Thursday, July 22, 2010

On Inequality

...feels like Friday here in the office so one more post. I'm just jotting down some thinking I've done recently.


So I've been thinking through more of Lovecraft's thoughts on political economy, and inequality features prominently in his discussion of it. I've also been looking into the writings of his contemporaries writing on inequality, particularly contemporary economists. It seems to me there are four basic ways to approach inequality:


1. From a rights perspective: people have a right to what they earn, differences in wealth or inequality are merely differences in ability and effort exercised and monetize through contract and property rights. From a contractarian perspective, then inequality is largely acceptable. Inherited wealth, while justifiable from a rights perspective, can also be challenged from this perspective.


2. From an incentive perspective: this is almost a consequentialist approach to inequality. Inequality is good because it motivates effort and improvement. It also directs people to socially beneficial activities (if there are more profits in one industry than there are in another, people will have the incentive to enter that industry). I often like to reference Bernoulli's law - it is inequality that provides lift. Keynes largely comes from this consequentialist angle when he explains why he is fine with economic inequality. Lovecraft has a consequentialist approach to inequality too, but it is very different from this incentives explanation - it is more of an aesthetic and cultural justification for inequality.


3. From a human dignity perspective: this is more of a humanitarian approach. Concepts of human worth suggest that people deserve a certain standard of living, simply in the interest of human dignity. You could approach dignity as a question of relative outcomes as well. Lovecraft also expresses some of this humanitarian vision, which is somewhat ironic given his very well articulated Neitzscheism (no matter - foolish consistency is the hobgoblin of small minds).


4. From an opportunity perspective: this is the "equality of opportunity" approach, as opposed to the "equality of outcomes" approach in point #3. It can be thought of as the democratic perspective. The unequal circumstances we are born into stack the deck in favor of people whose parents (or grandparents, or great-grandparents, or...) were more successful. From this angle, it is pointed out that the contractarian approach can be naive by ignoring endowment effects.


Are there any other ways to think about inequality? I have sympathy for all four of these - I think most people do. Others, of course, lean heavily on only one or two of them. I personally don't think from an ethical standard it's clear what to do with inequality (or put it this way - if it is clear it's because you've come at the question with a very detailed ethical outlook to begin with). I'm not going to think about inequality this abstractly or broadly in what I write about Lovecraft's views on the issue, but the issue itself is a major part of his political economy.

11 comments:

  1. Income? Wealth? Consumption? Freedom? Rights? Opportunity? Consequences? Luck? Endowment? Utility? Decision-making? Wit and Wisdom? Fashion sense?

    Whichever equality we aim for, it will never be equal enough, because it will come at the expense of equality somewhere else.

    It's like a game of whack-a-mole, only with a blindfold.

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  2. I agree, and I think that's where Dewey gets us too:

    http://factsandotherstubbornthings.blogspot.com/2010/07/guest-blogger-john-dewey.html

    The question is, even if an equality we actively pursue is "never equal enough" (or, for that matter, never unequal enough - I did highlight several benefits of inequality), is it at least possible to improve upon where laissez faire would land us?

    I think so.

    And, as I suggested, this is usually a matter of balancing equality and inequality appropriately - not simply pursuing equality.

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  3. Though I am not really sympathetic to these...

    Participation inequality

    International inequality

    Quadratic inequalities (ok that is a joke)

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  4. On Nietzsche...

    Many of Nietzsche's writings have a strong paternalistic aspect to them ... paternalism has a humanitarian aspect to it (though a really screwed up one IMHO).

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  5. On what basis are rights justified? Do they end up appealing to human dignity? Or just tradition? To me the rights perspective is the least compelling.

    Opportunity is emotionally engaging but logically irrelevant, except as a counter to the rights perspective.

    The incentive perspective is, I think, closely connected to self-determination. Non-coercive 'incentives' can be ignored, especially if keeping up with the Jones is eventually debunked as a fulfilling enterprise. Civilization is built by the individual actions of the many, as they respond to the incentives they face.

    'Human Dignity' seems like weak wording for the issue of who gets to summer in Provence and who gets to die of dysentery before reaching adulthood.

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  6. To me the rights perspective is the least compelling.

    Really? The idea that property rights come before material equality is troubling to you?

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  7. Well, consider: Property rights also come before inequality.

    The problem is that rights don't stand on their own, though many people seem to think they do. Rights are such by tradition, convention, agreement, or force. So to appeal to rights as the justification for anything is to beg the question. The very word Right implies a moral justification that cannot be borne out.

    This is a pretty basic concept that is often discussed in undergrad business law classes. What does it mean to say that I own a piece of land? It means that I have a very limited packet of rights (e.g. probably NOT including ownership of any oil or gold I might find on the land) that I get to exercise with respect to that piece of land. Where did those rights come from? From convention, etc. codified into law.

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  8. There is a natural rights argument that you are entirely missing. I was not appealing to rights codified by judges and lawyers, but the idea of rights independent of manmade institutions.

    It is this "rights perspective" that makes murder wrong. It's not just that lawmakers and citizens alike frown upon it, but it is wrong because it violates a system of rights above us.

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  9. No, I'm not missing that argument. I'm dismissing it as begging the question.

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  10. Let me try to be more clear.

    Let's assume that there's some kind of "system of rights above us", and that system guarantees me a legitimate claim on the fruits of my labor. Specifically, it guarantees me the exclusive right to make use of anything I "invent" for 7 years. But only if I file the right paperwork.

    Now you might object and say that while it's true that this system of rights guarantees me a claim on the fruits of my labor, the 7 years and the paperwork are just conventions that were adopted for practical reasons. But if you argue that, then how do you know which are the rights that are guaranteed by nature (or by God, or whatever), and which are the ones we've just adopted for practical reasons? Do you just have your preferences about which rights are "natural" in origin and which aren't? Or can you objectively distinguish natural rights from artificial rights?

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  11. Not to mention the fact that the natural rights position isn't really an "argument" that we're ignoring anyway, Mattheus. It's an assertion.

    To respond to an argument, you have to make an argument.

    I think sentiments consistent with natural rights and language consistent with natural rights are a very important thing for humans to have. I'm not sure there's much more to them than that.

    I think you could ethically derive contracts and that takes you a lot of the way. But contracts need property to make sense, and ultimately that property is still going to be artificially designated.

    Any reasonable theory of property rights not based on convention is going to have to be Lockean and built up from the our rights to our own person. But that risks getting twisted up in a labor theory of value and introduces a lot of other other problems.

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