Fairness and Equality: The Not-So-New New Bone of Contention

Posted on December 9, 2013 by

23


Not fair!  How many times did we hear, or say, that when we were children and someone thought they were not being treated fairly, whatever that meant to them?  We are hearing it again, from grown-ups—well, I think they are grown-ups.  We hear it from the Occupy Wall Street crowd (what is left of them), from Wal-Mart workers, from fast food workers, from ideological liberals in general, from many others, and recently from Pope Francis and President Obama himself.  They mean that the result for these people in terms of their income is not equal or closer to that of other wealthier individuals.  So for them inequality of income is not fair.  This has also been an important issue recently among Christians who argue that poverty is caused by a market system that creates inequality.  You need only refer to Jim Wallis or Ronald Sider to read or hear this lament.  Christian young people in Christian colleges are increasingly hearing this message—and they are buying into it.  So what is the reality of the claim that inequality of income is inherently unfair?  By the way, the Christmas season is a good time to write about this, not least so that I can achieve the dubious title of the latest “Scrooge” among those who see unfairness behind every tree, money tree that is.  Some child is going to be deprived of a “fair” amount of toys because I am promoting the opposite position, some will say.  Just as an aside, my colleague Jeff Haymond has also taken on this topic in part, overlapping mine, and in a very helpful—and shorter—form on this blog.  Read it.

We begin by trying to pin down what people mean.  It is sometimes difficult to understand what critics mean when they talk about inequality.  Some mean that different individuals are not treated the same in similar situations under the law.  This is the standard historical understanding of equality—under law.  This is fairness in process, regardless of the outcome.  The newer understanding is that the outcome of some particular process is unfair because it creates inequality.  To be fair, most people would agree that absolute equality is impossible to achieve.  But as we have heard lately from various protesters, they do believe that equality can and must be achieved to a much greater extent than it has been.  Their idea of equality then is relative equality of income in outcome or result.  An example:  The fact that I make say $100,000 per year (false) and my neighbor makes $50,000 is unfair in itself.  Somehow this situation must be remedied so that we are closer in income, maybe at $80,000 and $70,000 respectively or even $85,000 and $65,000.  Whatever we each end up with should narrow the gap in income—usually sufficiently to give each of us a “fair wage.”  I hope you see some of the problems with this idea already, but let’s continue.

How do we achieve this idea of fairness?  And how do we define the point at which the outcome is really fair?  And finally, is all this really fair after all? In the eyes of those promoting greater fairness in outcome, often called social justice, the easiest way to achieve greater fairness is quite simple in principle:  take some more from those better off and give it to those worse off.  One can do this either directly or indirectly.  For example, government at any level can simply tax better off people at higher rates and less well off people at lower rates and give the extra money from the better off to the poorer.  That’s simple redistribution.  Or, to take another, indirect example, government can mandate that employers pay higher wages to everyone through a minimum wage or a combination of minimum wage and restrictions on salaries and benefits on upper management.  The effect is supposed to be that the incomes of the lowest paid and the highest paid are closer than they were—ideally, much closer.  In utopia we would equalize the incomes-all would have the same income for the same work or in some utopias, the same income no matter the work done.

I have already alluded to the standards that might be adopted for defining fairness.  The loftiest is absolutely equal income no matter the level of work or time of labor.  But there have been many lesser definitions.  “Equal pay for equal work” comes to mind.  Or various redistributionist schemes based on progressive income taxes.  Just as an aside, things other than income can be redistributed (property, rights, etc., but we are concentrating on income).  Another is just the nostrum, “a fair wage” or a “living wage.”  Whatever we label them, the goal of all is to reduce the gap between the highest and lowest paid individuals. You see, “the gap” is all-important to fairness/social justice advocates.  They cite statistics that a corporate CEO makes 100 or 1,000 times the salary of the lowest paid worker in the same company.  Or they compare average wages paid in India to those paid in the United States.

How do we evaluate these calls for equality?  First we should understand that such calls are in themselves meaningless because inequality in itself is irrelevant.  Let us suppose that CEO makes a billion dollars per year and I make $100,000.  Our incomes are severely unequal, but we are both more than able to live and function and support families.  We are both well-off.  We are far from poor.  If I make $100,000 per year and someone else makes $40,000, again we are unequal but again, neither of us is poor (although the lower income person no doubt will have to watch his budget more carefully).  Furthermore, even these figures may be misleading.  What is poor, what is wealthy, what is middle class?  How much is enough? How much is too much?  Can any human determine this without claiming a god-like omniscience and a divine moral superiority.  The Federal government’s poverty standards are examples of the impossibilities of trying to measure the virtually immeasurable.  And the World Bank reminds us that global inequality has been reduced in the last twenty years—you read that correctly.  Finally, as David Harsanyi points out, there are a good many countries in which everyone is pretty equal—equally poor (“What the Pope Gets Wrong About Capitalism,” in Reason, December 9, 2013).  There’s something to be proud of.

Second, are these inequalities unethical just because they are unequal? Some would say they are and would justify their claim with biblical texts they argue teach that God favors the poor in some way.  But even if he did favor the poor (and was therefore biased, which we are told He is not) we have already seen that very few of these individuals are actually poor in an objective sense (statistics bear this out, no matter how one measures, whether using income or “things”).  Moreover, the Scriptures do not say that an economic system such as markets are unethical just because there are poor people living in those nations.  There were many (more) poor people under socialist regimes.  So the institutional “sin” argument is also bogus.  In addition, if there are poor, we would have to know something about how and why they came to be that way.  Are they unfortunate, disabled in some way, or simply lazy and foolish?  Each case is different and must be treated that way.  Once again, this is not a case of the ethically unfair necessarily.  Now it might be if one can point to systematic abuses and oppressive practices by a government or some institutional structure that actually inhibit economic activity by individuals, that stifles innovation, hard work, creativity, entrepreneurship.  That would be a case of an unfair government, but in a different sense than our market critics mean. Finally, consider this:  Why is it fair to take a part of one’s income when he earned it without duress, fraud, or theft, just because someone believes he is “too well off”?  This itself is theft, which even a non-believer like the philosopher Robert Nozick recognized as such.

Quickly, let us take a look at what would happen if we took the critics seriously and (as some nations have done) engaged in serious governmental redistributional policies.  Let us assume we take money from the wealthier (however we define them, itself a problem) and give it to the poorer (however we define them).  Let us say the redistribution equalizes all income so that Income (1)=Income(2)=Income(3)=…Income(n), where n is the number of wage-earners in a nation.  Will that state persist?  No.  Intelligence, entrepreneurial skill, work ethic, etc. will lead to a new state of, yes, inequality, which will then have to be remedied.  And so on it goes infinitely—and impossibly.  But also, if we begin to confiscate income from the wealthier and from their firms, we may expect them to be less productive at some point.  In that case, their companies would also become less profitable, would lose investors and profit, and would eventually close, eliminating many jobs and much income.  Then we have many more poor than before.  We destroy incentive, creativity, entrepreneurship—and opportunity to get out of poverty.  And what about that Indian worker who makes so much less than we do?  What if we somehow get the government to raise wages for him and all other such workers?  Their company goes out of business and the workers go back to a subsistence living that made their former life almost heaven.  Is that helping them?

To conclude, we do have some in every nation who are unable to care for themselves.  A good case can be made that government may provide for their needs.  Another thinker whom many would think could never have said this, asserted that the state could and should provide a “safety net” for those poor.  His name was Friedrich Hayek.  But there must be relatively few of these individuals in any relatively wealthy nation such as the United States.  In general, if any governmental action is needed, it is to take action to reduce its presence in the market and allow freedom to pursue one’s God-given abilities and create their own earned success in real, legally well-defined markets.  The argument that it isn’t fair that we have inequality is a false argument that must be addressed by Christians as well as non-Christians, if we genuinely care about the welfare of people.  This message is not that of a Scrooge, but of God’s principles applied to a fallen world.  Nor is it the prosperity gospel.  Markets don’t magically guarantee economic success, nor is such success the be-all-that-ends-all.  But it seems rather fruitless to call out markets because one sees inequality in the world.  I believe my Christian duty as an academic is to correct such misconceptions and thereby begin to change the conversation so that we can get started on the road to genuine and sustained human flourishing.

Advertisements