morally matter lies in the fact that inequality is often caused by morally bad behavior. The politically well-connected rich influence government policies to cause wealth to flow in their direction from those who are poorer and less well-connected.

Suppose, for the sake of argument, that it is morally permissible for governments to tax: it is not morally permissible for it to tax for the purpose of achieving a more equal distribution of wealth. (Of course, redistribution for purposes of rectification, as when A has two bananas and B has none because A stole B’s banana, is another matter.) Is progressive taxation justifiable? Our current system is doubly progressive: rather than everyone paying the same, one pays a percentage of one’s income, so the rich pay more; then the percentage increases. Arguably, the system is triply progressive, since much of the income of the rich is in the form of profits on investments which are subject to capital gains taxes, despite the fact that the invested money was taxed when initially earned.

Is it fair to force the rich to pay more? When I go to the store and pay the set price for a loaf of bread, it is not unfair that the next customer, who earns ten times what I earn, pays the same price. In a free market a fair price is whatever the informed, uncoerced parties to the transaction agree to. (Whether it is morally right to charge what it economically a fair price is a further matter.) Forced payments for government services do not, of course, occur in a free market. If it is possible morally to justify forcing people to purchase these services, possibly in that justification we can find grounds for counting some charges as fair and others not. If it is morally wrong to steal from A and from B, it is worse to take $1 million from the billionaire B than to take $1000 from A, who has only $10,000 altogether. All things being equal, more harmful wrongful acts are morally worse than less harmful wrongful acts. But I doubt that this is the kind of justification the statist seeks. Perhaps there is no point to looking for moral justification: governments simply find that they can get more, with less resistance, by means of a system in which the rich pay more, especially if the rich who gain political favor are given preferential treatment in the form of deductions, allowance, loopholes, etc.

A standard argument, construing taxation as payment for services, one of which is protection of property, claims that the rich, having more to protect, get a more valuable service. This is not fully convincing. If I am poor, I have little and can devote little of that to buying protection of the rest, but if I am rich I can afford to buy the protection I need on the private market. If I live on a large estate, I probably pay for more own security and see the police as superfluous. If I am poor and live in the inner city, my only protection might be the local cops, however inadequate it is. Similarly for various other public goods funded by taxation, e.g., parks, education, medical care. So in one sense, it’s the poor, not the rich, who benefit most from tax-funded government services.

In any event, so far as I know no one who claims that the rich are not paying their “fair share” has ever said what that share might be. In practice, “fair share” appears to be just code for “more.”

An ancient tradition in political thought is that democracy is ultimately infeasible. Every democratic regime self-destructs, the inevitable collapse coming some time after the poorer 51% expropriate the richer 49% but long before the poorer 99% expropriate the richer 1%. This was taken as a given in, e.g., Plato’s Republic. The US Constitution was the first serious attempt to create a democracy that would not inevitably self-destruct, by way of stringent constraints placed upon the power of the majority. Whether this can now be considered a success is, I assume, currently debatable.

Traditionally, utilitarianism rejects appeals to fairness out of hand. The only fairness utilitarianism demands is that each individual capable of pleasure or happiness has his utility weighed the same as that of everyone else. But this is consistent with any sort of treatment of the individual, e.g., torturing him to death because it turns out that the pleasure the spectacle affords others outweighs his suffering. In this and any number of other cases utilitarianism is at odds with our moral intuitions. This is why it is seen as an alternative to “common sense” morality, not as a way to articulate and systematize it. So it’s odd to see Mankiw treating this as some sort of discovery. Utilitarianism claims that common sense morality is often wrong, so pointing out its conflicts with common sense morality has no weight as an objection.

Also, Mankiw’s educational explanation of the increase in inequality in this country strikes me as focused on something of secondary importance. What seems much more significant is the confluence, by about 1970, of the US facing serious economic competition from emerging third-world economies as well as from first-world nations finally fully recovered from WW2, with government policies that discourage the production of wealth and facilitate its transfer to non-productive sectors.

Mankiw’s construal of the alleviation of poverty as a public good seems dubious to me. Are free rider problems really an issue when it comes to private help for the poor? Personally, I think I’m especially motivated to contribute precisely when I know that others won’t. In instances in which one fears that one’s contribution will go to waste, is there an obstacle to agreements to contribute if, but only if, others contribute a certain amount? We already have something like this when individuals and corporations offer to make “matching contributions,” e.g., your employer offers to contribute to PBS as much as you contribute.

But the underlying empirical claim that private charity “cannot do the job” is a familiar one. I think whether it is true depends on what “the job” is taken to be. Statists benefit from the ambiguity: is poverty having relatively less than others, or is it a matter of some people not having what they need for a decent life, however we measure that? It is probably true that nothing short of massive and systemic state action—”spreading the wealth around”—can do away with poverty in the former sense, but, as I said above, I see no reason to regard that as a good of any kind. What government welfare programs—not just the obvious ones like the subsidy of one-parent households, but things like subsidies for college tuition and medical care—achieve are in the main results no sane person would want. If instead doing away with poverty is a matter of bringing it about that everyone has their basic needs seen to, this (I would argue) is achievable by private means, at least in a society where there is no powerful central government working to increase need.