Thoughts On Inequality

NYU economist Mario Rizzo gives a list of some of the questions and issues that serious people ought to consider on inequality:

  1. There seems to be very little concern, in the popular press, for the causes of unequal distribution. This includes, especially, the causes of the increasing unequal distribution over the past few decades. (However, recessions seem to be good for reducing income at the top.) Reformers should always consider causes before advising cures.
  2. There is a confounding of the results of a process that produces a distribution with the process itself. If person A steals money from person B, I object to the process (theft) first and foremost, and not to the resultant distribution of wealth. I really don’t care if it results in a more equal or less equal distribution.
  3. If there is something wrong with the rules-of-the-game, that is, the process that generates wealth and income distribution, let us attend to that. For example, if people are getting rich because of the warfare state or because the institutions they work for are bailed out by taxpayer money, let us address those issues.
  4. What exactly constitutes a more just distribution? The economist Paul Samuelson (and other amateur “moral philosophers”) used to equate, in his textbook, equity with greater income equality. (He famously, but ignorantly, said that the Soviet Union “chose” greater equity at the expense of efficiently – but nevertheless they would surpass us in wealth soon, anyway.)
  5. Justice does not simply imply equality. Sometimes it implies equality and sometimes inequality (as when the criminal gets his punishment, but the rest of us do not).
  6. Is it important that the positive entitlement to resources must be bought with the effort of others who might believe they have better uses for their money?
  7. Why should the hierarchy of values that emerges out a political system — based on favors, special interests, power-plays, (rationally) ignorant voters, self-interested politicians, and people much less moral than you and me – dominate  over my and your moral judgments?
  8. Do the putative moral claims of the “poor” stop at the water’ edge? Given that the poor of the US are rich by world standards, what kind of objective morality of distributive justice allows that “our” poor get preference over, say, North Korea’s poor? Do we have a tribal morality?
  9. To what extent are the commentators (law professors and economists especially included) trying to publicly signal their “goodness” by using their technical skills to come up with schemes that pander to unthought-out popular prejudices. After all, how much respect from the general public can academics get by coming up with some theorem on the quasi-transitivity of preferences, or what not?
  10. Last, but not least, do the redistributioners have any idea how the so-called welfare state works in practice? Do they know how the state uses one hand to make the poor poorer (unseen) and uses the other hand to help them out (seen)? Do they see the coming bankruptcy of the welfare state?

Full post can be found here.

6 Responses to “Thoughts On Inequality”

  • 1-Possibly true in the popular press.
    2-I don’t make this error nor do the people I read, but maybe somebody does.
    4-Commits fallacy of the beard. You don’t have to know exactly what’s right to know that what we have now is not just.
    6-I’m not sure, so I’ll have to skip this one. I’m not sure what I think of claims to property rights. Anarcho syndicalists don’t think property rights should be respected and I’m loathe to bet against Chomsky. :)
    7-Because our moral judgments can lead to behavior that affects others. That’s why others should have a say in which moral judgments dominate.
    8-No, but this doesn’t mean we shouldn’t strive for a better society within the US. Striving for a better society world wide should also be a goal, but you have to walk before you can run.
    9-To what extent have economists been coming up with mathematical models divorced from reality that serve the interest of wealthy people? I’ll take pandering on behalf of the poor against pandering on behalf of the rich, which is more common in mainstream circles. Kind of like the flatterers of the King in biblical times. To call out the king’s BS and stand for the weak is what took real guts. That’s more of what Jesus did or Elijah.
    10-As I explained at my blog, welfare expenditures to the poor are miniscule. There’s no reason we can’t fund that indefinitely. And expand it.

  • I could comment on all, but I’ll pick my two favorites:

    4. Okay – say I buy your response, then how do you know what we have now is not just?

    8. The two are mutually exclusive. For example, closing the border will significantly help the former and expanding the border the latter. In such a constrained world, which would you choose?

  • 4-Let me revise what I said. What we have now doesn’t work well and should be changed in order to produce better outcomes.

    8-I don’t agree that the two are mutually exclusive. There is a lot we can do now to help the poor in the US and the poor elsewhere. A Tobin Tax would help the whole world. Redirecting government expenditure from war to productive enterprises would help everyone, so we should strive for that. There are some things we could do now that would harm poor Americans and help poor Africans, like opening borders. There are trade offs there. On the whole though I would probably side with opening the borders. Allow more suffering of Americans to alleviate massive suffering amongst the poor in foreign countries. You’d have to be careful though because this could concentrate wealth and power even more, which could lead to worse problems, but that’s more of a down the road thing. People are starving right now due to these constraints.

  • Replies:

    8 – Lots of your assumptions are not on solid ground. Take your first example, a Tobin Tax, not as clear cut as you think. See here. You may think Rogoff is wrong, but remember, he is THE expert on this (Krugman generally agrees). I doubt anybody alive could speak more authoritatively on this.

    You write, On the whole though I would probably side with opening the borders. Allow more suffering of Americans to alleviate massive suffering amongst the poor in foreign countries.

    This makes me happy to hear. This is, IMHO, what I would consider the defining difference between the knowledgeable economic left and the knowledgeable economic right – on the margin of course. This puts you on the right – instinctively, atleast, if not consistently.

  • Where is your blog, Jon? I’d be interested in visiting it.

  • Click on his name. It’s linked there. Or go here:

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