The Ethics of Human Rights (67): What Kind of Redistribution Does Luck Egalitarianism Require?

Luck egalitarianism is the theory of justice according to which bad luck that falls on people through no fault or choice of their own, is an injustice that has to be remedied. Whatever the merits of this theory, it does broadly correspond to certain widely shared moral intuitions. When you lose a limb in an accident, or contract a terminal illness, you probably feel like “why me?” and ask yourself: “what did I do to deserve this?”, “why should I of all people suffer this fate”, and “why should I be worse off than others through no fault of my own?”. You’ll have the same feelings when you happen to be born in a poor country, with a disability, in a dysfunctional family or in a discriminated cast or class. Such instances of bad luck lead to vastly unequal opportunities. And it does seem to be the case that inequality that is attributable to differences in our unchosen circumstances or abilities is less acceptable – morally speaking – than inequality that is wholly attributable to the responsible choices we make.

Of course, bad luck is unavoidable, but we can do something about the unequal opportunities it creates. This will inevitably lead to some kind of redistribution. The redistribution required by luck egalitarianism means that the lucky among us should transfer to those less fortunate some of the advantages that have come to us through luck. For example, we should pay taxes that are used to make life easier for the disabled. We can’t redistribute luck (for example, we can’t redistribute disease, accidents etc.). Hence we have to redistribute the consequences of luck. We should make the consequences of bad luck less severe or a bit easier to carry, and we should do so by skimming some of the beneficial consequences of good luck.

The redistribution required by luck egalitarianism is asymmetric: something must be done to help the unlucky, and that means taking something from the lucky; but it’s not the case that something must be done to make the lucky less lucky. It’s bad when people are worse off because of bad luck, but it’s not equally bad when people are better off because of good luck. Merit is important in life, and we admire people who are better off not because of good luck but because of what they did and who they are. But this admiration doesn’t imply condemnation of those who are better off simply because of good luck. The latter shouldn’t be condemned but they should part with some of their advantages in order to help those who are worse off because of bad luck. Bad luck is objectionable, and good luck is unobjectionable. But unobjectionable doesn’t mean that we are not allowed to confiscate part of the benefits of good luck in order to do something about objectionable bad luck.

And here we encounter one possible objection to luck egalitarianism: it seems like the theory doesn’t allow taxation of those who have acquired their wealth without any good luck (that is, if there are such people). Normally, most of us would want to impose a duty to help also on those who are better off not because of luck but because of what they did.

Other objections are here. More posts in this series are here.

The Causes of Poverty (68): Rich People Not Giving Enough Money to Poor People

You can criticize trade policy, immigration restrictions, bad governance or any other commonly cited cause of poverty, but you shouldn’t forget the obvious: there are a lot of wealthy people in the world who could, without losing much wellbeing (due to the diminishing marginal utility of money), help to lift every single poor person in the world to a much higher level of wellbeing.

The fact is that they could but don’t. We do have progressive taxation systems and other means of redistribution, we have development aid, we have charity etc., but none of these things yields enough money to lift everyone out of poverty. And there’s not enough public support to strengthen these redistribution mechanisms. Development aid is already unpopular at current levels, and don’t even start to talk about tax increases. The tireless efforts of Peter Singer and company to promote giving also have only a small effect.

The insufficiency of giving and other means of redistribution is hard to understand, in particular given the fact that rich people are generally not very dumb and able to understand the law of diminishing marginal utility. Of course, I know about loss aversion, the endowment effect, habit formation, the importance of status etc. But again, wealthy people should in general be the ones best able to overcome biases, to distinguish the important things in life from the unimportant, and to see how helping others can be beneficial to ourselves, both psychologically and socially (helping makes you feel good, and living a good life amid misery is socially untenable). But perhaps I’m wrong about rich people.

And then there’s something else stopping us from giving more (or allowing ourselves to be taxed more, which is roughly the same thing), namely the stories we tell ourselves. For example, you often hear that it’s better to allow people to look after themselves first, so that they can create the conditions in which they unintentionally help. Allowing entrepreneurs to get rich – i.e. not taxing them too heavily and not insisting that they should give their money away rather than invest it – will be much more beneficial to the poor. Many of the poor will get a job thanks to them, and their products and services will also make the lives of many a lot better.

However, this is not incompatible with giving. True, what you give you can’t invest, but we can allow people to delay their giving until the day that they don’t need to invest a lot more. The example of Bill Gates comes to mind. So we can accept that there is some truth to the story that free enterprise takes care of a lot of poverty, and at the same time insist that there should be more giving.

Another story we tell ourselves goes like this: giving people money isn’t a very good way of helping poor people. Many of them will just waste it, middle men will confiscate it, third world governments will misuse it, people will become to depend on it etc. Well, that doesn’t seem to be completely correct. Experiments with conditional cash transfers are very promising. And even if it’s correct to some extent, that’s just an argument to be smarter when giving money: invest it in businesses, healthcare etc.

And finally, there’s the story about agency: helping people is disrespecting them as self-authors and self-governing moral creatures. You may make them materially better off – at least in the short run because dependence on help may create motivational problems in the long run – but you take away their dignity and make them psychologically and morally worse off. People may not want to be helped, and even if they do it may not be in their best long term interest. The problem with this story is not that it’s false as such; it’s that people may not have a long term if we fail to help, and that starvation or homelessness is also an affront to dignity, and surely one that is a lot worse than receiving help.

More about giving is here. More posts in this series are here.

The Causes of Human Rights Violations (35): Last Place Aversion

It seems that it’s very important to people that there are others who have it worse:

Support for redistribution, surprisingly enough, has plummeted during the recession. For years, the General Social Survey has asked individuals [in the US] whether “government should reduce income differences between the rich and the poor.” Agreement with this statement dropped dramatically between 2008 and 2010, the two most recent years of data available.  Other surveys have shown similar results.

What might explain this trend? First, the change is not driven by wealthy white Republicans reacting against President Obama’s agenda: the drop is if anything slightly larger among minorities, and Americans who self-identify as having below average income show the same decrease in support for redistribution as wealthier Americans.

“[L]ast place aversion” … can lead people near the bottom of the income distribution to oppose redistribution because it might allow people at the very bottom to catch up with them or even leapfrog past them. (source)

Lab experiments have shown that people

choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. In money-transfer games, those randomly placed in second-to-last place are the least likely to costlessly give money to the player one rank below. …

Using survey data, we show that individuals making just above the minimum wage are the most likely to oppose its increase. (source)

I think it’s not far-fetched to assume that this isn’t limited to issues of redistribution and that something like it can lead to the persistence of certain types of rights violations. Perhaps some men in societies with endemic gender inequality actually like the fact that women are below them. And perhaps some groups in some societies need people like the Roma, “illegals”, immigrants or blacks to live in poverty and suffer from discrimination in order to feel better about themselves.

Moreover, individuals in positions of power can use last place aversion to create divisions and antagonism among groups belonging to the lower strata of the population and avoid the formation of a common front against the rulers. Last place aversion therefore leads to first place preservation.

More posts in this series are here.

The Causes of Poverty (54): Lack of Trade Liberalization

I mentioned before that trade liberalization – the removal of trade barriers such as tariffs, subsidies and other distortions of international trade – is, on aggregate and in the medium term, a powerful mechanism for poverty reduction. I say “in the medium turn”, because some structural adjustment may be necessary, and “on aggregate” because some may lose while others gain.

The usual fears about trade liberalization – that it reduces government revenues necessary for redistribution, that it leads to labor competition, lower wages and higher unemployment rates, or that it raises prices in developing countries – are, in general and on aggregate, unfounded (an overview of the evidence is here). Of course, trade liberalization may cause local economic shocks, and there can be distributional effects: some people will benefit more than others, and some may even be worse of after liberalization, especially in the short term. But it’s the aggregate medium term effect on a country or an economy that counts.

This is similar to the positive effect of economic growth on poverty reduction:

The vast majority of the world’s poor live in the rural areas of these two countries [China and India]. Both countries achieved significant reductions in poverty during 1980–2000 when they grew rapidly. According to World Bank estimates, real GDP grew at an annual average rate of 10 percent in China and 6 percent in India during these two decades. No country in the world had as rapid growth as China, and fewer than ten countries exceeded the Indian growth rate. The effect on reduction in poverty in both countries was dramatic, entirely in keeping with the “Bhagwati hypothesis” of the early 1960’s that growth is a principal driver of poverty reduction. (source)

Not all of the poor will be automatically better of as a result of economic growth, and growth may widen income inequality or relative poverty while reducing absolute poverty. But on average and on aggregate, economic growth – like trade liberalization – reduces poverty. That’s not just a story of “trickle down” or “all boats rising on a rising tide”; economic growth also means that the government has more resources to fund welfare and redistribution. (Obviously, none of this implies that growth is always beneficial or that there isn’t room to make growth even more “pro-poor” than it already is).

Arguments in favor of trade liberalization

The interesting part of the argument is that the positive effect of trade liberalization on poverty reduction passes through enhanced economic growth: liberalization reduces poverty because it enhances growth.

[P]ractically no country that has been close to autarkic has managed to sustain a high growth performance over a sustained period. Furthermore, … if one classifies countries into globalizers and nonglobalizers by reference to their relative performance in raising the trade share in GNP during 1977–1997, the former group has shown higher growth rates… [T]he outward-orientation of the Far Eastern strategy … led to the Asian miracle. (source)

Free trade is one of the determinants of economic growth. Growth requires increased productivity, and that’s what free trade delivers. Free trade means more productivity because it means

  • more specialization
  • more use of comparative advantage
  • better access to technology and knowledge
  • better and cheaper intermediate goods (raw products etc.) and capital goods (machines etc.)
  • benefits of scale
  • and increased competition.

All these consequences of free trade have a positive effect on productivity and hence on growth. And that’s not just theory; there’s empirical proof. Reductions in trade barriers were almost always followed by significant increases in productivity (source).

And it’s not just productivity; trade liberalization has other effects as well. The removal of tariffs can reduces prices for consumers and hence reduce poverty. It’s often the case that goods consumed by poor people have a higher tariff tax than goods consumed by rich people:

In his research, [Edward Gresser, senior fellow and director of trade policy at the Progressive Policy Institute] found that the tariff rate on a cashmere sweater is 4 percent; the rate for one made of much cheaper acrylic is 32 percent. A silk brassiere has a tariff rate of less than 3 percent, but the rate on a polyester one is slightly less than 17 percent. The tariff rate on a snakeskin handbag is just over 5 percent but climbs to 16 percent for one made of canvas. Similar variations occur when it comes to household goods. Drinking glasses that cost more than $5 each have a tariff of 3 percent, while those that cost less than 30 cents each have a rate of 28.5 percent. A silk pillowcase has a rate of 4.5 percent; this goes up to nearly 15 percent for one made of polyester.

Overall, clothes and shoes contributed nearly $10 billion in tariff revenue in 2009, while higher-cost items including audiovisual equipment, computers and even cars added less than $2 billion. Gresser contends that the $10 billion is disproportionately borne by people who can’t afford to buy luxury goods. What’s more, when customers pay sales tax on these products, that amount is also higher than it would otherwise be thanks to the tariff that drives up the retail price. (source)

Hence, not only does free trade alleviate poverty, trade restrictions and protectionism actually aggravate poverty. Take also the example of restrictions on rice exports in rice-producing countries:

At first glance, this seems understandable, because a country may not wish to send valuable foodstuffs abroad in a time of need. Nonetheless, the longer-run incentives are counterproductive. (source)

When farmers can’t export, there’s little incentive for them to farm rice. Result: the shortages that were meant to be avoided.

Arguments against trade liberalization

However, we shouldn’t lose sight of the undisputed downsides of trade liberalization. The removal of subsidies can hurt certain producers and it can, especially in the short run, depress employment and wages in certain sectors. It can therefore reduce some people’s incomes and push them into poverty. Trade liberalization can destroy entire markets: it can force a country to abandon tomato production for example, because nonsubsidized local producers are no longer able to compete with increased import competition coming from countries with a comparative advantage. The local producers will lose their jobs and income. However, these same people may benefit in other areas: products which they consume may become cheaper. So, when assessing the impact of trade liberalization on poverty, one has to aggregate all the losses and gains in different areas, and that’s ultimately an empirical question that has to be investigated country by country. Overall, the evidence is that, on aggregate, the effect is probably positive.

There can be individual losers from liberalization, and even individual countries can lose: countries that depend on mineral resources, for example, can take the fast lane towards the resource curse when trade is liberalized. But it’s the global balance of poverty alleviation that determines the desirability and success of trade liberalization.

The claim that liberalization negatively affects government revenues because of decreasing income from tariff taxes, and hence diminishes the generosity of the welfare state, is also not well founded. First of all, liberalization also means reduced subsidies, which should improve governments’ fiscal situation. Secondly, trade volumes increase as tariffs are reduced, and hence the net effect of reducing tariffs doesn’t have to be falling revenues. And finally, even if revenues fall, the poor don’t necessarily have to suffer: it’s ultimately a political decision where to spend which types of government revenues. Priorities can change when revenues change.

Another possible disadvantage of free trade is a cultural one. The claim is that free trade means cultural imperialism: small cultures don’t have the resources to export their cultural products and risk being overwhelmed by, in particular, American culture. Hence, there may be a case for cultural protectionism, but this case doesn’t extrapolate to protectionism writ large.

Conclusion

Liberalization isn’t a magic bullet, neither for economic growth nor for poverty alleviation. Sustained growth and substantial long term poverty reduction require more than free trade. Conflict resolution, good governance, education etc. need to accompany liberalization. It’s no secret that we don’t yet fully understand all the determinants of growth and poverty reduction. The advantage of trade liberalization, compared to other possible pro-growth or pro-poor policies, is that it’s relatively easy to implement: it is – or should be – easier to abolish tariffs and other trade restrictions (especially if there’s an element of reciprocity in global negotiations) than to create a solid education system or a non-corrupt judiciary able to enforce market rules and property rights.

The evidence in favor of the pro-poor effects of trade liberalization is compelling, but we shouldn’t underestimate some measurement difficulties: the measurement of poverty, of trade liberalization and of the effect of the latter on the former is by definition imprecise. The concept of trade liberalization may also be too broad or too vague. And the specific outcomes of liberalization policies depend not only on the precise reforms being undertaken, but also on the context in which they are undertaken. The same measures will have different results in different economic environments. The extent of multilaterality also determines the effects.

Read more on the topic here and here. More posts in this series are here.

The Causes of Wealth Inequality (22): Non-Progressive Taxation and Weak Transfers

This post applies to the U.S., but I guess the same conclusion are valid for a number of other countries as well. In the case of the U.S., very high levels of income inequality could, in theory, be reduced in several ways:

Unfortunately, very little of this is happening. Let’s focus on the last two options. The tax system in the U.S. is not progressive at all. As you can see from this graph, taxation in the U.S. hardly influences income shares.

The poor only get a little bit more thanks to taxes, and the rich only lose a little bit. This is all the more regrettable given the fact that the rich have done very well over the last decades.

Higher tax rates for the wealthy and other more progressive taxes such as a higher inheritance tax, a higher capital gains tax, a Tobin tax etc. are politically impossible it seems.

Increased benefits for the poor are equally unrealistic given the fiscal situation and the predominant ideology. Although the poor in the U.S. do profit from the existing benefit system in absolute terms (unemployment insurance for example saves millions from absolute poverty), income inequality barely moves because of it. Income shares after benefits are hardly less unequal than before. This graph shows the influence on income shares of the sum of taxes and transfers, but you get the picture.

Taxes and transfers result in the poor having a bit more and the rich having a bit less, but fundamentally they don’t change the distribution of income.

More posts in this series are here.

Income Inequality (25): And Economic (In)Efficiency

As I stated before, economic theory suggests that income inequality is a necessary price to pay for economic efficiency: unequal rewards incite those with talents, skill and perseverance to innovate and to be productive, so they can reap higher benefits. Ultimately, this serves the welfare of the whole of society (a process which is then caricatured in trickle down economics). The mirror image of this is reductions of inequality that take away incentives for doing well, and that therefore result in economic inefficiency and less prosperity for all.

Tyler Cowen has framed it like this:

Redistribution of wealth has some role in maintaining a stable democracy and preventing starvation. But the power of wealth redistribution to produce net value is quite limited. The power of wealth creation to produce net value is extraordinary … We should be putting our resources, including our advocacy and our intellectual resources, into wealth creation as much as we can. (source)

But is that really true? There is some evidence that reducing inequality through redistribution actually promotes wealth creation. What’s the mechanism? Sam Bowles claims to have identified one element of it:

Inequality breeds conflict, and conflict breeds wasted resources … [I]n a very unequal society, the people at the top have to spend a lot of time and energy keeping the lower classes obedient and productive. Inequality leads to an excess of what Bowles calls “guard labor”. (source)

More about that effect here and here. Other parts of the mechanism through which inequality impedes and equality promotes growth may be the following:

Poverty causes credit constraints. This stops the poor investing in businesses or education; the low aspirations caused by poverty can have the same effect. … Inequality can create the threat of redistribution which can blunt incentives to invest. Or it can lead to state interventions – such as the minimum wage – that harm wealth creation. … The backlash against wealth-creating processes such as globalization, offshoring and private equity in the UK and US are founded in the view that they create inequality. If we had better redistribution mechanisms (say, a basic income) such backlashes would be reduced, and the wealth creation process enhanced. (source)

That sounds persuasive and I want to see some evidence. In the meantime, it’s perhaps a bit glib to announce that “the power of wealth redistribution to produce net value is quite limited”.

The Causes of Poverty (53): Poor Economic Growth

As an update of this previous post, here’s some more information about the nature of the relationship between economic growth and poverty reduction.

In a recent paper, Lane Kenworthy has compared growth and income data for 17 developed countries. Specifically, he looked at the ways in which the incomes of people in low to middle income groups benefit from economic growth. “Growth” here means increases in the amount of per capita GDP – this caveat is necessary in order to filter out economic growth that is the result of population growth and that doesn’t make the average person better off (although it obviously can make some persons better off, immigrants for instance). “Income” includes both wages and welfare benefits or other government transfers. Another preliminary remark: it’s wrong to think that growth automatically and by definition makes everyone – and hence also the poor – better off. It just makes the average person better off. That means that it can also in some circumstances make some people – e.g. the poor – worse off. Growth numbers are silent about the distribution of the effects of growth.

The question which the paper tries to answer is the following. Given that poor people can benefit from economic growth in two ways:

  1. either growth “trickles down“: more aggregate national income or production means more jobs, better paid jobs etc.
  2. or growth can increase the government’s tax base so that the welfare system can be made more generous,

which of these two mechanisms has been most prominent in the 17 countries examined in the paper?

The answer is “number 2”. Why? Well, in some of the selected countries economic growth was accompanied by a significant rise in low-to-middle household incomes, while in the other countries the effect of economic growth on the incomes of people in low-to-middle income groups was much smaller or zero. If economic growth trickles down (1), then one would assume it trickles down in all or most countries. After all, if growth results in more and better paid jobs for the poor, then there’s no a priori reason why this result would occur in one country but not in another.

The nature of government transfer systems is the reason why the effect of growth on the incomes of the poor is not the same in all countries:

when households on low incomes got better off, it was due most often to a rise in net government transfers. Where net transfers increased, incomes tended to increase in concert with economic growth. Norway, the UK, Sweden, Finland, and Denmark illustrate this pattern. Where net transfers were stagnant, income trends were decoupled from growth of the economy. We observe this in the United States, Canada, and Switzerland. This is an important finding. It means that, as a general rule, growth has not trickled down to low income households through wages or employment. And it means that, when government transfers haven’t grown, wages and employment haven’t stepped in to take their place. (source)

Looking at all this from the perspective of the causes of poverty: it’s clear that poor economic growth in wealthy countries cannot, by itself, explain poverty, because these countries can witness both growth and stagnation of the lowest incomes (as a result of their failure to implement the necessary transfer programs). Hence you can have growth without poverty reduction. If lack of growth is the main cause of poverty, then growth would by itself and automatically reduce poverty. We see that this is not the case.

In poor countries, on the other hand, growth can perhaps be sufficient. Those countries start from a lower base and more can trickle down. A lack of growth can, therefore, explain the persistence of poverty in developing countries, but probably not in developed countries. The latter have a basis of wealth that is large enough to fund welfare programs even if growth is poor. Growth helps to make this funding easier, but it’s not really necessary. A more progressive tax system, coupled with some good legislative will, can also do the trick.

More here.

The Ethics of Human Rights (53): Some Problems With Theories of Justice That Are Based on Desert

Some theories of justice claim that justice is mainly about giving people (or letting people keep) what they deserve. These theories are opposed to other types of theories about justice, such as those that claim

  • that people should have what they are entitled to have (or have a right to have)
  • that people should have equal shares (of goods, opportunities, luck etc.)
  • or that people’s outcomes should be distributed so as to produce the best aggregate outcome (as in utilitarianism).

These distinctions aren’t always as clear as that, and one could argue that deserving behavior generally maximizes the utility of aggregate outcomes or that people deserve equal shares or equal rights. However, the goal of desert based theories is usually to argue in favor of some form of inequality. Usually this is inequality of wealth, income or financial compensation for effort and success, but it can also be inequality of praise, punishment, positions, admiration etc. I’ll focus here on desert based theories of justice that argue that justice requires inequality of wealth.

Take a look at this quote:

When the wages of labour are hardly sufficient to maintain two children, a man marries and has five or six; he of course finds himself miserably distressed. He accuses the insufficiency of the price of labour to maintain a family. He accuses his parish for their tardy and sparing fulfillment of their obligation to assist him. He accuses the avarice of the rich, who suffer him to want what they can so well spare. He accuses the partial and unjust institutions of society, which have awarded him an inadequate share of the produce of the earth. He accuses perhaps the dispensations of providence, which have assigned him a place in society so beset with unavoidable distress and dependence. In searching for objects of accusation, he never adverts to the quarter from which his misfortunes originate. The last person that he would think of accusing is himself, on whom in fact the principal blame lies, except so far as he has been deceived by the higher classes of society. Thomas Malthus, An Essay on Population

Ideas like these have become somewhat unfashionable, but the basic idea of desert is still very powerful. Many of us accept that inequality of wealth or income is to some and perhaps even a large extent the result of effort, and that justice requires that we respect the results of deserving actions. We also believe that it is wrong to reward laziness or willfully bad decisions. Hence, there are some powerful and widely shared intuitions that makes desert theories rather appealing. Equality based theories that do not provide space for desert seem to be bound to reward laziness rather than effort. And because they reward laziness they create incentives to settle in it. As a result, one runs the risk of creating a permanent and quite large “parasite” class that lives off the efforts of the deserving elements of society. That seems unjust to those deserving elements, but also to those who are undeserving since the latter are not really given an incentive to be deserving: if they are compensated for their laziness and bad decisions, then they are never encouraged to work and decide rationally, and in a sense they are therefore treated unfairly as well.

Apart from this moral or even moralistic objection to theories that don’t make room for desert, there’s the economic argument that they can’t provide stable prosperity. Not only is there a non-productive underclass in an economy without unequal rewards for desert, but the productive class will not put up very long with what it sees as unfair transfers from its productive surplus to others who don’t deserve those transfers (which is the basis of the “going Galt” mythology). This rejection may even lead some to the conclusion that transfers are bad in general, including transfers to the so-called deserving poor (those who don’t have themselves to blame for their poverty). However, things may even get worse than that: rather than rebel against transfers to the undeserving (or deserving) poor, people will stop being productive in the first place because absent rewards for productivity they no longer have an incentive to produce. It’s obvious that prosperity will be impossible under those circumstances, as will – a fortiori – egalitarian transfers of prosperity. So it seems that egalitarian theories of justice are economically self-defeating if they don’t temper their egalitarianism with desert-based concerns.

All this would seem to make it very hard to argue against desert based justice, but that’s not really the case. However appealing the notion of desert, it has its own problems:

  • First, desert based theories seem to be too unforgiving. A small lapse in effort in your youth may have disastrous long-term consequences. An intuition that’s equally strong as the one in favor of desert says that it’s not fair to make people suffer decades after a youthful error.
  • Also, desert based theories are sometimes excessively cruel. Imagine a person starving to death because of her lack of effort and desert: does this person not have a legitimate claim to assistance, despite her irresponsible actions? Does anyone really deserve to starve to death, even if it’s completely and utterly her own fault? But if not, then desert is not sufficient as a criterion of justice and some egalitarian rules have to come in (for instance a rule based on the equal right not to starve to death). Purely desert based theories of justice have some hard bullets to bite.
  • And they also run the risk of promoting big government: if we have to reward desert and avoid transfers to the undeserving, then the government has to determine who is who. In other words, the government has to monitor people’s efforts and decisions in order to see whether their poverty is really undeserved and whether transfers are in order. That can’t be anything but very intrusive. Moreover, it’s probably going to be a failure since the information requirements are huge and difficult to meet.
  • And even if we would accept such an intrusive government for the sake of desert, we would still be left with some very hard decisions. Take the case of someone who is systematically unable to find a decent job. Suppose we can determine that she is indeed not very industrious in her search (we have records about her activities). Is that enough to claim that she is undeserving and therefore not entitled to transfers? Maybe her lack of effort is not really her free and conscious choice but the result of her upbringing, of long-term employment discrimination against people of her color, of some unknown genetic deficiency, of alcoholism developed during childhood etc. How are we to know?
  • Of course, we can confidently determine desert in some cases. Poor children and the severely handicapped almost certainly don’t deserve their predicament and no amount of effort will allow them to help themselves. But we tend to overstate our ability to detect desert. We’re usually too quick to blame and praise. And we’re eager to withhold assistance for people who we believe don’t deserve help but whose lack of desert is only apparent because we lack detailed information about those people’s biographies and endowments. Likewise we’re eager to compensate people whom we admire but whose accomplishments are only apparently the result of their own efforts (after all, not even the greatest genius can do anything without a tight web of support, including infrastructure, national defense etc.). Desert based theories of justice and the practices that they inspire are insufficiently attentive to biographies and to natural and social endowments (or a lack thereof), partly because we rarely have full knowledge of those biographies and endowments. Of course, we can err in the opposite direction and put too much emphasis on endowments, in which case we lapse into determinism. Choices matter, and therefore desert matters as well. The point is simply that desert is often very difficult to determine, and acting on the basis of uncertain desert can be harmful, especially if goods, punishments etc. are distributed accordingly.
  • Suppose we are able to know, in general and not exceptionally, who is or is not deserving. Then we still face the fact that we somehow have to decide which activities and pursuits are deserving, and there as well we can err. There’s a notion called “marketable skills”. What if someone’s skills are not marketable (maybe someone is a philosopher)? That person may be very deserving and may invest enormous effort in her pursuits, but is still living on the brink of starvation. If her pursuits are correctly viewed as undeserving or perhaps even immoral by society, then she won’t have a legitimate claim to transfers. But what if we are wrong? What if we should reward the pursuit but don’t? And I don’t have to show that we are regularly mistaken in the way in which we differentiate between deserving and non-deserving or less-deserving activities. Just look here. Proponents of desert based theories of justice might answer that we should simply be careful and thorough when determining which pursuits and outcomes are deserving or not. But that won’t solve the problem because there’s likely to be permanent controversy about the nature of deserving pursuits and outcomes. People with different worldviews will have different ideas about desert.

More about desert here (and more about overpopulation here). More posts in this series are here.

Human Rights Promotion (2): Who Does Most Harm to Human Rights? The Left or the Right?

I can simplify this question a bit and focus on those rights violations that are caused by government action. Moreover, I’ll focus on governments in developed countries and say that those are generally democracies dominated either by left-wing or right-wing political movements, alternating. Now, if I want to judge whether it’s the left or the right that is most harmful to human rights, I need to define left and right. And that’s tricky. But let’s simplify some more and say that

  • the right is generally conservative, concerned about respect for religion and religious rules/morality, in favor of capitalism and free markets, against taxation and government intervention in markets, not very interested in equality or equal rights in some areas (as a consequence of religious morality for instance), suspicious of immigration, in favor of a strong national defense, and focused on law and order;
  • the left is worried about capitalism and free markets, in favor of government regulation and intervention in markets, suspicious of free trade, willing to tax and redistribute, and politically correct.

I know, highly simplistic, but I’ll try to make it useful. So bear with me. If we focus on present-day developed nations, which of these two political ideologies is most likely to lead to government policies and legislation that cause human rights violations?

If you look at national defense, you could claim that right-wing governments are most harmful. Although the left is often very supportive of the war on terror, especially in the US (but less elsewhere), it’s the right that is most enthusiastic and most eager to adopt extreme measures. In the name of this war, the US tortured, invaded, murdered civilians, eavesdropped, rendered, and arbitrarily arrested. After every new terror-scare, right-wing spokespeople are quick to demand more rights sacrifices (Miranda rights should be suspended, citizenship revoked etc.). On the other hand, it was a left-wing government in Britain that eagerly supported this war, and Obama seems to be continuing the work of Bush.

If we look at markets, the left is clearly more skeptical about it’s benefits. However, economists – also left leaning economists – generally agree that free trade is good and that many interventions in markets, such as trade restrictions, quotas, subsidies etc. aggravate poverty. And poverty is a human rights violation. Of course, right-wing governments also impose or maintain such restrictions, but arguably left-wing governments are more prone to such vices since they often depend on support of labor unions and other protectionist forces.

On the other hand, the trust in markets expressed by the right can result in a kind of blindness: the right often doesn’t notice market failures and the harm that a slap of the invisible hand can do. As a result, the poor are blamed for their poverty, which is why government assistance in the struggle against poverty is deemed unnecessary, unhelpful and even damaging. The right’s focus on private philanthropy is good but it’s naive to think that philanthropy alone will solve the problem of poverty.

Taxation is a difficult one. Very high levels of taxation are obviously economically inefficient and may lower living standards rather than equalize them. On the other hand, very low rates make it impossible to fund the welfare state, with the same result. Both right wing and left wing fiscal policy can be harmful from a human rights point of view. And there’s a problem of actions vs words here: it’s not obvious that right-wing governments impose low tax rates and left-wing governments high tax rates, despite the respective rhetoric.

If we accept that the right is more enamored of religion, then it’s clear where we should lay the blame for a host of rights violations, such as attempts to undo the separation of state and church, discrimination based on religion or sexual orientation and invasions of privacy. Take the example of 0gay marriage. A focus on religion can also lead to a lack of respect for the sexual privacy of consenting adults, not just homosexuals, but also adulterers, people consuming obscene or pornographic material, or engaging in sodomy. Laws against homosexuality, adultery, sodomy and obscenity usually come from the right. Moreover, the right can show a lack of respect for religious minorities, a result of the incompatibility of different religious claims (“there is only one God”). Opposition to Muslim headscarves for instance is often more prevalent among the right (although there’s also anti-Muslim sentiment in some parts of the feminist or atheist left).

Moving on to another topic. The right’s focus on law and order has led to high incarceration rates, especially in the U.S. These rates have also been inflated by a misguided war on drugs, apparently inspired by a puritan religious morality. Capital punishment is also more popular on the right.

Regarding the left, we can mention some of the harmful consequences of political correctness. PC can lead to exaggerated limits on free speech. Hate speech, for example, is in certain cases a justifiable reason for speech limits, but it seems like some of the limits go too far. An innocent use of a particular word can get you fired, for instance.

Of course, I did simplify. The left-right dichotomy as I have defined it here doesn’t accurately reflect all nuances of political ideology. Some on the left are more pro-free-market than some on the right. Moreover, the dichotomy doesn’t capture all ideologies (libertarianism in a sense is neither left nor right). Also, many governments are left-right coalitions. And, finally, many human rights violations are not caused by governments but by fellow citizens. And when they are caused by governments, they may not be caused by those parts of government that are made up of elected politicians of the left or the right. Bureaucracies or judges can also violate rights. Some violations are not based on left or right leaning ideologies, but on other things such as an extreme desire to regulate etc.

Still, I think that the overview given above is useful. It’s not useful in the sense that it allows us to quantify or compute the respective levels of (dis)respect and to conclude that either the right or the left is better for human rights. It doesn’t. In that sense the question in the title of this post is meaningless. However, the overview above highlights the fact that everyone can violate human rights and that human rights activists should be careful when affiliating themselves with a particular ideology. Neutrality, objectivity, fairness and a lack of double standards are crucial in the struggle for human rights.

The Fable of An Randy’s Libertism

Once upon a time, An Randy made her life. She wrote stories and became famous and wealthy. She attributed her success to her talent, effort and intelligence, and to the near total freedom she enjoyed in her beloved country of residence. Her freedom-loving philosophy permeates her writing, inspires her readers, and has become a social movement with a smallish yet enthusiastic following. Called “libertism”, the philosophy champions heroic individualism, productive and creative achievement, and near total liberty and self-centeredness as preconditions for this achievement. It requires a minimal government, minimal taxation, no redistribution and no welfare. Freedom from government is necessary for creative achievement, and redistribution implies theft of resources that are the product of solitary and well-deserved achievement.

Randy did not believe that her success or the success of similarly talented and disciplined creators is dependent on the receptiveness of an audience. The success of the talented depends merely on their talent, not on fashion, audience preferences, cooperation, marketing, being in the right place at the right time etc. Hence, because there’s no luck or cooperation involved in success, the fruits of this success are the product only of talent and effort. An individual therefore deserves his or her success, and should not be forced to share its fruits.

Libertism views success as an individual achievement rather than the product of a combination of individual achievement, talent, luck and social cooperation. In other words, there’s no real division of labor or joint production. The creators are Robinson Crusoes, producing everything by themselves. Libertism denounces the “socialist” vision in which everything is jointly created, in which every creator depends on a large web of support and in which no creator can do anything without a vast army of teachers, parents, food producers, road workers, bus drivers, doctors, police officers, book printers, librarians, internet providers, etc. Libertism believes the members of the creative class produce their work and achievements only by themselves and by their own efforts alone. Division of labor is necessary only for menial production.

The moral of An Randy’s story: were it not for the silly preferences of a part of the general audience, the feverish cooperation of a number of fanatic devotees and a suitable working environment, she would have had no success at all. Double irony: because she proved, unwittingly, that achievement is essentially a cooperative effort, she also showed that the fruits of achievement should be distributed across all participants; hence, that taxation, redistribution and reductions of income inequality are justified.

PS: no prizes for guessing whom this is really about…

What is Equality? (2): Or, Equality of What?

As I mentioned before, when people talk about equality they mean equality of something very specific. The problem is, they hardly ever agree on the specifics. So it’s not uncommon to see two people talking about equality and actually talking about something completely different. And even when they’re talking about the same specific type of equality, they often disagree about its importance, its definition and its (lack of) merits.

Here’s a list of some of the types of equality that are frequently discussed:

  1. equality of respect and/or dignity
  2. equality of income or wealth (sometimes equality of consumption)
  3. equality of a bundle of basic resources needed for a minimally decent human life
  4. equality of capabilities
  5. equality of power (political and other power)
  6. equality of rights
  7. equality of luck or opportunity, i.e. equality of natural and social endowments.

I’ll skip the first one for now (I may come back to it in a later post) because it’s vague in its policy implications, and it’s those implications I want to focus on here. In fact, what do we want to do when we say that we want to promote one of the remaining 6 types of equality? And what are the likely problems we’ll face? Let’s go over them one by one.

2. Equality of income or wealth (sometimes equality of consumption)

Few people actually want to strive towards complete equality of income, wealth or consumption, for several good reasons.

  • First, people have different consumption needs and hence different income or wealth requirements. And I’m talking about needs, not preferences. People who prefer expensive stuff will have a hard time justifying the inequality of income or wealth that they require to satisfy their tastes. On the other hand, a blind person will have no difficulties making the case for a higher income. Preferences may also be problematic when they aim too low rather than too high. People who are born into deprivation and only see deprivation around them may adjust their preferences and expectations so that they are satisfied with their lives. However, it would be wrong to follow their preferences rather than their real needs.
  • And secondly, equality of income or wealth creates an incentive problem. See here. If people are not rewarded for their efforts, they may decide that their efforts aren’t worth their while, and society as a whole may be worse off as a result.

So equality of income is in fact shorthand for reduced income inequality. As we don’t want this type of equality to collapse into the next one (see number 3 below), let’s assume that we’re not talking about a society in which income inequality means that the people at the wrong side of the inequality are poor – poor in the sense that they lack the basic resources needed for a minimally decent human life. So, instead picture a society in which all prosper but some prosper a lot more than others.

Is that kind of inequality a problem? Many say it isn’t. Why should a university professor care about how much a business tycoon earns? However, income inequality in this sense can be problematic. It can, for instance, shock people’s notions of fairness and justice. If the professor successfully teaches her students about morality, and the business tycoon earns his wealth by polluting the earth, it may seem unjust that the professor should be rewarded less. Merit and desert are powerful ideals, and a society that systematically violates these ideals through its system of rewards may not be the ideal place to live.

Even if the tycoon earns his wealth by way of morally sound activities, there can be a problem of justice: perhaps he started life in an advantaged position compared to the professor, and therefore doesn’t (entirely) earn his rewards. Maybe the professor also wanted to become a tycoon, but her blindness forced her into a different career. (See point 7 below). And even if the starting positions are equal, the result of the tycoon’s wealth may be that he, compared to the professor, has a larger influence on democratic politics. (See point 5 below). This may destroy democracy, or at least result in a highly fragmented and therefore also unstable society.

So we have some good reasons to do something about this type of inequality. However, when we try to reduce – not eliminate – income inequality, we’ll probably reach a point at which redistribution starts to discourage people from being productive (the incentive problem mentioned above). Or not. Perhaps the loss of income they suffer because of redistribution makes them want to be more productive. Higher productivity can be the means to compensate for the loss of income. It’s not clear how strong these two possible effects are.

In any case, many of the problems caused by income inequality don’t need to be solved by way of reductions in income inequality. Unequal political influence generated by unequal wealth can be solved by limiting the influence of wealth on politics, rather than by limiting wealth.

More on income inequality here.

3. Equality of a bundle of basic resources needed for a minimally decent human life

Let’s now drop the assumption that we’re talking about a society in which all prosper, albeit unequally. That’s unrealistic anyway. Even in the richest countries on earth, there are many people who are unable to secure the bundle of basic resources necessary for a decent human life. There’s a theory called sufficientarianism that wants to focus, not on income inequality or relative poverty, but on absolute destitution. It claims, correctly I think, that all have a right to an equal bundle of basic resources and that this is what equality means.

The easiest way to make sure that people possess these basic resources is to give them enough money to buy them. For example, there’s a political movement advocating a guaranteed basic income (an income people receive whether they work or not; Philippe van Parijs is a notable supporter of this policy). But also employment benefits, healthcare benefits etc. aim to provide people with access to the basic resources necessary for a decent life.

The advantage of giving people money is of course that money is fungible: people can use it the way they want. That means it takes into account the fact that different people need different and different amounts of basic goods (take again the case of a blind person). If you give people basic goods directly, rather than the money necessary to buy them, then it becomes difficult to tailor the given goods to the specific and variable needs of individuals. An all-purpose means such as money is clearly better.

However, you’ll still have the problem that some people may need more money than others because they have basic needs that are more expensive, again not because of differences in taste or preferences, but because of different abilities. A blind person does not only need different resources but also more resources in order to lead a minimally decent human life. So we’ll have to factor in capabilities (see point 4 below). Hence, equality of basic resources, outside of the capabilities approach, isn’t enough. If that’s your goal, you won’t do justice to everyone.

An additional difficulty is that the composition of the bundles has to be different from one country to another, and not just from one individual to another. A minimally decent life in one society is more costly than in another one. In a highly industrialized and technological society, it’s more expensive to earn a living than in a society where, in a manner of speaking, you can just pick the fruit from the threes. If you add up all these differences in the content and quantity of the bundles you risk ending up with something very arbitrary. The whole concept of a basic bundle may lose its meaning.

Even if we assume that this type of equality does retain some meaning as a separate type of equality, we’re faced with the same incentive problem as in income equality, depending on how costly the bundle of resources is and how heavily we have to tax to produce it.

A final problem with this type of equality is one of fairness. The guaranteed basic income approach, as well as all other forms of unconditional provision of basic resources, seems to reward the lazy and punish the hard working. It’s reasonable to provide basic resources to people who are poor because of bad luck, lack of talents, bad health etc., but not to those who voluntarily choose not to be productive.

4. Equality of capabilities

So let’s turn to this next type of equality, which can be seen as a fine-tuning of the previous type. Why do we say that people need a bundle of basic goods for a minimally decent life? Because a minimally decent life means something. It means having the capabilities to engage in certain functionings that are part of a minimally decent life. These functionings include “beings and doings” (in the words of Amartya Sen), such as being nourished and in good health, taking part in community life, culture and thinking etc. People’s capabilities to achieve these functionings should be equalized. That doesn’t necessarily require a fixed and equal basic income. On the contrary, because a fixed basic income does not take into account the different levels of incapability across individuals. Some people need no help whatsoever. Others may need a lot. The blind person mentioned a few times already may need more than the average poor person, but perhaps less than a particular person who’s very deep in poverty.

The problem with this type of equality is the precise determination of the list of functionings and capabilities that really matter and that should be equalized. There’s a risk of paternalism, a lack of neutrality and a sectarian bias. Maybe a democratic approach to this determination can solve that problem. And that’s the link to the next type of equality.

5. Equality of power (political and other power).

In a democracy, people have – formally at least – equal political freedom. They all have the right to vote, to voice criticism or support, to campaign and demonstrate, to assemble and associate, and to stand for office. However, a lack in some of the other types of equality mentioned above may reduce the fair value and effectiveness of this democratic equality for a certain number of citizens, e.g. the poor, the blind, etc. As already argued, even prosperous citizens can have unequal power in a society with large income discrepancies (remember the professor and the tycoon).

So, if we want to promote this kind of equality of power, we first need to promote other types of equality. People may need access to basic resources in order to have the time and energy to devote to politics. And some of these resources are directly necessary for political participation (people have to drive to the polling station, read the newspapers etc.). However, equality of power can also be promoted without first promoting other types of equality. We can regulate campaign financing and access to the media and thereby limit the influence of wealth on politics. We don’t necessarily need to reduce wealth inequality to do that (although there may be other reasons to limit wealth inequality, see above). Equality of power, therefore, doesn’t necessarily collapse into other types of equality. It’s a concept that merits a separate existence.

Equality of power isn’t just equality of political power. Slaveholders have power over their slaves, husbands may have (had) power over their wives etc. Again, equality of power in these contexts can be promoted by first promoting other types of equality. If slaves and women are given basic resources then we reduce the cost of exiting the oppressive relationship as well as the power of the counter-party to keep them in that relationship. We may also want to given them equal rights.

However, I see that this post is dragging along and is now way past the saturation level, I guess. So I’ll stop here and just link to some previous posts dealing with the two remaining types of equality:

6. Equality of rights: here
7. Equality of luck or opportunity, i.e. equality of natural and social endowments: here

The Causes of Wealth Inequality (19): Talent, Effort or Luck?

Talented people usually earn more, especially when their talents are “marketable”, highly valuable and in demand among large groups of consumers or users. Hence, it’s tempting to conclude that income inequality is the natural and necessary result of the given inequality in the distribution of marketable talents. However, that conclusion only holds up when you turn things around: rather than talented people earning more, it has to be true that people who earn more generally have more and better talents, talents moreover which are in demand. I don’t know of any study confirming this claim, but my anecdotal observations in the matter tell me that the claim isn’t true: many rich people don’t have special talents, and many talented people aren’t rich at all.

But then why are some people rich? Perhaps they have some other native endowments, such as a strong will, discipline and a natural willingness to make an effort. Or perhaps they have successfully acquired these characteristics during the course of their upbringing and education. Income inequality is then the product of the natural and/or acquired inequality of effort. But, again, it’s easy to find wealthy people who are neither talented nor strong willed, and many poor people work very hard. As someone has said: hard work is much more common than success.

Maybe luck plays a large part in the creation of wealth: some people have the good fortune of acquiring – perhaps through inheritance – certain means of production. Others are born in a place and family that provides good education, numerous wealth creating opportunities, encouragement etc. Still others find themselves in an economy where demand for their particular contributions is high, or where these contributions are highly valued. Or maybe they find themselves in a political system where discrimination and certain government policies give them an advantage.

Your personal thoughts on the relative importance of talent, effort or luck will determine what you think should be done about income inequality. Those who believe effort is the main cause tend to assume nothing should be done. If wealth distribution is the sole result of differences in effort, then redistribution is not only unfair to those who invest more effort, but also has perverse consequences: it will destroy all future wealth and therefore make all future redistribution impossible, because punishing people for their efforts means taking away their incentives to invest effort.

If you think talent or a native endowment of discipline is the main cause of wealth inequality, then you will probably be more sympathetic to redistribution. Since no one deserves his or her talents or other native endowments, no one deserves the unequal rewards that come with unequal endowments. However, since people still need to use and develop their endowments, you’re likely to reserve at least a small role for effort. Hence, you’re not likely to be a strict egalitarian. Still, you will favor education as a means to foster some people’s lingering talents and underdeveloped sense of discipline, and perhaps you’ll also favor a more equal distribution of the attention society gives to different talents.

If you think income inequality is mainly caused by luck or the lack of it, you will be a strong egalitarian. You view talent and effort, as well as the ability and willingness to use and develop talents and to invest effort, as the products of good fortune: you’re lucky to have the right genes, parents and teachers who encourage you etc. And you also view other types of good fortune as causes of wealth: being in the right place at the right time, inheriting means of production, meeting the right business partners etc. Luck is undeserved, and so are its products. Hence redistribution is morally required.

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.

The Causes of Poverty (43): The Welfare State

Yes, that’s right: the welfare state… According to many conservatives, the welfare state is self-defeating and actually makes people poorer. Welfare and social security (and perhaps even private charity) unwittingly work to thwart their own goal – helping the poor – in two different ways. There’s supposed to be a supply side and a demand side to the so-called “perverse effects” of anti-poverty policies.

Take the supply side first. The delivery of welfare by the government and – indirectly – by the taxpayers is economically inefficient. It burdens the primary suppliers of the necessary funds, namely the individual and corporate taxpayers. Because of this burden, companies and individuals lose the incentive to be productive. If they have to pay large amounts in taxes in order to fund the welfare state, they can’t or won’t create the wealth that is the basis for redistribution. In other words, they can’t or won’t create a rising tide that will lift all boats. Ultimately, a tax-based welfare state will eat itself because it burdens the wealth creators whose wealth it wants to redistribute.

I’ve argued against this rejection of the welfare state before, and I won’t repeat myself here. Suffice it to say that the risks to incentives are overstated, as well as the benefits of trickle down economics. (For instance, companies may decide to be more productive in order to compensate for the losses from taxation).

Let’s now turn to the demand side of the anti-welfare argument. Again, the reasoning is based on incentives that ultimately result in a self-defeating anti-poverty system, but this time it’s about the incentives of the recipients of welfare. The argument goes roughly like this. Take unemployment benefits for instance (one part of the welfare state). These benefits supposedly discourage people from working. And when people don’t work, they fail to gain experience and to nurture certain values – such as discipline – necessary in order to escape poverty. Hence, unemployment insurance makes the recipients worse off.

Or take another kind of benefit: financial support for children born out-of-wedlock. This kind of support also triggers the wrong incentives. It encourages teenagers to get pregnant and it discourages adults to marry. Teen-pregnancies and single parenthood both make it more difficult to escape poverty. Something similar happens with scholarships or affirmative action for poor students. These so-called anti-poverty policies actually incentivize students to enroll in education programs that are above their capabilities, forcing them to drop out of school at some point, and hence forcing them into poverty. And, finally, there’s the argument about welfare dependence: when people get money from the government they tend to settle in their role as receivers and fail to take their lives into their own hands. Again the wrong incentives.

This demand side of the anti-welfare argument suffers from two fatal shortcomings. First, the data don’t (always) support it. For example, it’s not true that generous unemployment insurance leads to higher unemployment. And secondly, it’s classist in the sense that it offers an essentialist depreciation of the poor as a class. The poor, according to the argument, suffer from a series of typical deficiencies:

  • shortsightedness (in the case of the person being tempted by child benefits and ignoring the long-term costs of teen pregnancy or single parenthood)
  • a lack of self-judgment (in the case of the student accepting a scholarship and enrolling in a program beyond her capabilities) and
  • a lack of self-control (in the case of the person settling in dependency).

This classism is not only generally incorrect and unfair, but it also obscures the many other causes of poverty. The poor aren’t always to blame for their own poverty, and the welfare state doesn’t force them to make themselves poor. Moreover, and even worse, this classism can be self-fulfilling.

Also, hasn’t the recent financial crisis shown that wealthy people, especially bankers, are equally short-sighted, self-deluded and lacking in self-control? And even if it’s true that those vices are more prominent among the poor (as is claimed here for example), wouldn’t that be a good argument for welfare rather than against it? If the poor can’t rationally take care of their own fate because they are self-deluded and unable to plan for the long term, shouldn’t the rest of us try to help them?

The Ethics of Human Rights (44): Human Rights Between Cosmopolitanism and Partiality

Cosmopolitanism and partiality (or parochialism if you don’t mean it in a negative sense) are two very strong and yet contradictory moral intuitions. Let’s start with the former. Most of us have a strong sense of the arbitrariness of national borders. The accident of being born on one or the other side of a border – just like the accident of being born black or female – shouldn’t have any moral weight and shouldn’t determine one’s life prospects, as it unfortunately does.

As a result of this intuition, we believe that all people have the same moral worth, and this in turn convinces us that we shouldn’t condone the notion that the suffering or oppression of a fellow-citizen is more urgent or more important than the equal suffering of someone far away. There is something like humanity and all members of the human species have equal value. Being partial and favoring the alleviation of the suffering of some over the alleviation of the suffering of others, just doesn’t sound like the right thing to do. We should help people because they are human beings, not because they are compatriots. If I see a compatriot and a foreigner drowning in a pool I have no reason to save one before the other.

That’s the cosmopolitan intuition. On the other hand, there’s an equally strong intuition favoring some level of partiality. A father watching his daughter and her friend drown in a pool is allowed to save his daughter first if he can save only one. People care more about their friends and family than about strangers, and that’s completely uncontroversial. A bit less uncontroversial but perfectly common is the fact that citizens of a country – through their tax payments – typically provide relatively generous social security and welfare to their fellow-citizens and much less development aid, even though the beneficiaries of development aid are much less well off than many of the beneficiaries of the welfare state. Countries also impose immigration restrictions as a means to protect the prosperity of their reasonably well off citizenry, even if doing so means condemning foreigners to poverty. And finally, states generally enforce the other human rights of their citizens (poverty is a human rights violation) much more rigorously than the rights of foreigners.

Without staking out my position regarding these two contradictory intuitions, I would argue that imposing strict immigration and aid restrictions means taking partiality too far and that we should have more migration, more global redistribution and more international intervention aimed at the protection of human rights. However, you can demand this and still favor some level of partiality over strict cosmopolitanism.

So, the conclusions people draw from the partiality intuition aren’t always morally defensible, but the intuition itself is. And the same is true for the cosmopolitan intuition. In what follows I will ignore those who draw extreme conclusions from either intuition because they tend thereby to ignore the other intuition. Extreme nationalists, chauvinist patriots, racists, “ethical egoists” à la Rand etc. on one side, and the much less numerous “uprooted” citizens of the world and the corporate or non-governmental “modern nomads” who ridicule origins and meaningful national affiliations on the other side. It’s generally not a good idea to deny strong moral intuitions, and certainly not in this case. So I’ll focus on those who recognize the two intuitions and somehow try to juggle them.

How do people do that? Some choose one as the most important and believe that the other can only be followed in addition. Others just accept this as a case of irreconcilable value pluralism and believe that we can’t solve the dilemma. And still others deny that there’s always a conflict between the two intuitions.

Let’s look at those who favor the priority of partiality, see what reasons they have, and how those who favor cosmopolitanism respond. Many of those who favor the partiality intuition agree that we can and should do more to help others in distant places, but they also claim that we shouldn’t do as much for the billions of poor and oppressed people in the world as we do for our local charity, our relatives and friends and even our compatriots. They believe that once we’ve provided a minimum of care and aid to humanity in general, we’re allowed to focus our attention on a partial group or a limited circle of people that have a special meaning to us. They may provide different reasons for this claim. Let’s look at a few and at the ways in which cosmopolitans can reply:

  • Parochialists may argue that we need global institutions similar to national ones in order to provide the same amount and quality of care and aid to humanity as a whole. For example, you need a global welfare state to provide social security to everyone, and an effective global judiciary to punish gross violations of human rights in despotic regimes elsewhere in the world. We can call this the institutional objection to cosmopolitanism. Cosmopolitans could point to the progress in international criminal justice that has already been made, and could also argue that international redistribution of resources doesn’t necessarily require a global welfare state.
  • Parochialist can defend their limited partiality by claiming that relatively small groups of people are best placed to help each other, and that long distance help isn’t the most effective. For example, local judiciaries are better placed to judge local human rights violations than “ivory tower” international institutions, and small groups of people are better able and more motivated to give each other material assistance. Closeness means that you can do more, and if you can do more you should do more. It also means that appeals to help will be better heard and be more persuasive. People far away simply don’t have the necessary information or motivation to help effectively. We can call this the effectiveness and motivational objection to cosmopolitanism. Cosmopolitans could reply that there’s a certain circularity in this argument and that globalization has eroded much of the salience of closeness. I can go to an internet site and donate money to a specific person thousands of miles away. And the modern media have made the suffering of such a person much more salient and motivating.
  • Parochialists can argue that relatively small groups of people are not only best placed to help each other, but have a right to help each other and should be allowed to do so before the international humanitarians come barging in. This is akin to arguments about self-determination and cultural relativism. Caring about other places on the globe means wanting to intervene in those places in order to promote human rights and alleviate suffering. Such intervention may amount to cultural aggression. We can call this the cultural objection to cosmopolitanism. I’ve argued against cultural relativism elsewhere so I won’t repeat myself here.
  • Parochialists may claim that partiality is the result of the importance of community membership. People want to belong to communities. This belonging is important for many reasons, notably for personal identity. In order to maintain a community, there have to be special duties towards fellow members. We can call this the community objection to cosmopolitanism. The cosmopolitan could argue that those special duties are different from the global duties imposed on us by human rights and humanitarianism and don’t diminish or replace those global duties.
  • Parochialists can argue that global duties and a global morality are meaningless concepts. Perhaps a real understanding of what a moral duty is can only arise from the communal traditions and language of a particular culture. Morality is then culturally situated, embedded and determined. Moral impartiality and global justice are then oxymorons. This objection to cosmopolitanism is related to the cultural objection, and we can call it the meta-ethical objection. A cosmopolitan could reply that this is a rather strange conception of morality. It’s not uncommon for people to be influenced by moralities from far away. Hence, it’s wrong to claim that morality is completely embedded in culture.
  • Parochialists can argue that cosmopolitanism and the need to treat everyone equally imply the imposition of excessive burdens on the wealthier members of humanity and would therefore be both unrealistic and unfair. Treating everyone equally would leave them with little for themselves and for their partial circle of care. None of them would still wear expensive watches or clothes, go on vacations or give their children an expensive education. We can call this the feasibility objection to cosmopolitanism. The cosmopolitan could answer in different ways. First, things aren’t entirely zero-sum as the parochialist seems to believe. For example, a well-educated child can more effectively help humanity. Hence, the two intuitions don’t have to cancel each other out and people don’t always have to choose. Love for humanity and love for certain people don’t necessarily clash. Secondly, even if it’s not feasible to help everyone, that doesn’t mean we have to be partial. The moral equality of all human beings may require that we select a random group of people to help, rather than our inner circle. Such a random choice would guarantee that we help strangers just as much as relatives, friends and compatriots, even though we can’t help everyone equally. The problem with such a random choice is that you need to know about people in order to be able to help (see the effectiveness objection above). The cosmopolitan could reply that random selection isn’t really necessary and that we can help a lot of people a lot more than we may think, without completely undermining our own wellbeing. It’s not absolutely clear that the world doesn’t hold enough resource to give everyone a decent life.

Why Do Countries Become/Remain Democracies? Or Don’t? (17): Inequality

A transition to democratic government is very unlikely when the population of a country is sharply divided in unequal classes or groups. Some of these groups will try to monopolize political power in order to repress rival groups and maintain the distributional status quo. For example, when there’s a division between a landowning class or an industrial class on the one hand, and a group of impoverished rural or urban workers on the other hand, then the former group will fear election victories by the latter group because such victories will lead to redistribution of land or other assets. Privileged classes will therefore work against democracy. As a result of this, the working classes will radicalize and aim for a revolutionary overthrow and the abolition of property rights altogether, thereby also making democracy less likely.

Something like this is arguably a good description of much of the recent history of Latin America. Positively stated: more economic equality – perhaps following the expansion of a middle class – will make democracy more viable, since different groups have less to lose from a democratic power shift.

But polarization doesn’t have to be exclusively economic in nature. Religious or ethnic divisions can also hinder the creation and continuity of democracy, especially when there’s also a spatial division between groups. This is probably what happened in Africa since decolonization. Of course, non-economic divisions are often exacerbated by economic ones, in which case we can hope that more economic equality will take the sting out of ethnic divisions.

More posts in this series are here.

Income Inequality (23): Income Inequality and Poverty

At first sight, income inequality and poverty are completely different things. Poverty is clearly a human rights issue, while income inequality is clearly not, at least not directly (it can have an impact on some human rights). Income inequality is a relative indicator, not an absolute one, and is, for this reason, claimed to be not about poverty at all. Poverty, it is said, is about absolute deprivation and is a lack of the resources necessary to satisfy certain basic needs. Income inequality just describes the unequal possession of resources, basic or otherwise. And indeed, it’s possible to imagine a very rich society in which no one is poor in the sense of lacking basic resources, but in which the distribution of resources is very unequal. Vice versa, there may be countries in which everyone is (almost) equally poor.

However, if we compare countries, we see that the more unequal a society, the larger the numbers of people suffering from poverty. Does that mean that high income inequality leads to more poverty? Not necessarily. That would probably be the case if we saw that a country’s poverty rate grows with increasing inequality. But that doesn’t happen:

If we look across the rich nations, it turns out that there is no relationship between changes in income inequality and changes in the absolute incomes of low-end households. The reason is that income growth for poor households has come almost entirely via increases in net government transfers, and the degree to which governments have increased transfers seems to have been unaffected by changes in income inequality. …

In some countries with little or no rise in income inequality, such as Sweden, government transfers increased and so did the incomes of poor households. In others, such as Germany, transfers and the incomes of low-end households did not increase.

Among nations with sharp increases in top-heavy inequality, we observe a similar disjunction. Here the U.S. and the U.K. offer an especially revealing contrast. The top 1%’s income share soared in both countries, and through the mid-1990s poor households made little progress … But over the next decade low-end American households advanced only slightly, whereas their British counterparts experienced sizable gains [thanks to the Labour government, FS]. (source)

So, in other words, there are countries with soaring inequality that still manage to make the poor better off in absolute terms (not in relative terms obviously) through redistribution. Other countries that witness the same evolution of inequality don’t make their poor better off. And trickle down also doesn’t seem to work, by the way. Vice versa, the less unequal countries also differ in the way they treat the poor. Income inequality doesn’t produce poverty because it doesn’t affect the welfare state.

It’s often argued that income inequality not only fails to produce poverty but actually helps to reduce it. That argument goes something like this. High levels of income inequality – and therefore high wages at the top – are necessary for economic growth. If the top economic performers are allowed to earn very high wages, they will have an incentive to produce and innovate. That will lead to economic growth, which will in turn, through a trickle down mechanism, benefit everyone, including the poor and those earning very little.

However, from the quote above it follows that it’s government transfers rather than automatic mechanisms that have helped the poor during the last decades of increasing inequality. If inequality by itself would reduce poverty, these government transfers would not have been necessary. An increase in income inequality by itself does not improve low-end incomes, as is shown by the example of the US.

And even if it could be shown that rising inequality pushes up the absolute income of the poorest, there are other reasons to object to inequality (such as this for example).

The Ethics of Human Rights (42): What’s the Best Approach to Distributive Justice?

What is distributive justice?

Distributive justice is a set of normative principles designed to guide the allocation of the benefits and burdens of economic activity. These benefits and burdens can be material goods and services, income, welfare or something else. Whatever they are, a theory of distributive justice will claim that they should be distributed or allocated to people according to some morally justified and morally just set of rules.

The assumption is that all government activity in some way affects the distribution of those benefits and burdens, whatever we do or believe, and that it’s important to guarantee that this distribution is done in a just way. So a theory of justice will propose rules for taking some benefits and burdens from people and giving them to others in a way that corresponds to ideals of justice.

Different types of distributive justice

Unfortunately, there isn’t one commonly accepted theory of justice. Different people have proposed different theories that describe different ideal methods of distributing different types of benefits and burdens. Some theories propose a more or less equal distribution of income; other theories focus on a more general understanding of benefits and talk about “welfare”. And some theories do not accept equal distributions and focus on desert. Etc. There are even some schools of thought that deny the justice of any sort of redistribution and argue that justice is about respecting property rights (libertarianism for instance). However, I’ll focus in this post on those who think that some kind of distributive justice is an important concern (which doesn’t imply that I believe that libertarianism is completely wrong about everything).

Let’s look at some of the more common theories and try to assess – superficially, I admit – what their respective merits are.

Strict egalitarianism

This theory of justice claims that all people should have the same level of material goods.

  • Advantages. This does seem to correspond to the basic moral rule that all people are owed equal respect.
  • Disadvantages. Different people have different needs, and so they need different and different amounts of goods. There’s also the problem of economic efficiency: strict equality removes incentives for economic productivity. Hence, it may result in overall wellbeing at a rather low level, making things worse for everyone. Conversely, everyone, even the worst off, can be made better off if goods/income/whatever are not distributed equally.

The Difference Principle

That last point was probably the origin of the so-called Difference Principle. This principle is part of John Rawls’ theory of justice. It does not demand strict equality as long as unequal distributions make the least advantaged in society better off than they would have been under strict equality. More precisely formulated: inequalities are to be to the greatest benefit of the least advantaged members of society. This principle is also called the maximin rule: an unequal distribution can be just when it maximizes the benefit to those who have the most minuscule allocation.

The justification of this principle is that higher incomes for more productive members of society provide those people with an incentive to be productive. And if they are productive, they produce more wealth, which can be used to benefit the least advantaged.

(Similar ideas can be found in sufficientarianism and prioritarianism).

  • Advantages. Contrary to egalitarianism, the focus is on the absolute wellbeing of the least advantaged, rather than their relative wellbeing, i.e. their (un)equal position. Hence, we avoid the egalitarian destruction of incentives and the resulting risk of leveling down.
  • Disadvantages. People’s relative positions are to some extent morally important. See this older post for a list of reasons why this is the case. Rawls does have a partial response to that concern because he argues that the inequalities permitted by the difference principle should be consistent with another rule of justice, namely the equality of rights and liberties. For example, high income inequality may make it impossible for people at the wrong end of this inequality to participate in democracy, to have their views represented and to get elected. Hence, Rawls argues for some corrections of inequality when inequality of resources negatively affects equal liberty. However, other disadvantages of inequality receive less attention. Another disadvantage of the Difference Principle is that it ignores desert.

Desert-based principles

It’s plausible to claim that a just distribution of goods should give people what they deserve, at least partially. We intuitively believe that at least some of the inequalities in life are deserved. People who work hard or contribute a lot to society deserve a higher level of wealth/income/welfare etc., even if such inequalities do not improve the position of the least advantaged. The hard working should not be forced to subsidize the lazy. They don’t deserve to be forced in this way, and the lazy don’t deserve to benefit in this way. (Many desert-based theories of justice are based on Locke’s theory of property).

Desert-based theories of justice claim that distributive systems are just insofar as they distribute benefits and burdens according to desert, at least partially. (This goes back to Aristotle).

  • Advantages. Desert is a strong moral intuition and it is therefore important to incorporate it in a theory of distributive justice. Theories that fail to do so will always seem unjust.
  • Disadvantages. We can make mistakes when deciding that some or other activity is deserving or meritorious. Distributions based on such mistakes will only be just by chance. But even when we don’t make these mistakes, it’s hard to measure and compare desert (is art more meritorious than science?). In addition, we can fail to identify real desert. Apparent desert may in fact be based on undeserved endowments. And that’s where luck egalitarianism comes in. (More problems with desert are described here).

Luck egalitarianism

Luck egalitarianism can be viewed as a desert-based type of justice. It proposes to redistribute the benefits and burdens that people don’t deserve and that result from bad luck, for example the bad luck of being born poor, in a poor country, without talents etc. Bad luck in the initial distribution of natural or social endowments should not affect one’s life prospects or distributions of income/wealth/etc. People don’t deserve those endowments and hence don’t deserve the distributions that result from it. These distributions therefore need to be corrected and equalized. After having equalized people’s starting positions in life, we have to let people free to decide what to do with their lives. Those decisions are their responsibility and hence they deserve the outcomes of their decisions. After corrections for endowments, people who work deserve the benefits of their work, and people who are lazy or careless deserve the results of their laziness or carelessness.

  • Advantages. Luck egalitarianism avoids the pitfalls of both crude desert-based justice and strict egalitarianism.
  • Disadvantages. There may be cases in which people who bring bad luck or suffering on themselves still have a claim to assistance. Also, luck egalitarianism produces some bad incentives and can be seen as demeaning (go here for more detail).

International distributive justice, or cosmopolitan justice

A small detail in the theory of luck egalitarianism has far-reaching consequences. Among other things, people don’t deserve the places in which they are born. And yet, those places can determine whether you are rich or poor, free or persecuted etc. To some extent, poverty and persecution are just bad luck, the bad luck of being born in the wrong country. Residency and citizenship are as morally arbitrary as race, gender, natural endowments etc. No theory of justice that takes the equality of human beings serious can ignore the unequal distributions caused by the place of birth, and has to correct these distributions. Arbitrary facts about places of birth, border, residency or citizenship – just like genetic defects, race, gender etc. – cannot be allowed to determine people’s lives. Limiting the principles of justice to citizens or residents is unacceptable.

That means that redistribution should be international and not just between citizens of a particular country. Of course, it’s plausible that people have more responsibilities to those closer to them: parents have more responsibilities towards their children than towards the rest of humanity; friends should help each other etc. Closeness is morally relevant because it means more power: the closer you are to someone, the easier it is to help. But equal dignity and equal respect for all human beings is also morally relevant, and closeness therefore doesn’t mean that people who are far away and who are unknown to you and unrelated to you can’t legitimately demand assistance.

Preference to people close to you – and those people can perhaps include fellow nationals rather than just family and friends – shouldn’t be the only or overriding concern. We want to avoid chauvinism, parochialism and egoism. The metaphor of the family can turn nationalism into something very nasty. And anyway, the salience of closeness has been substantially reduced by technology: nowadays, it’s easy to send money abroad for example.

Still, in some plausible conception of international justice there can be room for some form of differentiation of duties towards fellow citizens and foreigners. International or cosmopolitan justice is therefore possibly coherent with the Difference Principle: international inequalities are acceptable if they improve the position of those who are globally worst off (although Rawls himself did not believe this because he correctly pointed to the absence of global institutions, and institutions are crucial to his theory).

  • Advantages. International (or cosmopolitan) justice points to the ultimate consequences of liberal egalitarianism. If women, racial or religious minorities and people burdened with bad luck should be treated equally, why not foreigners? Borders are indeed just as arbitrary from a moral point of view as gender, race or talent and they can’t, therefore, determine distributions. International justice assumes all the consequences of the theory of human equality and makes the theory of justice more coherent compared to theories that focus on domestic distribution only.
  • Disadvantages. International justice can burden the citizens of wealthy countries with extreme and unbearable responsibilities. After all, we want a coherent system of justice that treats people equally regardless of their place of birth. So it’s not just that rich countries have to prevent starvation and genocide abroad. That seems to be difficult enough already, but international justice makes things even more difficult because it gives people abroad the same benefits and burdens as citizens. That can imply, for example, completely open borders or far-reaching redistribution leading to substantially reduced welfare levels in rich countries. Another problem is more practical: it’s not clear how international redistribution should take place. In the case of national distribution there is a state taking care of it. Not so on the global level.

Distributive justice across generations

The same reasons that argue against the moral salience of closeness in space argue against the moral salience of closeness in time. The fact that some people will be born after our death isn’t a good reason to impose burdens on them. Hence, our distributive principles should take into account the interests of future generations. It wouldn’t be just to design a system of distributive justice that takes care of the least advantaged among us, that removes the influence of bad luck suffered by the living, that preserves a place for desert, that is insensitive to borders, and that at the same harms the interests of future generations (for example because it fails to provide a good system for the management of natural resources). More here on transgenerational justice.

  • Advantages. Like international justice, transgenerational justice points to the ultimate consequences of liberal egalitarianism. If women, racial or religious minorities, people burdened with bad luck and foreigners should be treated equally, why not future generations? Time is indeed just as arbitrary from a moral point of view as borders, gender, race or talent and can’t, therefore, determine distributions.
  • Disadvantages. Again, like in the case of international justice, we run the risk of imposing enormous burdens on the present generations. Moreover, there’s the so-called repugnant conclusion: if we multiply the number of future people – which is potentially a very large number of people – then we run the risk of drowning the interests of present generations. A small benefit for a very large number of future people will then justify a very heavy burden on the limited number of people currently alive. However, this doesn’t mean that we should neglect the interests of future people.

Welfare-based principles

Theories of justice can also focus on welfare. According to welfare-based theories of distributive justice, the only value of goods, resources, desert-claims, equal freedom and even equality is their positive effect on welfare. Distributive principles should then be designed so that they enhance welfare. Welfare maximization is the only criterion to decide distributive rules.

Utilitarianism is the main welfare-based theory of justice. “Utility” can be understood as more or less identical to “welfare”. It can be defined as pleasure, preference satisfaction, happiness etc. According to utilitarianism, distributing benefits and burdens means distributing them in such a way that we maximize overall utility (i.e. overall preference satisfaction, happiness etc.). We have to choose the pattern of distribution that maximizes the sum of all satisfied preferences, of all instances of happiness etc. (unsatisfied preferences or unhappiness count as negatives, and some “higher” or more intense preferences may be weighted higher, depending on the type of utilitarianism we are talking about).

  • Advantages. Utilitarianism’s main advantage is its compatibility with freedom: it doesn’t prefer particular types of preferences, pleasure, happiness etc., and it therefore allows people to realize their own visions of the good life.
  • Disadvantages. What about evil preferences, such as hate and racism? If those kinds of preferences are widespread and the individual targets of those preferences are a minority, then the latter will suffer because overall wellbeing will be increased by allowing the realization of evil preferences. Also, it’s not because it’s rational for an individual to sacrifice some present preferences for a larger future gain, that it’s moral for a society to sacrifice individuals for the gain of the whole, as utilitarianism often requires. That is why some utilitarians have added rights or rules to their equations: preferences can only be satisfied when they don’t violate the rights of others.

Feminist approaches

Feminism has convincingly argued that the traditional theories of justice described above tend to ignore how distributive principles affect the fate of women, especially given the fact that women still have primary responsibility for child-rearing. Distributions within the family are usually not discussed in theories of justice. Therefore, these theories can be criticized as paternalistic or at least unwittingly supportive of paternalism. Many theories of justice include specific rules about the protection of the private sphere as an area that is off-limits for the government and hence for distributive efforts. So theories of justice have made themselves powerless to address gender inequality.

Conclusion: What’s the best approach to distributive justice?

So, after all this and if you’re still with me, what do we take away? Strict equality and simple utilitarianism seem the least appealing. And any coherent approach has to include rules that apply both nationally and globally, has to be gender sensitive and has to reserve some attention to desert. Intergenerational concerns are also hard to avoid if we want to maintain coherence, although perhaps we could limit the impact of the demands of future generations by claiming that actual suffering is more urgent than possible suffering.

This brings back the concern of the burden justice imposes on people. If we want to take the best of all the previously described approaches to distributive justice, we necessarily end up with a “thick” conception of justice, imposing a heavy burden. We have to take into account all people currently living, not just our fellow citizens, as well as people not yet born. And we have to give special attention to gender. But at the same time we don’t want to have a theory of justice that’s so burdensome that people will say: thank you but no thanks. It’s fine to have a coherent theory of justice but if this coherence leads to impossible demands on people or demands they are not (yet) willing to accept, then the practical use of that theory is nil.

One possible reaction to this concern about the burden of justice is the adoption of a prioritarian approach, and more specifically a global gender sensitive prioritarianism with a time preference: the worst off should get the most attention. For example, poor women currently living in a patriarchal society should be the first beneficiaries of redistribution. The disadvantage of this is that it will force us to abandon, temporarily, a lot of people we don’t want to abandon, for example welfare beneficiaries in rich countries. Or we could bite the bullet and say with Peter Singer that the burden is what it is and we should carry it. Morality may be more demanding than we had initially thought. Rather than adapting morality in order to diminish its burden, we just accept the burden.

More posts in this series are here.

Income Inequality (23): U.S. Public Opinion on Income Inequality

Despite what foreigners usually believe about the U.S., and despite the confused ramblings of a tiny group of anti-“socialist” loudmouths high on tea, U.S. public opinion is actually very egalitarian:

Americans are in broad agreement on the need for a more equal distribution of wealth. … that’s what a forthcoming study by two psychologists, Dan Ariely of Duke University and Michael I. Norton of Harvard Business School, has concluded. First, Ariely and Norton asked thousands of Americans what they thought the nation’s actual wealth distribution looks like: how much is owned by the wealthiest 20 percent of the population, the next-wealthiest 20 percent, and on down. The researchers then asked people what, in an ideal world, they would like the nation’s wealth distribution to be.

Ariely and Norton found that Americans think they live in a far more equal country than they in fact do. On average, those surveyed estimated that the wealthiest 20 percent of Americans own 59 percent of the nation’s wealth; in reality the top quintile owns around 84 percent. The respondents further estimated that the poorest 20 percent own 3.7 percent, when in reality they own 0.1 percent.

And when asked to give their ideal distribution, they described, on average, a nation where the wealth distribution looks not like the U.S. but like Sweden, only more so—the wealthiest quintile would control just 32 percent of the wealth, the poorest just over 10 percent. “People dramatically underestimated the extent of wealth inequality in the U.S.,” says Ariely. “And they wanted it to be even more equal.” (source)

The Causes of Poverty (38): Behavior

Theories about the causes of poverty typically fall into two camps:

  1. either the poor are victims of circumstances that are irrational (trade restrictions, misguided government policies, etc.)
  2. or the irrationality is situated within the minds, lifestyles, behaviors and values of the poor whose lack of rational calculation and foresight condemns them to a life of poverty.

Theory 1 describes the poor as people who satisfy the commonly accepted economics paradigm of the rational economic actor, but who also face economic or political structures that make it difficult for them to reap the usual benefits of rational self-interested economic interaction in a mutually beneficial market. Theory 2 blames not the dysfunctions or imperfections of the market and of government, but the dysfunctions of the self-destructive individual.

Poverty alleviation in theory 1 means market corrections or improvements in government (redistribution, market liberalization, breaking poverty traps, institutional improvement, the struggle against corruption etc.). In theory 2, it means better education, family planning and perhaps even psychological and paternalistic guidance. Some will go to extremes such as sterilization or eugenics. In the immortal words of Oliver Wendell Holmes:

Carrie Buck is a feeble-minded white woman who was committed to the State Colony… She is the daughter of a feeble-minded mother… and the mother of an illegitimate feeble-minded child… An Act of Virginia, approved March 20, 1924, recites that the health of the patient and the welfare of society may be promoted in certain cases by the sterilization of mental defectives… We have seen more than once that the public welfare may call upon the best citizens for their lives. It would be strange if it could not call upon those who already sap the strength of the State for these lesser sacrifices, often not felt to be such by those concerned, in order to prevent our being swamped with incompetence. It is better for all the world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind. The principle that sustains compulsory vaccination is broad enough to cover cutting the Fallopian tubes. Jacobson. v. Massachusetts, 197 U. S. 11. Three generations of imbeciles are enough. (source, source)

That’s not so popular anymore these days, fortunately, and invasive actions like these or like the aboriginal “Stolen Generations” are widely condemned. And yet, extremely paternalistic interventions still occur (take for example the current Australian aboriginal policy, aptly called “the intervention“).

Theory 1 seems to blame “society” for the fate of the poor, and this violates some of our philosophical intuitions about (limited) self-control and self-responsibility. Theory 2 seems very cold-hearted and even classist, and violates moral intuitions about the requirements and consequences of living together. That’s probably why the most common view is a mix of both theories (call it theory 3). Most of us believe that poverty has multiple causes and that these causes can be situated both in the economic-political structures and in individual psychology and behavior, in varying degrees depending on the specific cases.

However, there’s also a theory 4, described in this paper, and it’s one that avoids the (partially) paternalistic, classist, anti-activist or anti-individualist pitfalls of the previous three theories:

The behavioral patterns of the poor, we argue, may be neither perfectly calculating nor especially deviant. Rather, the poor may exhibit the same basic weaknesses and biases as do people from other walks of life, except that in poverty, with its narrow margins for error, the same behaviors often manifest themselves in more pronounced ways and can lead to worse outcomes. (source)

So the poor only give the impression of being deviant and self-destructive. They are, but not more or less than anyone else; it just shows more. For example, many poor people fail to open a bank account, notwithstanding the large benefits and the low costs of doing so. That failure is self-destructive because it increases the cost of payments and revenues, something the poor can afford least of all. However, this doesn’t prove that the poor are particularly self-destructive people. It only shows the effects of minor and universal human failures, such as embarrassment (when faced with a bank teller), short-termism, time preference etc., failures which happen to have graver consequences for the poor than for the rest of us because of their smaller error margins.

Income Inequality (22): Social Mobility in Anglo-Saxon Economies, Ctd.

After completing my older post on the subject – in which I argued that Anglo-Saxon economies don’t do a very good job promoting social mobility despite the focus on individual responsibility and policies that (should) reward merit (e.g. relatively low tax rates) – I found this graph which I thought would illustrate my point.

Although the US and other Anglo-Saxon countries aren’t in the graph, the UK is. And the effect of parental education on child earnings in the UK is particularly large. The children of the well-off and well-educated earn more and learn more than their less fortunate peers in all countries in the world, and that’s hardly surprising given the importance of a head start, both financially and intellectually. What is surprising is that this is less the case in countries which pride themselves on their systems that offer people incentives to do well (low taxes, minimal safety nets etc.).

So one wonders which fact-free parallel universe David Cameron, the new UK Prime Minister, inhabits:

The differences in child outcomes between a child born in poverty and a child born in wealth are no longer statistically significant when both have been raised by “confident and able” parents… What matters most to a child’s life chances is not the wealth of their upbringing but the warmth of their parenting. (source, my emphasis)

Extolling the virtues of good parenting can never hurt, except if you have a low boredom threshold because it’s so goddamn obvious. But making it sound like parents’ wealth or education are “insignificant” is truly grotesque and an insult to those poor parents who have children that aren’t doing very well. And even for those living in the alternative reality where only bad parents keep children back, the Conservative leader’s position in fact, and unwittingly, should lead to left-wing policies, as Chris Dillow points out:

Because of bad parenting – which begins in the womb – some people do badly in school and therefore in later life; they are less likely to be in work, and earn less even if they are. However, we can’t choose our parents; they are a matter of luck. It’s quite reasonable to compensate people for bad luck, so there’s a case for redistributing income to the relatively poor, as this is a roundabout way of compensating them for the bad luck of having a bad upbringing.

High levels of social mobility can compensate for high levels of income inequality: if people can be socially mobile, and if their earnings and education levels don’t depend on who their parents are but on their own efforts and talents, one can plausibly claim that the existing inequalities are caused by some people’s lack of effort and merit. However, the UK and the US combine two evils: low mobility and high inequality, making it seem that whatever effort you invest in your life, you’ll never get ahead of those rich lazy dumb asses. So why would you even try? Low mobility solidifies high inequality.

Just to show that the U.S. isn’t better than the U.K.:

Parental income is a better predictor of a child’s future in America than in much of Europe, implying that social mobility is less powerful. Different groups of Americans have different levels of opportunity. Those born to the middle class have about an equal chance of moving up or down the income ladder, according to the Economic Mobility Project. But those born to black middle-class families are much more likely than their white counterparts to fall in rank. The children of the rich and poor, meanwhile, are less mobile than the middle class’s. More than 40% of those Americans born in the bottom quintile remain stuck there as adults. (source)

The Ethics of Human Rights (28): Private Charity vs the Welfare State

In a previous post, I wrote about my personal views regarding the best ways to help the poor. I favor private philanthropy or charity over the welfare state. Some of the reasons are:

  • The welfare state imposes certain costs on the economy, thereby damaging the prospects of the future poor.
  • Closeness and affinity imply a greater ability to help. And he or she who can do more, should do more (can implies ought). Citizens are better placed than the government to help poor people in their community/family because they better understand the needs.
  • Spontaneous mutual assistance fosters community spirit. Allowing poverty reduction to take place at the level of citizens’ relationships will strengthen feelings of belonging.

When all this fails – as it often will – and only when this fails, can a state intervene and can the welfare mechanisms and redistribution systems based on taxation begin to operate (these merely enforce deficient private philanthropy).

However, some claim that the welfare state crowds out private charity. If you don’t care about private charity and want a government monopoly on care for the poor, you won’t mind if there is crowding out. And if you don’t care about private charity or about government assistance to the poor, you won’t mind either. But I guess most people agree with me that both charity and the government have a part to play (although they may not agree with my chosen priorities). So it’s good to see that

government welfare programs [do not] appear to displace an equivalent amount of private charity. Private giving does not vary inversely with the size of government programs and there is little evidence for a “crowding out” effect. Many private charities, in fact, rely on government funding to some extent. Private charitable giving to the poor, defined in narrow terms, runs in the range of $10 to $15 billion a year [in the U.S.], and few observers believe that this sum is capable of significant augmentation in the short run, regardless of government policy. Tyler Cowen (source)

More posts in this series are here.

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.

The Ethics of Human Rights (27): The Human Rights of Future Generations and Poverty

I’ve argued many times before that poverty is a human rights issue, so I won’t do that again. For those who are not convinced, just assume arguendo that I am right, otherwise the rest of this post won’t make a lot of sense. I’ve also presented my views on the types of duties produced by the human right not to suffer poverty, and on the moral agents that carry those duties: is it a face-to-face thing, or does the government have a role to play by way of redistribution and the welfare state? Etc. You can read about this here and here for instance, so that’s something else I won’t repeat.

I do believe the welfare state is an important institution because it can fill the gap left by deficient private charity. But my view is that private charity should come first and should be promoted. The welfare state should be a fallback option rather than the starting point. So I guess I don’t think it’s as important as people from the left usually think it is. In order to bolster my view, I can point to some problems with the welfare state. In fact, it can be argued that the welfare state is another case of a self-defeating human rights policy, in the sense that it reduces poverty but at the same time produces poverty. Tyler Cowen, in a very interesting paper, has argued that while the welfare state does indeed reduce the levels of poverty of those people currently living (at least if we focus on the level of the state and forget the global impact of the operation of a welfare state in a particular country), it also has a negative impact on the poverty of future generations.

The argument goes as follows. It’s reasonable to accept that economic growth lifts people out of poverty and that the welfare state lowers the rate of economic growth, perhaps not by much annually but small reductions of economic growth over several years may amount to a large cumulative reduction. Now, how does the welfare state lower the rates of economic growth? There are at least four effects:

[1] A welfare state will cause some people to substitute welfare dependency for private work, thus lowering the number of individuals in the active work force or causing them to work less hard. … The poor could be engaging in more productive exchange with other individuals in the economy, but to some extent they desist, for fear of losing welfare benefits. …

[2] The taxes used to support the welfare state discourage taxpayers from working or otherwise creating economic value. …

[3] The extensive welfare states of Western Europe typically are bundled with labor market protections and interventions. It is not politically or economically feasible to give the non-working significantly more risk protection than the working. Western European welfare states therefore tend to create a privileged class of working “insiders,” with high real wages, high benefits, and near-guaranteed positions of employment. This practice, of course, lowers the number of new jobs that are created, limits labor market mobility, and raises unemployment.

[4] [The welfare state] causes the economy to develop new technologies and new ideas at a slower rate. … A welfare state will plausibly have a negative effect on innovation. By withdrawing individual labor from the productive sector of the economy, the rate of discovery is likely to fall. Both the poor and the taxpaying non-poor will work less when a welfare state is in place [see 1 and 2 above]. If we think of research and development, broadly construed, as one kind of work, we can expect the rate of growth to decline. Even if the poor do not participate in ideas production directly, they do so indirectly. To provide a simple example, to the extent it is harder or more costly to hire good janitors, and other forms of cheap labor, fewer research laboratories will be opened. … The welfare state permanently discourages various individuals from contributing to technological development and thus lowers the rate of economic growth in lasting fashion. (source)

One can argue about the importance or even the existence of these four effects, and there may even be counter-effects (welfare recipients may move in the underground economy, unemployment may lead to better parenting and hence better education etc.). But even if the effects are small, it’s sufficient to spread them towards the very long term future in order to produce a lowering of the economic growth rate and an increase in future poverty. Given that the future contains an infinitely large population, the welfare state will always produce more poverty than it eliminates (given that the current population and hence also the current poor are a limited number). That would mean that the concept of the welfare state is doomed. And if that’s the case, it would seem I have proven too much (I merely wanted to buttress my argument that the welfare state should come second, after private philanthropy).

However, I don’t think it’s obvious that we should value the rights of future people the same way as the rights of existing people. After all, these future people may never come into existence. If we try to protect their welfare by giving up the welfare state, we will harm real people for the rights of people who may never exist. Furthermore, the future may bring a novel solution to the poverty problem.

Measuring Equality of Opportunity

People on opposite sides of political debates often agree on very little, but they do agree on the importance of equality of opportunity. There is almost universal agreement that people should have at least a starting position that guarantees an equal chance of success in whatever life projects one chooses, for those willing to invest an equal amount of effort. More specifically, equality of opportunity is often defined as an equal likelihood of success for all at age 18 (in order to factor in possible inequalities of opportunity determined by education).

Equality of opportunity is by definition an impossible goal. The lottery of birth means more than being unable to choose to be born in a wealthy family with caring parents who can finance your education and motivate you to achieve your goals. It also means that you can’t choose which talents and genes you are born with. Genetic differences are no more a matter of choice than the character and means of your parents. And genetic differences affect people’s talents, skills and maybe even their capacity to invest effort. So, as long as we can’t redistribute beneficial genes or disable harmful ones, and as long as we don’t want to intervene in people’s families and redistribute children, we can’t remove the impact of genes and parents.

However, we can do something. Equality of opportunity may be impossible but there is less or more inequality of opportunity. Or concern should be to provide as much equality of opportunity as possible, and to expand opportunity for those who are relatively less privileged. This means removing things that hold some people back (e.g. discrimination, unemployment, bad schools etc.), and – more positively – helping people to cultivate their capabilities and expand their choices.

How doe we measure if these interventions are successful? It seems very difficult to measure equality of opportunity. All we can do is measure some of the elements of opportunity:

  • We can measure unequal income and infer unequal opportunity from this. People with low income obviously have less opportunities than other people. However, not all opportunities can be bought and maybe low income isn’t the result of a disadvantaged upbringing or bad schools, but of bad choices, or even conscious choices. Can we say that a child of a millionaire who chose to be a hermit suffered from unequal opportunity? Don’t think so.
  • We can measure unequal education and skills (educational attainment or degrees, IQ tests etc.). However, someone who comes from a very privileged family but with low or alternative aspirations may score low on educational attainment or even IQ.
  • We can deduce unequal opportunity by the absence of opportunity enhancing government policies and legislation. The Civil Rights Act was self-evidently a boost for the opportunities of African-Americans.
  • We can measure social mobility and assume, correctly I think, that very low levels of mobility indicate inequality of opportunity.
  • Etc.

Whatever actions we take to enhance opportunity, it will probably always be relatively unclear what the net outcome will be on overall equality of opportunity. Of course, that doesn’t mean we shouldn’t do anything. And when we do something, we should also distinguish clearly between things we can do and things we can’t to, or things we feel are immoral (e.g. genetic redistribution or child redistribution). We know that parental attitudes, genetics, talent, appearance, networks and luck have a huge impact on individuals’ chances of success, but those are things we can’t do anything about, either because it’s impossible or because it’s immoral. But we can teach people skills and perseverance, to a certain extent. We can help the unlucky, for example with unemployment benefits. We can regulate firms’ employment policies so as to counteract the “old boys networks” or racism in employment decisions. We can impose an inheritance tax in order to limit the effects of the lottery of family. Etc etc.

The Causes of Wealth Inequality (5): Globalization

Globalization is supposed to have lowered the earnings of less-educated workers by putting them in direct competition with low-wage workers around the world. This competition put pressure on wages through international trade in goods and services; through the relocation or threat of relocation of production facilities to overseas locations; through competition with immigrants in local labor markets; and through other channels. …

U.S. and European workers are told that … our societies can no longer afford a generous welfare state. …

Contrary to the standard framing, which presents globalization as something that no nation can escape or even attempt to shape, we can choose the terms under which we integrate capital, product, and labor markets across countries. Over the last 30 years we have indeed “chosen” a particular form of globalization in the United States – a form that benefits corporations and their owners at the expense of workers and their communities. If we had chosen globalization on different terms, however, economic integration would not have required rising inequality. Another globalization is possible. (source, source)

So globalization, as it has occurred and is occurring, causes higher inequality in the West in two ways:

  • The direct competition with overseas workers who can produce at lower wages puts downward pressure on wages in the West, especially for low-skilled workers at the wrong end of inequality.
  • Governments in developed countries react to this competition by restricting social safety nets because the taxes necessary for the funding of these safety nets hurts the competitiveness of local businesses, a competitiveness already under pressure from low-cost labor in the developing world. Less generous safety nets obviously also have a negative effect on inequality.

If these effects are real, perhaps they can explain the decline of manufacturing in many developed countries.

However, I’m not sure this pressure on wages is real and significant (I’ll try to find some data), and we also shouldn’t dismiss the benefits for low-wage workers in the West of cheaper products. This particular result of globalization can offset the possible negative wage effects of wage competition.

Also, I’m not sure governments in the West are actively attacking safety nets (here it says they haven’t during the last decades, but it seems that the recent economic crisis has convinced some to start cutting benefits). And finally, we should remember that inequality isn’t just a national problem. The inequality between countries is just as, if not more, important. And globalization has had a beneficial effect on inter-country inequality because it has redistributed wealth from rich countries to poor countries. For example, it’s hard to imagine how China could have had the same success in poverty reduction without globalization. The question is of course whether this redistribution had to come from low skilled workers in the West, rather than from their more wealthy fellow citizens. The fact that it did come, however, was undoubtedly beneficial to the poor in the receiving development countries.

Income Inequality (19): What To Do About It?

What to do about income inequality? Assuming of course that you agree that income inequality is a problem. How can we do something about the problem without destroying the incentives behind economic growth (assuming that much of economic growth is driven by financial rewards for effort, creativity, innovation etc. and that taking away resources from wealthy successful people takes away their will and creativity, hence driving down growth and making everyone, including the poor, worse off).

One thing that everyone thinks of is taxation, more precisely <a href="http://progressive taxation: this reduces the income of higher-earning families by a larger percentage than the income of lower earning ones. “Spreading the wealth around”, if you want. This makes incomes more equal in a direct way, but also in an indirect way because the tax revenues can be spend on poverty reduction (unemployment benefits, healthcare or education subsidies etc.). (An inheritance tax can also help, because it promotes social mobility and discourages income inequality that is not the result of economic incentives, and because a lack of social mobility is correlated with income inequality).

The problem, however, is that taxation is hardly ever progressive, even if it looks like it is:

Taxation in affluent countries does little to alter the market distribution of income. The reason is that taxes on income and corporate profits-which are progressively structured, reducing the incomes of high-earning households by a greater percentage than those of low-earning ones-are only part of the tax system. [But] their progressivity tends to be largely offset by the regressivity of payroll and consumption taxes. … Payroll and consumption tax rates usually are “flat”: the rate is the same regardless of individual or household income. Payroll taxes tend to be regressive because they apply to earnings rather than income, and wealthy households tend to get a smaller share of their income from earnings than do most households in the middle of the distribution. Also, payroll taxation often features a cap; in the United States, for instance, earnings above roughly $100,000 are not subject to the social security payroll tax. Consumption taxes apply to spending rather than income. They are regressive because lower-income households by necessity spend more of their income than their higher-income counterparts, so more of their income is subject to the tax. Lane Kenworthy (source)

Redistribution, then, does not occur through or because of the tax system itself, but through the systems of public spending.
Some interesting graphs
here. So it’s the amount of taxes, rather than the system of taxes, that enables governments to redistribute and reduce income inequality.

The Causes of Poverty (30): Lack of Economic Growth

When a country achieves a certain level of economic growth – or, more precisely, rising levels of GDP per capita because economic growth as such can be the result of rising population levels – it is assumed that this reflects a higher average standard of living for its citizens. Economic growth is therefore seen as an important tool in the struggle against poverty. If a country is richer in general, the population will also be richer on average. On average meaning that GDP growth isn’t necessarily equally distributed over every member of the population. That is why GDP growth isn’t sufficient proof of poverty reduction. Separate measurements of poverty and inequality are necessary.

So in theory, you can have GDP growth and increasing levels of poverty, on the condition that GDP growth is concentrated in the hands of a few. However, that’s generally not the case. GDP growth benefits to some extent many of the poor as well as the wealthy, which is shown by the strong correlation between poverty reduction and levels of GDP growth (always per capita of course). It’s no coincidence that a country such as China, which has seen strong GDP growth over the last decades, is also a country that has managed to reduce poverty levels substantially.

Unfortunately, growth isn’t a silver bullet. Poverty is a complex problem, requiring many types of solutions. Promoting economic growth will do a lot of the work, but something more is required. In a new paper, Martin Ravaillon gives the example of China, Brazil and India. The levels of poverty reduction in these three countries, although impressive, do not simply mirror the levels of economic growth. Although half of the world’s poor live in these three countries, in the last 25 years China has reduced its poverty level from 84% of the population in 1981 to just 16% in 2005. China is exceptional, but Brazil also did well, cutting its rate in half over the same period (8% of Brazilians still live on less than $1.25 a day). Regarding India, there are some problems with its statistics, but whichever statistic you use, there’s a clear reduction.

Ravaillon points out that the intensity of poverty reduction was higher in Brazil than in India and China, despite lower GDP growth rates.

Per unit of growth, Brazil reduced its proportional poverty rate five times more than China or India did. How did it do so well? The main explanation has to do with inequality. This (as measured by the Gini index, also marked on the chart) has fallen sharply in Brazil since 1993, while it has soared in China and risen in India. Greater inequality dampens the poverty-reducing effect of growth. (source)

Which is rather obvious: lower levels of income equality means a better distribution of the benefits of growth. So the “pro-growth strategy” against poverty is important but not enough, and should be combined with Brazilian type anti-inequality measures (focus on education, healthcare and redistribution).

Economic Human Rights (31b): Certain Objections

Economic rights are a subset of human rights. Put very briefly and simplistically, they are what could be called anti-poverty rights: for example, there’s a right to a certain standard of living, to social security, to work, to fair wages, to healthcare, housing etc.

It’s an understatement to say that there’s no universal consensus on these rights. Some say that these aren’t “real” human rights (like Bill Easterly for example). Others say that these rights are useless or even harmful. Here are a few of the most common objections raised against economic rights.

The big state criticism

Economic rights are believed to require invasion of privacy and hence violations of an important freedom right (freedom rights such as free speech, privacy, habeas corpus etc. are usually distinguished from economic rights, political rights etc.). In order to verify whether people have a right to social security benefits or healthcare benefits, the state has to check people’s income (legal and illegal), their family composition, their health, their medical consumption, their lifestyle etc.

The assumption behind this criticism is that the state is the only or the main party responsible for the realization of economic rights. This is not the case. People in need can call on other people to help. And these other people have a moral responsibility to help. The duties of mutual assistance, charity and philanthropy point to a horizontal aspect of economic rights. People in need do not only have a vertical right to assistance, or a right directed at the state. Their economic rights can be addressed at their fellow citizens, and these have a duty to respect and protect these rights. It’s only when horizontal duties fail that the state should intervene. If we think of economic rights in this way, the dangers of an overbearing state don’t look that ominous anymore.

The rule that economic rights should – in part – be realized by citizens has another advantage as well: economic rights tend to foster community spirit and feelings of solidarity and belonging.

But this insistence on solidarity shouldn’t obscure the rule that people have a responsibility to help themselves and support themselves. This kind of independence is a part of freedom and an important good. Solidarity comes into play only when self-help is unsuccessful or impossible, and the state comes into play only when solidarity is unsuccessful or absent.

Different kinds of duties

Another objection: some say that economic rights, if they are rights at all, are radically different from “normal” human rights – also called freedom rights – and can therefore be given a lower priority (and maybe aren’t even real rights at all). Freedom rights imply duties of abstention or forbearance, whereas economic rights require duties of active help, involvement and intervention. In the case of violations of freedom rights, the remedy is easy: stop doing what you’re doing. In the case of violations of economic “rights”, the remedy is often very difficult if not impossible. If there is no work, no one can give it to me. If a country is poor, no one can raise the standard of living.

When freedom rights are violated, the victim can go to a court and a judge can force the violator to stop his or her actions. When economic rights are violated, it’s useless to go to a court. Not only isn’t there an obvious violator who can be stopped, there is often no one who can stop the violation from happening. Hence it looks like these rights are unenforceable and often have no remedy. Rather than rights, it seems that they are aspirations or policy goals, often long term policy goals.

However, there’s again an erroneous assumption underlying all of this. The distinction between the two types of duties – forbearance and active assistance – isn’t clean-cut. Freedom rights require active intervention by the state in order to enforce forbearance. They require an efficient judiciary and police force. For some states, this may be as unattainable as prosperity. In fact, it’s precisely because of a lack of prosperity that many states are unable to guarantee protection for freedom rights. Of course, the fact that economic rights are a prerequisite for freedom rights isn’t a sufficient reason to call them rights. But neither is it a reason not to call them rights.

Conversely, economic rights often require more forbearance than active intervention. Economic rights in China during the Great Leap Forward would have been better served by state forbearance. All types of human rights require forbearance and intervention. Perhaps economic rights generally need more intervention, but that is a difference in degree and not in essence, and it isn’t a sufficient reason to reject the label of “rights” for the aspirations inherent in economic rights.

Ought implies can

There’s another criticism of economic rights, related to the previous one. Economic rights are said to violate a general rule for rights: ought implies can; there can be no obligation to do something if there is no capability to do it. You cannot have a duty to help someone who’s drowning if you can’t swim yourself. Hence the person drowning doesn’t have a right to be assisted by you. The same is said to be true of economic rights which therefore aren’t real rights. If a poor country doesn’t have the resources to help its poor citizens, then these citizens don’t have a right to be helped.

However, we don’t follow the same logic in the case of freedom rights. Freedom rights also require resources, as we have seen. When a state doesn’t have the resources necessary to protect its citizens’ freedom rights, we usually don’t say that the citizens of such a state have lost their freedom rights. People have rights irrespective of the probability that they can be protected. Or better: the less people’s rights are protected, the more important it is that they have rights. And anyway, violations of economic rights don’t occur because there are insufficient resources but because of an unequal distribution of resource, nationally or internationally. So the “can” part of “ought implies can” isn’t as fanciful as the critics of economic rights believe.

Economic rights are superfluous and useless

This is supposed to be the case because free markets should automatically produce a certain standard of living for everyone that is high enough to realize the goals inherent in economic rights. Free trade, deregulated markets and low taxes cause profits to rise, which in turn means more investments, which in turn means more and better jobs and higher incomes. All boats rise on a rising tide.

Now, it’s my belief that history – and especially recent history – has shown that this isn’t enough. Free markets are beneficial, but they don’t automatically provide high standards of living for everyone.

Economic rights are harmful and counterproductive

This is a stronger version of the “useless” argument. Economic rights are believed to require a big state (see above), high taxes and intrusive regulation. All of this hinders the economy and the creation of wealth. As a result of economic rights, there is less wealth to redistribute, and economic rights therefore undo what they want to achieve.

They are also harmful in another way: they violate freedom rights, especially the right to privacy and the right to property (because of redistribution). We’ve already seen that we can mitigate this risk when we include horizontal duties. But even if this risk is real, why should property and privacy automatically rank higher than the absence of poverty? If we assume that economic rights are real rights, then it’s not surprising to see that they can contradict other rights. Contradictions between human rights are very common. The right to privacy is often in conflict with free speech for example. Sometimes one right has to be limited for the sake of another. So why should this be a problem when dealing with economic rights?

Of course, one shouldn’t dramatize. Economic rights and freedom rights are generally not incompatible. On the contrary, they are interdependent. Freedom for the poor often doesn’t mean a whole lot. But, on the other hand, the squeaky hinge gets the oil: poverty has to have a voice if it is to be eliminated.

The Failure of “Trickle Down Economics”

Trickle Down Economics, also called Reaganomics (due to its association with the policies of Reagan and Thatcher) or supply-side economics, is the theory according to which policies destined to alleviate poverty and redistribute wealth are unnecessary and even counterproductive. The rich should be allowed to become even more wealthy, by imposing very low tax rates on high incomes (or a flat tax for example) rather than using the tax system to redistribute wealth. The result will be that their wealth will “trickle down” towards those who are less well off.

When government policies favor the wealthy — for example, via tax cuts for upper-income classes — the increase in wealth flows down to those with lower incomes. That’s because the rich are more likely to spend the additional income, creating more economic activity, which in turn generates jobs and eventually, better paychecks for the less well-off. Michael S. Derby (source)

All boats rise on a rising tide. Redistribution is counterproductive because it will take away the incentives to do well, and hence also take away the possibility of wealth creation and subsequent automatic wealth distribution through “trickling down”. All this is reminiscent of laissez-faire and the invisible hand theory.

Reagan’s trickle down policies in the U.S. can still be felt today:

According to the Tax Policy Center, the top marginal tax rate in the U.S. stood at 70% when Reagan was elected in 1980, falling steadily to 28% by 1989, before it began to rise modestly. The top marginal rate now stands at 35% against a peak of 94% in 1945. (source)

These tax cuts were implemented with the support of the Democrats in the House, which explains why they have been upheld all these years. The result of this was, unsurprisingly, a higher concentration of wealth in fewer hands:

In the period since the economic crisis of the early 1970s, US GDP has grown strongly, and the incomes and wealth of the richest Americans has grown spectacularly. By contrast, the gains to households in the middle of the income distribution have been much more modest. Between 1973 … and 2007, median household income rose from $44 000 to just over $50 000, an annual rate of increase of 0.4 per cent. … For those at the bottom of the income distribution, there have been no gains at all. … incomes accruing to the poorest 10 per cent of Americans have actually fallen over the last 30 years. John Quigging (source)

This is already part of the refutation of the doctrine. Obviously not all boats have risen on the same tide. But if you don’t believe this, there’s a paper here and a blogpost here arguing against the doctrine in a more intelligent way. Maybe “spreading the wealth around” a bit and imposing some tougher taxes on the rich isn’t such a bad idea after all. I mean, the “tricklers” have had decades to prove their point, and failed; maybe now it’s time for the “spreaders” to have a go.

Income Inequality (16b): Its Moral Significance

Will Wilkinson’s recent paper on income inequality argues that it’s an overrated problem (see also here). Before I deal with his arguments in detail, a quick reminder of my personal views on income inequality. From the point of view of human rights (which is my default starting point), the most urgent problem is not necessarily the unequal distribution of wealth or income, but the insufficient wealth and income of the poor in a given population. The urgent problem is absolute poverty, rather than relative poverty. Or, in other words, what we have to tackle first is some people’s inability to gather sufficient resources necessary to survive in a decent way, not the fact that some people have more resources than others. The human rights of people in a very poor but highly egalitarian society can be violated more extensively than the human rights of the relatively poor in a society that is very rich on average but highly inegalitarian. Eliminating or reducing income inequality – or “killing the rich” (metaphorically) as in the image above – doesn’t necessarily help the poor.

However, inequality can be a problem. The absence of poverty or the availability of sufficient resources for a decent human life is a human right, but it isn’t the only human right (some would even say that it isn’t a right at all, but I disagree, together with the drafters of the Universal Declaration). Human rights also include political human rights, and these political human rights usually mean the right to democratic participation in government and legislation. Income inequality makes these political rights highly problematic. Democracy is based on the equal influence of every citizen, but income inequality, by definition, gives the wealthier citizens more influence in politics.

In addition, income inequality may also lead to social fragmentation, with negative consequences for the cohesiveness of a society. We see that highly inegalitarian societies, such as the U.S., are also societies with relatively low levels of social mobility. One could argue that income inequality isn’t much of a problem when everyone has the same chance to be on the good side of the inequality. But when it is combined with social rigidity and stratification, it undermines meritocracy and equality of opportunity, which in turn enhances social fragmentation.

Finally, people in more egalitarian societies tend to be healthier, to live longer and to be happier (as Wilkinson should know).

These are serious issues from the point of view of human rights. If reducing income inequality (for example through progressive taxation, public spending – on welfare, education, healthcare etc. –  and regulation of political funding and lobbying) can go some way towards a solution, we should consider it.

One last point: all these issues are based on the assumption that income inequality is the outcome of just processes. In other words, we assume that people’s incomes are the result of their own desert and effort. If, on the other hand, we assume – more correctly in my view – that income and wealth distributions are affected by unjust processes (such as colonialism, slavery, discrimination, inheritance and a lack of social mobility etc.) than we have additional reasons to do something about income inequality. And these reasons have nothing to do with the negative consequences of inequality. They are, instead, related to its origins.

(If you want to know more about my views on income inequality, before I tackle Wilkinson’s views, you can read this old post).

Wilkinson claims that

income inequality is a dangerous distraction from the real problems: poverty, lack of economic opportunity, and systemic injustice.

Those are real problems indeed, and even more urgent problems, as I’ve stated above. But income inequality is also a real problem, and I fail to see how one problem is necessarily a distraction from another problem. Human beings are perfectly capable of tackling several problems at the same time.

He also states that

there is little evidence that high levels of income inequality lead down a slippery slope to the destruction of democracy and rule by the rich.

That’s not true, as you can read here and here. Income inequality obviously doesn’t necessarily “destroy” democracy or replace it with “plutocracy”, but it significantly reduces its meaning, on both sides of the income gap: wealthy people use their wealth, their higher education, their networks etc. to gain influence, and poor people tend to participate less and thereby lose influence. While it’s true that wealthy people can use their political influence for the benefit of their poor fellow-citizens, it’s still a fact that many don’t. If we cherish democracy, we should implement policies that limit the risk of selfish interventions by disproportionately influential individuals or groups, as well as policies that encourage participation of relatively less influential individuals and groups. It’s not sufficient, as Wilkinson does, to point to the fact that many wealthy people voted for Obama, knowing that he would raise their taxes.

Wilkinson also believes that the level of American income inequality was not caused by exploitative, institutional mechanisms. Given the historical inheritance of slavery and discrimination, I think this opinion is false. This inheritance, combined with astonishingly high levels of correlation between parental income and the income of children, does suggest that there are institutional mechanisms which perpetuate income inequality. While it’s wrong to claim that the inheritance of racism and slavery is to blame for the poverty of African-Americans living today, it’s very likely that it has some effect.

Few people argue for a completely egalitarian society. I certainly don’t. Some inequalities are perfectly just, and probably necessary from the point of view of economic efficiency. But there are many who argue for the opposite: don’t do anything about inequality. While I don’t believe Wilkinson is one of them, his statement that “income inequality is a dangerous distraction” encourages those who believe that we shouldn’t care about inequality.

The Compatibility of Freedom and Equality (7): Negative and Positive Freedom

It think it’s fair to say that both the libertarian and egalitarian conceptions of freedom are wrong. Libertarians traditionally adopt a negative kind of freedom. More precisely, they believe that individuals should be free from interference, especially interference by the government, and with their property. They don’t accept that it makes sense to view freedom more positively as the possession of resources and capabilities that are necessary to make a really free choice between alternatives and opportunities. The freedom of those without certain resources and capabilities (such as education, health and a basic income) is futile because they can’t exercise their freedom, not because they are actively interfered with but because they can’t choose between opportunities.

Such a positive freedom is preferred by egalitarians (also called social-democrats, progressives, or even liberals). These, however, often make the mistake of denying the importance of negative freedom. In their effort to equalize freedom they often show disdain for non-interference and property rights.

There is a relatively easy way to bring these two points of view a bit closer together. The main worry of libertarians is that egalitarians will use the power of the state to redistribute property. (Remember the uproar over the claim by Obama that he wants to “spread the wealth around”). As I stated here, there are good reasons to encourage voluntary redistribution by citizens, without enforcement by the state (enforcement should only be necessary when citizens fail to engage in charity). If the resources and capabilities necessary for an equal positive freedom are redistributed voluntarily by citizens, then there is no interference and negative freedom and property rights are safeguarded.

This may sound naive, but I don’t think it is. There’s already an enormous amount of private charity and remittances are also a very important source of financial aid.

The Ethics of Human Rights (16): The Extent of Our Duties Towards the Poor

Not only the state has a duty to help the poor and to protect their economic rights. The individual should also intervene in order to realize the economic rights of his or her fellow citizens and fellow human beings. He or she can intervene in different ways: through caritas or altruism, through trade and exchange etc. (Simply giving the example and inspiring others by way of your own success, as in this cartoon, is not enough).

It is only when these interventions fail or never take place and individuals neglect their duties, that the state must act by way of redistribution. After all, redistribution is a limit on freedom and on property rights (which are very important) and should therefore be kept to a minimum.

I mentioned our fellow human beings. The extent of our duties towards the poor is an interesting discussion in contemporary philosophy. Some say that we have only duties towards our fellow citizens; others that we have a duty towards everyone. Whereas in principle, everyone regardless of borders has the same right to our assistance, there has to be some differentiation in practice. Our duties arising from economic rights are not the same towards everyone. In general, we have more duties towards certain persons than towards other persons. This is because of the principle “ought implies can” (if you cannot swim, then you do not have a duty to rescue persons from drowning), which is a general principle of law and morality. None of us can give material assistance to everybody in need of assistance. We all have a limited amount of resources, and even if we have more than we require for our basic needs, we will not be able to assist everybody.

That is why we have to be selective. Our own children, for example, take precedence. We have more duties towards our children than towards other people. Closeness means that you can do more, and if you can do more, you ought to do more. Can also implies ought. Closeness, therefore, plays a part in the degree of duty, although not in the existence of duty. If we can help everybody, then we have to help everybody. This is especially the case when we transcend the level of individuals. Wealthy groups – for example a wealthy country or a group of wealthy countries – can help many people and maybe even everybody, and hence have a duty to do so.

The Causes of Poverty (7c): Globalization

Does globalization erode social safety nets? Economic theory and intuition suggest that as economies become more globalized, the ability of governments to undertake redistributive policies and to engage in social spending erodes. After all, a large part of the tax base – corporations, financial intermediaries, and skilled workers in particular – become internationally mobile and can evade taxes needed to finance those public expenditures.

… the lack of an obvious decline in the overall tax take in major advanced economies, has led many observers to think that the hypothesized decline of the welfare state has not in fact taken place. [However], as technological progress and multilateral trade liberalization have made borders less of a barrier to economic activity, the scope of redistribution policies has become smaller. Dani Rodrik (source)

This doesn’t mean that globalization necessarily leads to more poverty. Redistribution on the basis of taxation is only one way to fight poverty. In this post I discussed some of the ways in which more free trade and hence more globalization can reduce poverty.

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.

Economic Human Rights (19): Spreading the Wealth Around

The necessaries of life occasion the great expense of the poor. … The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. … It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion. Adam Smith

The purpose of economic rights is the equal possession of a minimum supply of those fundamental material means, which are necessary for the continuation of life in a decent way. If there are some people who have less than the minimum, economic rights will redistribute some of these means. In other words, these rights will take some things away from those who have enough and give it to those who do not have enough. This is possible because, globally or even nationally in some cases, there is enough for everybody. The only problem is the unequal distribution.

Marx and Human Rights

According to Marx, human rights are the “rights of the egoistic man, separated from his fellow men and from the community”. They are the rights of man as an isolated, inward looking, self-centered creature

  • who regards his free opinion as his intellectual private property instead of a part of communication
  • who uses his right to private property not in order to create a beach-head for his public and cultural life but to accumulate unnecessary wealth and to protect unequal property relationships
  • who uses the right to privacy as a wall keeping out the poor snoopers watching the rich people
  • who considers fellow men as the only legitimate restraint on his own freedom, and therefore as a limit instead of the source of his own thinking, identity and humanity (this is the way in which Marx read art. 6 of the French constitution of 1793: “Liberty is the power which man has to do everything which does not harm the rights of others”)
  • who considers freedom to be no more than the ability to pursue selfish interests and to enjoy property, unhindered by the need to help other people, “without regard for other men and independently of society”
  • and who considers equality to be the equal right to this kind of freedom (everybody can emancipate himself by becoming a bourgeois).

Human rights, in this view, serve only to protect egoism and the unequal distribution of property, and to oppress the poor who question this and who try to redistribute property. On top of that, human rights obscure this fact because they are formulated in such a way that it seems that everybody profits from them. Contrary to what is implicit in their name, “human” rights are not general or universal rights. They are the rights of those who have property and who want to keep it. A specific situation of a specific group of people is generalized in human rights.

Of course, this criticism can be correct. No one will deny that human rights can serve to protect and justify egoism, oppression of the poor and indifference. They can help to shield people behind private interest and to transform society into a collection of loose, self-centered, self-sufficient, withdrawn, independent, sovereign and isolated individuals. Because the rich have more means to use, for example, their freedom of expression, this freedom can be an instrument of the rich to monopolize political propaganda and political power and to use this power to maintain their privileged situation. Economic relationships can be maintained by legal means.

However, in order to judge and possibly reject a phenomenon, one should also look at its intended and ideal functions, not only at the ways in which it can be abused. Human rights not only protect man against the attacks and claims of other people (for example the attacks and claims on his property); they also create the possibility of forcing people to help each other. They do not allow you to do something to other people (taking their property, determining their opinions etc.), but at the same time they invite you to do something with other people. In other words, they are not only negative. They not only limit the way we relate to other people, they also stimulate and protect the way we relate to other people.

Marx and Democracy

According to Marxism, democracy suffers from a contradiction between political equality on the one hand (equal votes but also equal rights, equality before the law etc. – see here and here) and economic or material equality on the other hand. The absence of the latter prevents the full realization of political and even judicial equality (equality before the law). Wealthy persons have more means (such as money, time, education etc.) to inform themselves, to lobby, to influence, to get themselves elected, to defend themselves in court etc. A merely formal principle such as political equality loses much of its effectiveness when some can use their wealth to control political debates and decisions. Even more so, political equality, democracy and equal human rights (not only the right to private property) serve to cover up, justify and even maintain material inequality, exploitation and class rule in a capitalist society.

Real material equality and therefore also real political and judicial equality can only be brought about by an anti-capitalist revolution which brings down the capitalist system of property along with the legal and political tools that are used to protect this property. Material redistribution is not enough because it does not affect material inequality in a substantial way. It only provides a minimum of basic goods. The remaining material inequality still affects political equality. Democracy is self-defeating. It can never deliver what it promises because it does not go far enough. It can only give people formal instead of substantial equality. Elections, rotation in office, economic rights etc. are superficial phenomena without effect on the deeper economic processes of exploitation and class rule. Democracy must therefore be replaced by something better.

Marxism claims that there can only be real political equality and real equality of power when the most important goods – the means of production – are the equal property of all citizens. In all other cases, the rich will have more opportunities to benefit from political participation and judicial protection. Equal rights will lead to an unequal outcome, and this is intentional.

Much of this is, of course, correct. Wealthy groups can and do use elections and human rights to pursue their interests, often at the expense of less fortunate groups. They may even use democracy to maintain exploitation. They can speak better thanks to their education; they have a better knowledge of the ways in which to defend interests; they know their rights; they have friends in high places, etc. That is why compensating measures have to be taken, not only in order to respect economic rights, but political rights as well. By way of these measures, the state redistributes wealth from the rich to the poor, in order to grant the poor more political influence and not just in order to satisfy their basic needs. Other measures enhance the independence of political parties with regard to wealthy pressure groups (for example public instead of private funding for political parties).

It is clear that we are not dealing with a potentially fatal argument against democracy. Wealth causes political inequality everywhere, not just in a democracy. Democracy and human rights are in fact the only solution to the problem of the unequal political result of economic inequality. Democracy and human rights are not merely formal. Equal voting power, equality before the law and equal rights do not cover up and do not maintain the social division between rich and poor. Democracy does not hide divisions; it shows them and it shows them in a better way than any other form of government. And because it allows divisions to become public, it offers the best chance of eliminating or softening unjust divisions. Democracy does not only serve the interests of the wealthy classes. Poor, exploited or oppressed groups also benefit from freedom of expression, from the election of their own representatives and from the possibility to claim rights (economic rights, for instance, equalize political influence because they create leisure time which can be spent on politics). Even the bare fact of being able to show an injustice is an advantage in the struggle against this injustice. If you are not able to see an injustice – and this can happen in an unfree society – then you are not aware of its existence and you can do nothing about it. Democracy at least gives poverty a voice.

The struggle against injustice means questioning society and the powers-that-be (also the economic powers). It is easier to question social relationships in a society in which political power can be questioned. Publicly questioning political power in a democracy is a process in which the entire people, rich and poor, are involved. This process legitimizes the act of questioning per se and therefore also the act of questioning injustices in society. Elections and rights are not a force against change. They create infinite possibilities, including the possibility to change economic structures.

Of course, the political and legal elimination of the difference between rich and poor (they all have an equal vote, equal rights and equality before the law) does not automatically result in the elimination of the social difference between rich and poor. However, democracy and human rights can diminish the influence of property and wealth because:

  • They give legal and political means to the poor in order to defend their interests; no other form of government performs better in this field because no other form of government gives the same opportunities to the poor (the opportunity to show injustices, to elect representatives, to lobby governments, to claim rights etc.).
  • They diminish the difference between rich and poor by way of redistribution; they allow for compensating measures to be taken, measures which help to preserve the value of political participation for all (for example redistribution, but also measures such as subsidies for independent TV-channels or for political parties which then become more independent from private wealth and private interests).

If certain divisions are made politically and legally irrelevant (by way of equal rights, equality before the law, equal vote etc.), then this is not necessarily part of a conscious strategy to maintain these divisions in real life. If it were part of such a strategy, it would probably produce the opposite of what is intended. The chances that injustices disappear are much higher in a society in which injustices can be shown and questioned, and only a democracy can be this kind of society. A society which can question itself because it can question the relations of power, is more likely to change. This is shown by the recent history of most western democracies where many injustices have been abolished by way of democracy and human rights. The labor movement, the suffragette movement and feminism would have been impossible without democracy and rights. Workers, women, immigrants etc. have all made successful use of the possibility to claim rights, to elect representatives, to enact legislation etc.

Political influence will probably never be equal for everybody (talent also plays a role, and it is difficult to correct for the effects of talent). But there is more and there is less. Democracy is probably the best we can hope for. On top of that, democracy constantly enhances the equality of influence, even though every victory creates a new problem. The Internet, for example, will empower many people and will enhance political equality, but it will also exclude many other people, namely those without the necessary computer skills or without the infrastructure necessary to use the Internet on an equal basis. It can become a new source of political inequality. We will have to finds ways in which to equalize the access to and the use of the Internet because we want to maintain or increase political equality. In the meanwhile, however, a new kind of inequality should not make us lose sight of the enormous progress for equality which the Internet allowed us to achieve. Many people, who today use the Internet to participate in politics, never participated in the past.

Economic Human Rights (4): Taxation

What if different kinds of equality contradict each other? For example equality before the law on the one hand (laws must be equal for everybody and should not discriminate) and material equality as promoted by economic rights on the other hand.

Material equality is often promoted by way of taxation based on legislation. The purpose of taxation is the redistribution of property. The problem is that redistribution only benefits one group of people and harms the interests of the rest of the population. Taxation laws do not seem to be equal for everybody and do not have the same result for everybody. It seems as if they discriminate against certain people. A wealthy person can claim that laws must be the same for everybody and that a law which forces one person to give and allows another to receive is illegitimate. A law against murder does not, at the same time, force one person to abstain from murder and allow another person to murder. So why should a law on taxation be allowed to discriminate?

First of all, there is no reason to believe that the principle of equality before the law is an absolute principle. It must be possible to make trade-offs between principles. If one principle – for example equality before the law – does serious harm to another principle – for example material equality – then it may be acceptable to sacrifice or limit one principle for the sake of another. Sometimes, one has to make a choice and one has to establish priorities. This goes both ways. Too much attention to material equality can be counteracted by way of the principle of equality before the law.

However, it may not be necessary to limit the principle of equality before the law. Taxation laws do not discriminate, at least when we define discrimination as giving something to one person and denying it to another without good reason. Economic rights indeed give something to one person and not to another. Even more so, they take away something from one person in order to give it to another. However, the former person is not denied the thing that is given to the latter. He or she has and continues to have the same thing as the one given to the latter. The consequences of taxes are equal for everybody because they make sure that everybody has the same minimum of material means. Taxation laws do not cause discrimination or inequality. On the contrary, they are designed to eliminate discrimination and inequality, not only at the level of material well-being but also at the level of political influence, because material inequality causes political inequality.

We have discrimination when a law only benefits one group of persons and when there is no good reason why other persons should not benefit. It is clear that there is no good reason why wealthy people should benefit from taxation laws in the same way as poor people, except of course when they themselves become poor. Everybody can be in a position in which he or she needs taxation laws.

The right to free speech does not benefit everybody in an equal way either. Some people gain more from this right than other people. A colored person suffering from discrimination needs this right more than a white, middle-class person without political worries. However, there is no reason to claim that this right contradicts the principle of equality before the law.