The Compatibility of Freedom and Equality (13): More Income Equality Makes Us More Free

Another reason not to worry too much about the supposed incompatibility of equality and freedom is the fact that an equal level of monetary resources promotes freedom. Money in the form of a relatively decent income allows us to choose from and engage in a wide variety of activities. It makes it possible for us to buy the commodities and services we want to buy, and consequently do with them what we want to do. (Of course, within the legal limits that determine what can be commercially traded and how traded goods can be used; e.g. we can’t buy people, and we can’t use the guns we buy to kill people). As a result, we have a wider choice of life plans and more means to pursue our chosen plan.

This is freedom in one sense of the word: more choice. Freedom in another sense, namely the ability to do what we want without interference, looks absolutely anemic compared to this. After all, what good is the absence of interferes when the world we live in offers us only very few options or none of the monetary resources to choose and pursue options. This freedom from interference is hardly valuable, if it is freedom at all.

So, if we agree that monetary means promote freedom in a certain sense of the word because these means broaden our sets of choices, then I guess we’ll also agree that a more equal distribution of money, wealth and income promotes freedom: it gives people who receive more money in the new, more egalitarian distribution more freedom, without necessarily diminishing the freedom of those whose resources are diminished in the new distribution. The monetary freedom of the rich isn’t necessarily reduced after income redistribution and after reductions of income inequality, because of diminishing marginal utility. The ability to buy a fifth yacht doesn’t increase anyone’s freedom in any sense of the word. And taking away this ability doesn’t reduce anyone’s freedom. On the contrary, if the monetary means that could have been used for this fifth yacht are instead given to a number of other people who don’t have a lot of money, then these means will benefit the freedom of those other people, and aggregate freedom will have increased.

So that’s a good reason to reduce income inequality. However, it’s probably not a good reason to eliminate income inequality completely, for four reasons. First, even if, ideally, people have a right to the same extent of monetary freedom as it is defined here, that doesn’t mean they should have the same amount of money. In order to be able to do the same things and have the same choices, different people need different amounts of money. The handicapped, for instance, may need more than average.

The second problem with equal money is that it would mean deep and frequent violations of property rights, and property rights are important, perhaps just as important as freedom (and no, property rights and freedom are not the same thing: the former are a means to interfere with the freedom of others, namely the freedom of others to use goods that belong to you).

A third problem created by equal income is related to incentives. And finally, equal income doesn’t combine well with considerations of desert (one definition of desert is that people deserve different levels of monetary wealth for their contributions to society, culture etc.).

We could react to these different considerations by framing the issue as one of value pluralism: income equality and freedom are important values, and so are desert and property. The difficulty would then be to balance these different values which, it turns out, are sometimes contradictory. That would mean limiting the equalization of income at some point before total income equality, at a level that is compatible with respect for property rights (also limited), with due consideration of incentive problems (also limited), and with recognition of the moral value of desert (also limited).

There’s possibly some Gini value that would hit this balance. This Gini value of x gives a level of income inequality at which monetary freedom is maximized for a maximum number of people. A value lower than x (the lower the Gini value, the more equal the income distribution) resulting from higher levels of income redistribution would not increase the monetary freedom of the poor because the amount of money taken from the rich has become so high that it doesn’t just eat away at marginal utility but also produces disincentives high enough to reduce the size of total social wealth.

We could try this kind of delicate balancing between redistribution on the one hand and incentives produced by rewards for deserving actions on the other hand. (Alternatively, we could also drop income equality as a value and instead focus on a so-called sufficientarian approach in which we would try to give people enough monetary means to achieve a certain level of freedom – freedom as it is understood here – regardless of the means and freedom of the people at the top of the income or wealth distribution. However, I’ll leave that option aside for the moment).

However, there are some problems: we’re dealing here with a somewhat strange notion of freedom. Freedom is obviously much more than the use of monetary means to choose and pursue goals. Also, we don’t want to promote consumerism. The problem with consumerism is that the truly important parts of life can’t be bought, and that focusing on consumption tends to sideline those important parts. It also has ecological disadvantages.

And another problem I already mentioned: some people will be worse off if money is equalized because they need comparatively more money just to have the same capabilities. Hence, rather than equalizing money we should perhaps equalize capabilities.

More posts in this series are here. More on income inequality here. And here‘s a related post about the link between poverty and freedom.

The Compatibility of Freedom and Equality (12): How Coercion Promotes Freedom

Freedom understood as independence and the absence of interference or intentional coercion (especially government coercion) is an important concept. The problem is that it seems to invalidate redistribution through taxation. If the government taxes a wealthy person to transfer some of her wealth to another person living under a fixed threshold of basic resources, then the government intentionally coerces the wealthy person and takes away (part of) her freedom. That’s one of the origins of the traditional view that freedom and equality are incompatible. For people who believe strongly in freedom as the absence of intentional coercion, it’s very difficult if not impossible to accept taxation and redistribution.

On the other hand, there are those who want to maintain the use of government and taxation as a means to guarantee people an equal share of those basic resource necessary for a decent human life. And I’m one of them. How can we reply to those – let’s call them libertarians – who voice concerns about the loss of freedom that’s inherent in redistribution?

1. First, we could argue that freedom, as it is understood here, isn’t the only important value, and that we should put it “in the mix” of the whole of human values, including welfare and equality, and try to balance those values in a fair way. That’s the value pluralism approach, but it’s an approach that won’t be successful to those who don’t believe in value pluralism or who believe that if there are many values, freedom is still the most important one (e.g. many libertarians).

2. Another reply could be that redistribution reduces one type of freedom – freedom from intentional coercion – in order to promote another type of freedom, namely a more positive type of freedom in which not only the absence of coercion is important but also the availability of choices, capabilities and power. Of course, a wealthy person’s choices, capabilities and power aren’t enhanced by the fact that she pays taxes – on the contrary – but when these taxes are used to guarantee a poor person’s basic income for example (or education, or health etc.) then that poor person will have a wider array of choices, capabilities, opportunities, power etc. So positive freedom is redistributed by means of a limitation on negative freedom, and is redistributed in such a way that on average people have more equal access to it. (If a rich person pays $10,000 in taxes for the welfare benefits, healthcare, education etc. of a poor person, then the rich person loses less choices, opportunities and capabilities then those gained by the poor person. Of course, the exact tax rate is important: punitive tax rates may harm the rich more than they benefit the poor).

In a way, this second reply also involves an appeal to value pluralism: negative freedom (one value) is balanced against more equal access to positive freedom (another value), and is – sometimes and in part – outweighed by it.

3. A third reply isn’t based on value pluralism. We could argue that redistribution of income or wealth through government taxation merely limits one person’s negative freedom for the sake of another person’s negative freedom. It’s fairly easy, in fact, to argue that poverty, or the absence of those basic resources necessary for a decent human life, reduces the negative freedom of the poor. The poor are intentionally coerced all the time, for no other reason than their poverty: the homeless are forcibly removed from train stations, gypsies from land where they aren’t allowed to camp, poor migrant workers have their passports taken away by their employers and are forced to repay “travel costs” by working for free, etc.

If the government gave these people a basic income for example, or rent subsidies, they wouldn’t be coerced in these ways. The taxes that the government would collect for this purpose would not simply reduce negative freedom for the sake of another value (positive freedom, welfare, equality etc.). It would reduce the negative freedom of some for the sake of the negative freedom of others (possibly many others depending on the type of taxation system). In other words, it would modify and equalize the distribution of negative freedom. It would increase intentional coercion on some people in order to reduce intentional coercion on (many) others.

Taxation and redistribution do indeed reduce freedom (in one sense of the word) but at the same time they increase freedom (freedom in the same sense as well as in a more positive sense). Conversely, a failure to tax and redistribute could reduce freedom.

More posts in this series are here.