Wilkinson - The Varieties Of Equality

The Varieties of Equality Will Wilkinson [Appendix to “Thinking Clearly about Economic Inequality” Cato Institute Policy Analysis no. 640]

Economic equality is only one kind of equality and not the most important kind. It is obvious that people differ wildly in their assets and liabilities. Some of us can calculate pi to twenty decimal points unassisted and some of us cannot sign our name. Some of us are paid to have our photograph taken and some of us are too fat to walk a flight of stairs. Some of us are virtuosos of multitasking who scarcely need sleep and some of us are paralyzed by unflagging depression. Some of us are very rich, while some of us are very poor. And it goes on. Some or all of these inequalities may be “unfair” at some metaphysical level, but few of us think all of them are a matter of justice or that a perfectly benevolent and democratic state may legitimately intervene to “correct” them. Some of us are lucky in love, but it would be monstrous to redistribute lovers.1 Nevertheless equality of some kind is at the heart of every decent society. The Nobel Prize-winning economist and philosopher Amartya Sen has written, “every normative theory of social arrangement that has at all stood the test of time seems to demand equality of something-something that is regarded as particularly important in that theory.”2

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The thought experiment of perfect, politically-enforced equality on all dimensions is famously and brilliantly performed by Kurt Vonnegut in his dystopian short story “Harrison Bergeron”: Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution, and to the unceasing vigilance of agents of the United States Handicapper General. See Welcome to the Monkey House (New York: Delacorte Press, 1968.) 2 Amartya Sen, Inequality Examined, (Cambridge, MA: Harvard University Press, 1992), p. 13.

Depending on the theory, that special something might be, among other things: coercive power, political and legal rights, social status, opportunities to realize basic capacities, access to institutions and offices, command of material resources, or happiness. However, on no theory of the good society do all these dimensions of inequality happily coincide. More inequality on one dimension is often the price we pay for less on another.3 For example, it is impossible to reduce income inequality through government transfer payments without granting a handful of people the awesome power to coercively expropriate wealth, and this introduces large inequalities of political power that, as a matter of fact, almost always lead to some level of corruption and abuse.4 As the philosopher Roderick Long glosses John Locke’s seminal liberal conception of natural political equality, “equality involves not merely equality before legislators, judges, and police, but, far more crucially, equality with legislators, judges, and police.”5 Even if we are satisfied that such inequalities in power are made legitimate by fair democratic institutions that reliably safeguard us against abuse, there is simply no avoiding inequality whack-a-mole. When we raise taxes on the wealthy to finance spending on the welfare of the poor, we increase inequality in tax rates; a small segment of the population will bear an increasingly unequal share of the tax burden. Reduce tax inequality and income inequality goes up. “Closing one gap widens the other,” political philosopher David Schmidtz notes in a lucid

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See David Schmidtz, “When Inequality Matters,” Cato Unbound, March 6, 2006, http://www.catounbound.org/2006/03/06/david-schmidtz/when-equality-matters/. See also “Equal Respect and Equal Shares,” Social Philosophy and Policy 19 (2002). 4 Roderick T. Long, “Equality: The Unknown Ideal.” Lecture delivered at the Philosophy of Liberty Conference at the Ludwig von Mises Institute in Auburn, Alabama, Saturday, September 29, 2001. Online at http://www.mises.org/story/804. See also, Roderick T. Long, “Liberty: The Other Equality,” The Freeman (October 2005): 17-19. 5 Locke says, “there being nothing more evident than that creatures of the same species and rank, promiscuously born to all the same advantages of nature, and the use of the same faculties, should also be equal one amongst another, without subordination or subjection.” John Locke, Second Treatise of Government II. 4, www.lonang.com/exlibris/locke/loc-202.htm

discussion of this issue.6 Recognizing this fact forces us to square up to the choice between dimensions of equality and to ask explicitly: Why does this one merit the greatest concern? Are inequalities in political power or authority more or less worrying than inequalities in economic holdings? Are highly unequal tax rates really fairer than highly unequal incomes? Different liberal theories of the good society place the emphasis on different dimensions of equality. The version of liberalism most notably and durably embodied in the United States Declaration of Independence and Constitution is, at its core, a doctrine of freedom and equality, working in tandem. Republican or democratic equality reflects our natural equality as persons, which is the foundation of our rights. To say that “all men are created equal” is to say that no man has a right to rule over another simply in virtue of birth, blood, or prior privilege.7 This is the antithesis of monarchy or aristocracy. The only legitimate ruling power is that which free and equal individuals consent to be governed by. It is in this anti-aristocratic, republican sense -natural equality of authority -- that the United States of America was the first explicitly egalitarian, and liberal, nation. Under a system of hereditary class stratification, economic inequality is a predictable consequence of predation by political elites and the systematic exclusion of the lower classes from the most rewarding economic opportunities.8 It is not surprising, then, that those living in societies with a history of exclusive hierarchy will tend to suspect that large differences in wealth reflect an entrenched structure of unfair inequality of opportunity. We will return below to the effect of long-standing historic institutions on contemporary public opinion to help explain why 6

Schmidtz, “When Inequality Matters.” The first draft of the Declaration of Independence has equality even more at the forefront, “We hold these truths to be sacred and undeniable: that all men are created equal and independent; that from that equal creation they derive rights inherent and inalienable, among which are the preservation of life, and liberty, and the pursuit of happiness.” It is clear here that our rights were conceived as following from equal creation, rather than the fact of equality standing next to the fact of rights as an independent posit. 8 Edward Glaeser, Jose Scheinkman, and Andrei Shleifer, “The Injustice of Inequality,” Journal of Monetary Economics 50, no. 1 (January 2003). 7

Americans have a greater tolerance for economic inequality than do Europeans. For now it is important to grasp that differences in economic holdings and differences in the power to wield the coercive tools of government are separate ideas and should not be confused, even if they have often been intertwined to pernicious effect. Political and economic inequality can and have been disentangled to various degrees in successful, wealthy liberal democracies. The classical liberal argument is that they should be disentangled further by limiting more strictly the scope of political discretion, and thereby taking a great deal of political power—and the potential for great political inequalities—off the auction block.9 Though economic inequality need not imply political inequality, economic inequality indisputably matters, because money matters. Life is hard when you don’t have enough money, and it's easier when you've got a lot. Recent studies clearly show that, other things equal, more money makes us more likely to report that we are happy.10 Money is a form of power: with money, you can get what you want—you can get things done. With more of it, you can get more of what you want, worry less, and feel more in control of life. It is not surprising then that inequalities in other important goods often reflect inequalities in the command of economic resources. People with more money have access to more and better opportunities of all kinds. High-quality educational, occupational, and political opportunities are in easy reach for the wellto-do, but are often completely out of reach for most of the poor. While our legal rights may be 9

See Branko Milanovic, Peter H. Lindert, and Jeffrey G. Williamson, “Measuring Ancient Inequality,” NBER Working Paper 13550, for an account of the “inequality extraction ratio”— the difference between possible and actual economic inequality. Wealthy societies, the authors point out, have a greater potential for economic inequality. A parallel concept applies to political inequality. Societies with a powerful and relatively unchecked state have a greater potential for political inequality. Minimizing the political power available, minimizes the incentive to capture it. When political inequalities are low, we can be more confident that economic inequalities do not reflect them. 10 See Angus Deaton, “Income, Aging, Health, Wealth, and Wellbeing: Evidence from the Gallup World Poll,” working paper, NBER Working Paper No. 13317, http://www.nber.org/papers/w13317; Pew Research Center, “Are We Happy Yet?” Pew Research Social Trends Report, February 13, 2006, http://pewresearch.org/pubs/301/are-wehappy-yet; Will Wilkinson, “In Pursuit of Happiness Research: Is It Reliable? What Does It Imply for Policy?” Cato Institute Policy Analysis 590, April 11, 2007.

formally equal, differences in wealth can lead to differences in the ability to exercise them effectively. There is a reason wealthy people accused of crimes do not rely on public defenders. The political philosopher John Rawls aptly characterized a thriving society as a “cooperative venture for mutual advantage.”11 When some people do extremely well within a certain system of institutions while others do very poorly, that system may seem to lack the cooperative mutuality that is the beating heart of a healthy society. [Elliptical] When some prosper and others flail, it is not unreasonable to wonder whether the institutions are rigged, whether some are exploiting others. Economic inequality is often the consequence of exploitation, self-dealing, and the violation of basic human rights. But economic inequalities also emerge as side effects of dynamic institutions that are not exploitative or unjust, but rather embody cooperative mutuality to the highest degree. In order to tell the difference—to tell whether or not we are looking at a level of economic inequality that is a consequence of injustice—we must first identify and then evaluate the mechanisms that have brought it about. In the absences of such identification and evaluation, neither the level nor the trend of inequality tells us anything definitive.

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John Rawls, A Theory of Justice XXX