The Ethics of Human Rights (66): Human Rights and “Spontaneous Order”

Hayek has famously argued that market economies create a spontaneous order, a more efficient allocation of societal resources than any intentional design or planning could achieve. This spontaneous order is superior to any order the human mind can design due to the specifics of the information requirements. Planners will never have enough information to carry out the allocation of resources reliably. Only individual economic actors can create an efficient and productive economy by engaging in free exchanges and by using as their information source the spontaneously developing price system. They can do so because they act on the basis of information with greater detail and accuracy – namely the price system – than the information available to any centralized authority.

Whatever the general merits of such invisible hand theories for the whole of society (I think those merits are real but often vastly overstated), it’s useful to ask if they also apply in the field of human rights. To what extent and in which circumstances can there be an equivalent of “spontaneous order” for human rights? Can it happen that people’s unintended and selfish actions promote respect for human rights? Or do human rights always require intentional and (centrally) planned policy?

First, this question has to be distinguished from a similar one: it’s true that people do have selfish reasons to promote human rights and often act on those reasons, as I’ve argued here. But in that case their human rights efforts are quite intentional. What I’m asking here is whether there are equally selfish but unintentional processes that promote human rights. And I think there are. Before listing some of them, however, let me make clear that those processes, although they are obviously beneficial and to be encouraged, will not make a huge difference, and that they certainly won’t be sufficient to bring about human rights utopia.

After some superficial thinking about this, I came up with three examples:

• Trickle down economics is by now thoroughly discredited, especially when it’s used to justify tax cuts for the wealthy. Not all boats have risen on the rising tide, and the tide itself has recently come crashing down on all of us, the rich included. However, that doesn’t mean that there’s never any trickling down in an economy. When the government’s tax system allows the wealthy to retain a reasonable part of their wealth (let’s assume we know what “reasonable” means here), then some of their wealth does indeed flow down to those with lower incomes. That’s because the rich are more likely to spend the additional income, through either consumption or investment, thereby creating more economic activity, which in turn generates jobs and higher income for the less well-off. If that’s the case, then the right to a certain standard of living is promoted through the selfish and unintentional actions of the wealthy. Of course, this will never be enough to secure that right for everyone all of the time.
• As Becker has argued, free competition between firms reduces discrimination. A racially biased firm will want to hire whites, even if they are more expensive and less qualified than some non-whites. But a firm will only do so if it’s not under pressure from competitors. In a competitive market, other firms can and will produce the same goods at cheaper prices by hiring the cheaper/better black person. The biased firm will then be forced to do the same. It may remain biased – opinions on such matters are notoriously hard to change – but it no longer has the luxury of acting on its bias.
• There’s a strong tendency towards urbanization in developing countries. Large cities offer more economic opportunities, and jobs in factories, shops or trade offer some advantages compared to agriculture (e.g. weather independence, stable income etc.). When women move to cities and work in factories, they usually have less children – they don’t need children to work the land – and they become more independent of traditional patriarchal structures that are more common in the countryside. This does not only improve the wellbeing of women. Having less children means that the remaining children are more likely to attend school, because school is expensive. Female children in particular benefit from this education. Hence, rights such as education and non-discrimination are automatically advanced by urbanization.

More posts in this series are here.

Why Do We Need Human Rights? (21): Selfish Reasons for Respecting the Rights of Others

People usually have no problem acknowledging their own rights and demanding that others respect those rights. (I say “usually” because it’s not unheard of that people waive their rights. For example, some don’t want to live in a democracy). It’s the rights of others that are often a problem. One can try to foster benevolence, tolerance, mutual respect and humanitarianism as means to increase the level of respect for the rights of others, but perhaps that’s utopian, depending on your assessment of human nature. It’s true that the concept of human rights arose precisely because of deficiencies in human nature and an overall insufficiency of benevolence, tolerance etc.

So perhaps it’s better to try to find selfish reasons that may convince people to respect the rights of others. There’s a couple of those here:

• To the extent that social stability and peaceful coexistence depend on some level of respect for certain human rights, and break down below that level, everyone has an interest in maintaining that level of respect. Massive and ongoing violations of certain human rights for a large enough subgroup of a population can cause social unrest that may ultimately affect the prosperity and security of all members of that population, including the violators.
• I argued before (see here and here) that the optimal process for thinking and knowledge acquisition requires the free and public appearance of a maximum number of arguments for and against a theory or idea. Only those theories and ideas that survive this process will be of high quality. The multiplication of perspectives can, to some extent, be the result of solitary reflection (“imagination”) but is enhanced by the actual participation of others in the thinking process. It’s like you can’t know that a square shape is actually part of a cube rather than simply a square if you don’t look at it from all possible perspectives and if you don’t shine a “light” on all possible sides. Hence, if we assume that everyone has an interest in the quality of his or her own thinking and knowledge, then we can also safely assume that everyone has an interest in at least certain freedom rights being granted to a maximum number of other people (even people in other countries or cultures, since the marketplace of ideas should be extended as wide as possible in order to avoid national or cultural prejudice and to allow the appearance of unusual perspectives and arguments).
• And then there’s reciprocity. If people cherish their own rights, it may be wise of them to cherish the rights of others, because they can reasonably hope for reciprocity: others will to some extent return the favor. Respecting the rights of others can encourage them to respect your own rights. Conversely, if you claim the right to deny the rights of others, that sets the precedent that someone might deny your rights. This reciprocity operates on several levels: it’s probably a basic social instinct to answer respect with respect; and you may hope for reciprocity because your own practice of respect for the rights of others has contributed to a general culture of human rights.
• Aging populations in developed countries will need more immigrants to keep their economies going. Hence their economic self-interest will convince them to be more positive about the freedom of movement and association of potential immigrants, something which will also be beneficial for those immigrants’ right to a certain standard of living.
• Some other selfish reasons to respect the rights of others may seem a bit far-fetched but not completely unlikely. For example, people have an interest in art and want to consume art. Hence, they must grant artists freedom of expression.

The big question here is obviously the weight of these selfish reasons to respect the rights of others. There are, after all, numerous selfish reasons for violating the rights of others (for example, discrimination, like dishonesty, is an important producer of profit for the discriminators). And those reasons can easily be considered more important than the reasons to act benevolently. We wouldn’t need to discuss human rights if things were any different because the “invisible hand” would have eradicated all rights violations. Still, I believe it’s useful to emphasize some of the selfish reasons to respect the rights of others because those are clearly not understood well enough most of the time. A proper understanding could at least make things better at the margin, and in some cases.

The Ethics of Human Rights (29): Should Taxation Be a Tool For Economic Efficiency or For Social Justice?

Taxation is a recurring theme in political discussions between people of the left and right. People of the left see taxation as a tool for social justice. They tend to prefer rather high taxation rates and a progressive taxation system:

• High taxation rates bring in revenues that are large enough to enable the government to spend on programs and transfers that are designed to promote social justice: unemployment benefits, poverty reduction policies, education, healthcare etc.
• Progressive taxation rates are just because they impose relatively (and not just absolutely) higher taxes on people who are more able to pay, and, in addition, reduce income inequality and hence realize another goal of social justice.

People on the right usually favor low tax rates and a non-progressive taxation system (either a proportional system in which everyone pays the same share of their income, or a regressive system in which everyone pays more or less the same amount in taxes). Rather than on social justice, they focus on the economic effects of taxation.

• They reject high taxation rates because they claim that these high rates discourage people and are a disincentive to hard work, effort and investment. Because high rates limit effort and investment, they also limit productivity, innovation, international competitiveness and job creation.
• They also reject progressive tax rates because high tax rates for high incomes discourage those people who work relatively hard (they work hard supposedly because they earn a lot) and who are most likely to innovate, to be productive and competitive and to create jobs.
• However, they don’t necessarily favor regressive taxes because they are equally hostile to high tax rates for low income people, albeit for other reasons. High taxes for low income people discourage them from entering the labor market and hence inflate unemployment. Still, they claim that the worst damage is done by high taxes on the higher incomes, which is the reason they reserve particular scorn for progressive taxation systems. Because high tax rates for the wealthy punish the most productive elements in a society, the whole of society suffers. More productive people will limit their productivity because they don’t want to fall into a higher tax bracket, and the money they pay in taxes can’t be invested in the economy. High tax rates, especially for the rich, have an unacceptable cost in terms of economic efficiency. Keeping taxes low, on the contrary, and allowing wealthy people to use their money in the economy, will ultimately benefit everyone (this is the so-called Trickle-Down theory).

Of course, this distinction between left and right is a caricature. Most people on the left are also concerned about economic efficiency, and most on the right are not insensitive to questions of social justice. The extremes are hardly ever encountered in real life: no one wants to limit taxes to such an extent that economic efficiency is promoted but no money is left for justice, and no one wants to put tax rates at such a high level that there is ultimately no more economy to tax. (The latter concern is expressed in the famous Laffer Curve arguing that beyond a certain level of tax rates government revenues in fact decrease instead of increase. At very high rates there is no longer any incentive for a rational taxpayer to earn any income and hence tax revenues will decline while tax rates increase. However, it isn’t clear what “very” in the previous sentence actually means and where exactly the tipping point is situated).

Personally, I believe that the concerns of both right and left are justified and need to be balanced, and that too much focus on either the element of efficiency or justice is detrimental to the other element. On the one hand, there’s only so much money a government can raise without wrecking the economy, and justice isn’t only about spending money (there can even be perverse effects such as unemployment traps, welfare dependency etc.). On the other hand, there’s only so much an efficient economy can do to realize social justice all by itself and quasi-automatically (remember the invisible hand…). To quote Matthew Yglesias’ sarcastic comment on the skyrocketing incomes of the U.S. top 400 earners in the decades leading up to the 2009 recession:

As is well-known, the Top 400 are considerably more talented than the rest of us. And [the] decline in their tax rates has created exciting new incentives for them to apply their talents. And that, in turn, is why the 2000s were a so much more economically successful decade than the 1990s, not just for the Top 400 but for the rest of us as well. Thanks to their skyrocketing incomes and falling tax rates, we’re currently [during the 2008-2009 recession, FS] all enjoying the fruits of prosperity, rapid growth, and low unemployment. Thanks rich guys! (source)

A similar sentiment is expressed in this clip from the Daily Show (skip to the 4th minute or so).

I believe taxes in the U.S. are relatively low and can be raised without too much harm to economic efficiency. The resulting government revenues could then be spent on improving the social safety net and promoting social justice. It’s difficult to imagine for a European that a country such as the U.S. doesn’t offer health insurance to millions of its citizens. Also, unemployment benefits are quite stingy in the U.S., both in terms of eligibility and duration: only one third of the unemployed qualify for benefits and only for 26 weeks (extendable during recessions if the Republicans don’t object, as they infamously did beginning of 2010).

The system of unemployment benefits could easily be improved without perverse effects or harm to economic efficiency. And there are other areas of possible improvement as well.

However, as a European in Europe, I think there’s a strong argument that the social safety net in Europe (at least in some countries) has harmed European competitiveness, labor market participation and innovation.

Still, is there evidence of this? What do the data say about high tax rates harming economic efficiency, in Europe and in general? Is the conservative case against taxes as strong as it seems? I’m afraid not. There’s some evidence that the effect of reasonably rather than extremely high rates on economic efficiency is minimal at best. Here’s more evidence from Lane Kenworthy about the U.S. and other affluent countries (always keeping in mind that correlation doesn’t imply causation and that the absence of a large negative effect of high taxes doesn’t preclude the possibility that lower taxes would have had a large positive effect). One measure of economic efficiency is economic growth. If we plot economic growth rates for the U.S. against tax rates for the wealthy we see that higher tax rates lead to more growth. But of course there can be catch-up effect: higher rates producing their effects only years later. That’s taken into account in these graphs, which also show that an international comparison doesn’t prove that countries with higher tax rates have lower growth.

If we have a look at the data about the effect of high tax rates on unemployment (another conservative concern), we also see that we shouldn’t panic about taxes.

Now, if there is no good reason not to tax at a moderately high level, based on concerns about economic efficiency, the question remains whether there is a good reason to tax based on social justice reasons. Given the caveat that social justice isn’t all about government spending (I argued <a href="http://here that it is primarily about something else) and that such spending can in some cases have perverse effects (see above), I do believe that some spending is necessary in some cases, and that relatively high tax rates are necessary to produce the revenues required for this spending.

Again following Kenworthy, I believe that relatively high tax rates are acceptable and even necessary to create the revenues required for social justice policies, but that progressive tax rates in themselves don’t do the job of reducing income inequality, contrary to what is often claimed as a justification for progressive rates. That doesn’t mean that we shouldn’t reduce income inequality (it’s quite high in the U.S.) – there are good reasons to try. It just means that progressive taxation in itself won’t do the job. The important thing is to have high tax revenues which can then be spent in transfers and services that reduce income inequality and achieve other goals of social justice. Yet, I still think a progressive system is required, not because of its supposed effects but simply because it is just in itself, compared to proportional or regressive systems. A person with more income can afford to pay, not merely more in an absolute sense but more in the sense of a larger share of his or her income.

The Causes of Human Rights Violations (19): Ideology

From Reinhold Niebuhr’s Moral Man and Immoral Society:

Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold.

That’s the basis of trickle down economics which is a theory about how inequalities ultimately benefit everyone. It’s also the basis of tax schemes such as a flat tax that limit forced redistribution, because the invisible hand will redistribute wealth or make it trickle down automatically.

And, when trickle down is discredited and when it turns out to be difficult to prove that inequality is a universal value, we hear that inequality isn’t as big a problem as it seems, and that this is the land of opportunity where even people who are on the wrong side of inequality can make it through hard work and discipline. Even Obama seems to believe this, as is clear from his inauguration speech. That’s a classic case of the anecdote turned into a “scientific” law. Data show that social mobility isn’t what the American Dream dreamers think it is. Implicit in this story is that existing inequalities are the sole responsibilities of individuals who haven’t made diligent use of the many opportunities this land has generously provided them. Discrimination, injustice, greed and lack of compassion are obscured as causes of inequality.

In reality, inequalities are indeed greater than could possibly be defended rationally, in the words of Niebuhr. The defense based on trickle down economics has failed, as has the defense based on the claim that inequalities are the sole result of individual choices and a lack of response to opportunities (this defense completely rejects effects of discrimination, which seems to be misguided).

However, it’s not because inequalities are greater than they should be that all inequalities are wrong. Some inequalities are unavoidable or even valuable. We do want Einsteins and Picassos. Society should reward merit. We all benefit from the recognition of exceptional individuals. Nietzsche for example rightly protested against the modern habit of cutting everyone down who dares to stick his head up. Equality of outcome is in many respects distasteful. And apart from the valuable inequalities, there are unavoidable inequalities. Some inequalities that are the result of the “lottery of birth” are impossible to correct: some people are born with more talent than others or with talents that are more appreciated in the economic or cultural market; and there will always be people who are born in privileged families.We wouldn’t want to engage in genetic engineering in order to redistribute talent, and neither would we be willing to redistribute children across families (at least not for the purpose of equality of opportunity).

Other aspects of the lottery of birth, however, are more difficult to defend. Why should the good luck of being born in a wealthy family with educated parents guarantee you a better education, better healthcare and better economic prospects? But of course it isn’t just the contingency of your place of birth that determines your opportunities and you future place in society. Some people are pulled down by discrimination or bad luck. We justifiably don’t accept that people’s prospects in life are fully determined by their family, luck or discrimination.

Again, equality of opportunity is different from equality of outcome: most of us don’t think it’s a good idea to strive towards equality of outcome in most spheres of life. We’re quite happy to accept that some people earn less money, have less vacation time, have lower social status and recognition levels and have more uncomfortable, dangerous, or physically draining work etc. What we don’t accept is that those outcomes are predetermined by the family they happen to be born in, by discrimination they suffer or by other instances of bad luck.

Racism (4): Competition v Racial Bias

Gary Becker looked at the well-documented fact that African-Americans in the U.S. earn less than whites, partly because on average they are less well educated. But even if corrected for this, there remains an unexplainable difference in wages. Unexplainable apart from racial bias. There have been many studies that have proven the existence of bias. For example, firms are 1.5 times as likely to interview someone for a job if they think the person is white, even if all other characteristics such as education and experience are equal.

The interesting thing about Becker is that he goes beyond education, positive discrimination or labor legislation in his search for solutions. He mentions increased competition between firms. A racially biased firm will only hire a white who is more expensive and perhaps even less qualified than a black, if this firm is not under pressure from competitors. If its market is opened to competition, then other firms can and will produce the same goods at cheaper prices by hiring the black guy/gal. The biased firm would then be forced to do the same. It may remain biased – opinions on such matters are notoriously hard to change – but it no longer has the luxury of acting on its bias.

So this sounds promising, and market freedom is beneficial for other reasons as well, so it’s worth to pursue it. But don’t expect too much of the free market. There’s no invisible hand, leading those motivated by selfish motives to destroy racism without really wanting to. Much more needs to be done.

The Compatibility of Freedom and Equality (1): Impossible?

Freedom vs. Equality, or Equal Freedom/Free Equality?

In this blog series, I want to look for philosophical arguments in favor of the link between freedom and equality and against the traditional opposition between these values. The conclusion will be that the best way of defending this link is by adopting a certain definition of freedom, namely freedom as self-realization, self-development and autonomy. Other types of freedom are more difficult to combine with the demands of equality.

An important part of the link between freedom and equality is the law and the state. Protection by the law, security because of the law, the creation of a public space by the law, political participation in a democratic state based on the law, are all factors which combine in producing an equal liberty for all, liberty in the sense of self-rule, freedom of choice and the possibility to determine your own life and to develop your self.

In this first post of the series, I will limit myself to the statement of the problem. Why should there be a contradiction between freedom and equality? Over the last centuries, it has indeed become kind of a tradition to juxtapose freedom and equality and to view these two important human values as opposing goals, one inevitably leading to the limitation of the other.

Some examples

One can point to the way in which the claims of equality, as they are expressed in economic rights and policies of income redistribution, limit the freedom of the wealthier parts of the population, in particular the freedom to do with their possessions as they want.

Moreover, the struggle against poverty can become the overriding preoccupation and often even an excuse for violations of freedom rights (the Chinese government can be criticized for this). Non-economic injustices are often readily accepted once people are convinced that these injustices are needed to combat economic injustices.

Another example of the way in which the struggle for equality limits the freedom of certain groups is given by some kinds of affirmative action programs. And a final example, the principle of non-discrimination may require limiting the freedom of expression of those who promote racism or other forms of discrimination.

Conversely, freedom can also limit equality. Although I’m all in favor of economic freedom, I have to admit that the unfettered free market and the absolute protection of property – a freedom right – can produce or exacerbate economic inequalities. When the unequal distribution of talent and starting-capital is not checked by government intervention then the outcome tends to be more economic inequality, the exceptional “rags to riches” story notwithstanding. It is obvious that people who are born in wealthy families have more opportunities and less risks than others.

This is true even if we don’t assume that people only use their abilities and starting capital for selfish purposes. There is charity and solidarity, but even if we combine this with so-called trickle-down effects or Invisible hand effects (the wealth of the wealthy benefits the less wealthy because they can work for the wealthy etc.) we have to admit that some people will lose and will find themselves in a situation which is not only economically unequal but also detrimental for their wellbeing.

Economic rights, the rights to these basic resources and capabilities, are not the automatic product of voluntary caritas, free solidarity, economic freedom or the invisible hand. Some kind of government intervention and coercion is necessary in order to redistribute wealth and undo the most heinous forms of economic inequality.

Another example: an absolute freedom of expression which includes the protection of hatred and racist speech, can lead to inequality, discrimination and even genocide.

The choice between freedom and equality

Most if not all people consider both freedom and equality to be important human values and goals. But because of the apparent contradiction between these goals, people tend to make a choice, and prefer one to the other. It is this choice which separates conservatives and liberals, or people from the right and left; the former preferring liberty, the latter equality (simplistically).

No one, however, throws the other value overboard. Either equality or freedom is merely deemed somewhat less important in certain specific cases. Not all things that are good and desirable are necessarily compatible. Sometimes one good thing will have to be abandoned or limited in order to protect another good thing. And I don’t exclude that this can be the case of equality and freedom. However, what I will try to do in this series is to show that things aren’t so problematic and that, given a correct understanding of freedom in particular, conflicts are not necessary.