Everyone cares about inequality. Caring about inequality, though, is not enough to make inequality matter. Unless we have the right sorts of reasons to care, equality does not matter, at least not in the way justice matters. So, why care about inequality?

If the question has no simple answer, part of the reason is that equality is multi-dimensional. Suppose Jane Poor earns $10,000 and pays a tax amounting to 10%, while Joe Rich earns $100,000 and pays a tax amounting to 38%. Together they pay $39,000, 95% of which is paid by Joe Rich. If we cut each rate by 1%, Jane saves $100, while Joe saves $1000, which is to say, Joe gets about 90% of the benefit. The pundits belabor this point, without ever mentioning that the way people get more than their share of a tax cut is to be paying more than their share of the tax that got cut. After the cut, Joe still pays $37,000, compared to Jane’s $900. So, does inequality matter? Which one? There remains a 7-fold gap in what they have left after paying? Is that unfair? Should Joe Rich be paying more? The 38-fold gap in what they pay is now a 41-fold gap (even though it has shrunk in dollar terms). Is that unfair? Should Joe Rich be paying less? Closing one gap widens the other.

Of the many dimensions along which people can be unequal, presumably some do not matter. Moreover, not all dimensions can call for amelioration, given that to ameliorate along one dimension is to exacerbate along another. The dimensions that do matter, though, may turn out to matter for the same reason, so even given that inequality is multi-dimensional, the reason to care about it may yet be relatively simple. Here are two possibilities.

1. The dimensions of equality that matter are dimensions where moving in one direction (letting wives have bank accounts, say) is liberating while moving in the other direction is oppressive.

2. The dimensions of equality that matter are dimensions where moving in one direction (toward equality of income, say) fosters prosperity while moving in the other fosters destitution.

My assumption here is that for an inequality to matter, it must make a difference. It must matter whether we have more rather than less, or some rather than none. Simply calling a given inequality ‘unjust’ (some people paying more than others pay in taxes, say, or having more left after paying) is not a reason but a promissory note; we make good on the promise when we offer reasons why that particular inequality matters enough to warrant being called unjust.

Inequality That Matters: Toward Liberation

Suppose we have a certain moral worth, and nothing we could do would ever make us more worthy, or less. In this case, we might turn out to be of equal worth. Now suppose instead that, along some dimensions, our worth can be affected by our choices. In that case, presumably there never will be an instant when we are all equally worthy along those dimensions. Egalitarianism cannot survive inspection as a call for enforcing a static pattern (of income shares, say), but that is not what liberal egalitarianism historically has been. The point of the liberal ideal of political equality is not to stop us from becoming more worthy along dimensions where our worth can be affected by our choices, but to facilitate our becoming more worthy.

Liberal political equality is not premised on the absurd hope that, under ideal conditions, we all turn out to be equally worthy. It presupposes only a traditionally liberal optimism regarding what kind of society results from giving people (all people, so far as we can) a chance to choose worthy ways of life. We do not see people’s various contributions as equally valuable, but that was never the point of equal opportunity, and never could be. Why not? Because we do not see even our own contributions as equally worthy, let alone everyone’s. We’re not indifferent to whether we achieve more rather than less. Some of our efforts have excellent results, some don’t, and we care about the difference. In everyday life, genuine respect (to some extent) tracks how we distinguish ourselves as we develop our unique potentials in unique ways.

Traditional liberals wanted people—all people—to be as free as possible to pursue their dreams. Accordingly, the equal opportunity of liberal tradition put the emphasis on unleashing human potential, not equalizing it.

Elizabeth Anderson rightly says, “Those on the left have no less reason than conservatives and libertarians to be disturbed by recent trends in academic egalitarian thought.”[1] To Anderson, “The proper negative aim of egalitarian justice is not to eliminate the impact of brute luck from human affairs, but to end oppression.”[2] Anderson suggests that when redistribution’s purpose is to make up for bad luck, including the misfortune of being less capable than others, the result in practice is disrespect. “People lay claim to the resources of egalitarian redistribution in virtue of their inferiority to others, not in virtue of their equality to others.”[3]

Political equality has no such consequence. In the 19th century, when women began to present themselves as having a right to vote, they were presenting themselves not as needy inferiors but as autonomous equals, with a right not to equal shares but to equal treatment. As Gerald Gaus describes the liberal egalitarian tradition, “the fundamental human equality is the absence of any natural ranking of individuals into those who command and those who obey.”[4] Gaus is right. To acknowledge that no one has a right to command merely in virtue of being Caucasian, or being a husband, of being the son of a king, is a fundamental equality, and at the same time a fundamental liberty.

Liberal egalitarianism has a history of being, first and foremost, a concern about status, not stuff. Iris Marion Young calls it a mistake to try to reduce justice to a more specific idea of distributive justice. Anticipating Anderson to a degree, Young says, “instead of focusing on distribution, a conception of justice should begin with the concepts of domination and oppression.”[5] Young sees two problems with the “distributive paradigm.” First, it leads us to focus on allocating material goods. Second, while the paradigm can be “metaphorically extended to nonmaterial social goods” such as power, opportunity, and self-respect, the paradigm represents such goods as though they were static quantities to be allocated rather than evolving properties of ongoing relationships.[6]

So, taking our cue from Young, one way in which liberal equality matters is in helping to repudiate and eliminate such things as Jim Crow laws: gratuitous limitations on our freedom to pursue our dreams in peace. The proper function of our network of evolving relationships is not to keep us in our static place but to empower us to aspire to a better life. Even more fundamentally, the point is to empower us to become as worthy as we can be along dimensions where our worth is affected by the choices we make about what sort of life is worth living.

A final thought about equality as liberation. Brian Barry discusses positional goods, where “what matters is not how much you have but how much you have compared to other people.”[7] Capitalism’s critics once scoffed at the cliché suburban goal of “keeping up with the Joneses,” but Barry laments that, “The cost of ‘keeping up with the Joneses’ thus rises in line with the standard of material prosperity.”[8] He says, “Social mobility has thus become a zero-sum game; working class children can rise only if an equal number of middle-class children fall.”[9] But this cannot matter, for it follows tautologically from the fact that income shares necessarily add up to 100%. Barry says “has become” as if he were discussing an empirical development. Not so. What Barry is lamenting is a property of arithmetic rather than of a faulty political system. To see changes that matter, we need to look at actual changes: in real purchasing power of the 20th income percentile, say, or in life expectancy. Between 1900 and 2001, life expectancy for whites rose 63%, from 47.6 to 77.7 years. Life expectancy for blacks rose 119%, from 33.0 to 72.2 years.[10] Moreover, the change is not merely a decline in infant mortality. “Death is on the decline for babies, adults, and older people alike, with AIDS, homicide, cancer, and heart disease all claiming fewer lives.”[11] Undeniably, the persisting difference between 77.7 years and 72.2 years matters. Just as undeniably, it matters relatively little compared to the difference between 33.0 and 72.2. When it comes to life expectancy, keeping up with the Joneses is not what matters. More generally, when it comes to things that matter, keeping up with the Joneses doesn’t.

In a race, equal opportunity matters. In a race, people need to start on an equal footing. Why? Because a race’s purpose is to measure relative performance. Measuring relative performance, though, is not a society’s purpose. We form societies with the Joneses so that we may do well, period, not so that we may do well relative to the Joneses. To do well, period, people need a good footing, not an equal footing. No one needs to win, so no one needs a fair chance to win. No one needs to keep up with the Joneses, so no one needs a fair chance to keep up with the Joneses. No one needs to put the Joneses in their place or to stop them from pulling ahead. The Joneses are neighbors, not competitors.

Inequality That Matters: Toward Prosperity

Here is a truism about the wealth of nations: Zero-sum games do not increase it. Historically, the welfare of the poor always—always—depends on putting people in a position where their best shot at prosperity is to find a way of making other people better off. The key to long-run welfare never has been and never will be a matter of making sure the game’s best players lose. When we insist on creating enough power to beat the best players in zero-sum games, it is just a matter of time before the best players capture the very power we created in the hope of using it against them. We are never so unequal, or so oppressed, as when we give a dictator the power to equalize us. By contrast, the kinds of equality we have reason to care about will be kinds that in some way facilitate society as a positive sum game.

Rawls assumed society can be a cooperative venture for mutual advantage—a positive sum game.[12] Society is not, or at least need not, be like poker in that respect. Poker is zero-sum. The only way to win is at the expense of other players. Some of us want to see—to define—profit as coming at other people’s expense, despite the ubiquity of consensual transactions where both parties go away having gotten what they came for. Robert Axelrod says he puts students in game situations, instructing them “that it should not matter to them whether they score a little better or a little worse than the other player, so long as they collect as many dollars for themselves as possible. These instructions simply do not work. The students look for a standard of comparison to see if they are doing well or poorly.” Moreover, “people tend to resort to the standard of comparison that they have available—and this standard is often the success of the other player relative to their own success. This standard leads to envy. And envy leads to attempts to rectify any advantage the other player has attained.” Axelrod concludes that, “Asking how well you are doing compared to how well the other player is doing is not a good standard unless your goal is to destroy the other player.”[13] Is Axelrod exaggerating? Perhaps. Yet he has a point. Sometimes we care about inequality because we are envious, but envy is not a good reason to care.

One of the great sources of inequality (more precisely, inequalities of wealth and income) is the division of labor.[14] If we truly were on our own, producing something as mundane as a slice of pizza would be out of the question. Even getting started—acquiring iron ore (with our bare hands) and turning it into an oven in which to bake the dough—would be out of the question. Without division of labor, the Joneses would go nowhere, so keeping up with them would be unavoidable. At the same time, the division of labor makes us many thousands of times more productive than we otherwise would have been.[15] Compared to that, the income inequality that division of labor fosters is inconsequential. In summary, the kind of equality that is liberating is also the kind that historically has been a key to human prosperity—namely, acknowledging people’s right to use their own judgment about how to employ their talents under prevailing circumstances, as free as possible from encumbrances of a race-, sex-, or caste-defined socioeconomic roles.

From the Goodness of Equality to the Rightness of Equalizing

David Miller notices a difference between saying equality is good and saying equality is required by justice.[16] If our school organizes a track meet, and one boy wins every race, we accept that justice was done. Prizes were fairly won. Still, we are disappointed. It would have been a better (at least more enjoyable) day if the prizes had been spread around. Yet, Miller observes, we need not dress up our disappointment. Not everything that matters is a matter of justice.

We may think more equality would make the world a better place without thinking each boy claiming a prize as a matter of justice would make the world a better (or fairer) place. A person could wish for more equality while seeing a gap between equality being good and equalization being good, or between equality being good and anyone having a right to equalize. In the real world, to take from one person and give to another does not only alter a distribution. It also alters the degree to which products are controlled by their producers. To redistribute under real-world conditions, we must alienate producers from their products. The alienation of producers from their products was identified as a problem by Karl Marx, and rightly so; it should be seen as a problem from any perspective.

Elizabeth Anderson notes, as many have, that egalitarians “regard the economy as a system of cooperative, joint production” in contrast with “the more familiar image of self-sufficient Robinson Crusoes, producing everything all by themselves until the point of trade” and says we ought to “regard every product of the economy as jointly produced by everyone working together.”[17] The Crusoe image is indeed familiar, but only in writings of liberalism’s communitarian critics. The liberal ideal is free association, not atomic isolation.[18] Further, the actual history of free association is that we do not become hermits but instead freely organize ourselves into “thick” communities. Hutterites, Mennonites, and other groups moved to North America not because liberal society is where they can’t form thick communities but because liberal society is where they can.

Anderson’s point is nonetheless sound. We do not start from scratch. We weave our contribution into an existing tapestry of contributions, and within limits, are seen as owning our contributions, however humble they may be. That is why people contribute, and that in turn is why we have a system of production.

Obviously, there is much to be said for being thankful that we live within this particular “system of cooperative, joint production” and for respecting what makes it work. When we do reflect on the history of any given ongoing enterprise, we feel grateful to Thomas Edison and all those who actually helped to make the enterprise possible. We could of course resist the urge to feel grateful, insisting that a person’s character depends on “fortunate family and social circumstances for which he can claim no credit”[19] and therefore, at least theoretically, there is a form of respect we can have for people even while giving them no credit for the effort and talent they bring to the table. One problem: this sort of respect is not the kind that brings producers to the table. It is not the kind that makes communities work.

Rawls says inequalities ought to be arranged (to the greatest advantage of the least advantaged).[20] Sometimes, though, justice is about returning a stolen wallet to the person from whom it was stolen. Why return the wallet to that person? Not to restore a previously fair arrangement but to restore the wallet to the person from whom it was stolen. Sometimes, justice is about returning the wallet, not distributing it. The wallet’s history trumps any thoughts about how it might best be distributed.

Similarly, as Robert Nozick observed, we lack a license to distribute mates.[21] That is why we have no right to distribute mates unfairly, and no right to distribute mates fairly either. Mates are not ours to distribute. What about inequalities? Presumably, the same point applies. Unless an inequality (of talent, say) is ours to arrange, theories about what would be fair are moot. A truly foundational theory about how inequalities ought to be arranged would not start by imagining us coming to a bargaining table with a right to distribute what other people have produced. A truly foundational theory would start by acknowledging that there is a prior moral question about which inequalities are ours to arrange.

Notes

[1] Elizabeth S. Anderson, “What Is the Point of Equality?” Ethics 109 (1999): 287-337, at 288. Anderson is a Professor of Philosophy at the University of Michigan.

[2] Anderson, 288.

[3] Anderson, 306.

[4] Gerald F. Gaus, Political Concepts and Political Theories (Boulder: Westview Press 2000) 143. Gaus is Professor of Philosophy at Tulane University, soon to be moving to the University of Arizona.

[5] Iris Marion Young, Justice and the Politics of Difference (Princeton: Princeton University Press, 1990) 3. Young is a Professor of Law and Political Science at the University of Chicago.

[6] Young, 15-16.

[7] Brian Barry, Why Social Justice Matters (Cambridge: Polity, 2005) 176. Barry is a Professor of Political Philosophy at Columbia University.

[8] Barry, 177.

[9] Barry, 61.

[10] Source: National Center for Health Statistics at the Center for Disease Control.

[11] Source: National Center for Health Statistics at the CDC, as reported by the Associated Press, September 16, 2002. (For up to date figures, try www.cdc.gov/nchs/fastats/)

[12] John Rawls, A Theory of Justice (Cambridge: Harvard, 1971). Rawls was a Professor of Philosophy at Harvard University.

[13] This paragraph is a digest of Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984) 110-11. Axelrod is a Professor of Political Science at University of Michigan. For an example of a fairly uncompromising egalitarianism that is opposed to envy-based leveling, see Thomas Christiano, The Constitution of Equality, (Oxford: Oxford University Press, forthcoming). Christiano is Professor of Philosophy at University of Arizona.

[14] How does division of labor foster income inequality? Imagine a pin maker contracts with a partner to make pins, providing the partner with materials, training, and perhaps the security that goes with being a salaried employee. Suppose the pinmaker is an egalitarian and thus splits equally the profits that grow out of the relationship. Now suppose the pinmaker contracts with ten similar partners and establishes a similarly egalitarian relationship with each. The consequence is that the pinmaker’s income is ten times the income of the partners with whom he maintains a strictly egalitarian relationship. Perhaps at some point, the pinmaker starts taking less than an equal share. Suppose he gets up to five thousand employees and a company making a net profit of two hundred million per year. Suppose he then begins to take only takes only ten percent of what his relationship with any particular partner is worth, leaving them with ninety. The result is that he makes twenty million while his average partner makes thirty-six thousand.

[15] See Adam Smith’s discussion of a pin factory in the opening chapters of Wealth of Nations (Indianapolis: Liberty Fund, 1981, 1st pub. 1776).

[16] David Miller, Principles of Social Justice (Cambridge: Harvard University Press. 1999) 48. Miller is a Professor of Philosophy at Oxford University.

[17] Anderson 1999, 321.

[18] For a seminal expression of the communitarian complaint, see Taylor 1985.

[19] Rawls, 104.

[20] Rawls, 65.

[21] Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974). Nozick was a Professor of Philosophy at Harvard University.

As a utilitarian, the kind of equality I care about is equal consideration.* When Jeremy Bentham first suggested that the pains and pleasures of an African should count as much as the happiness of an English person, this view had radical implications, for slavery was still legal in the British colonies. Today, the suggestion that the pain of a nonhuman animal might count as much as the pain of a member of our own species is still radical. That is why this sense of equality remains important.

To care about equal consideration, we don’t need to think that pleasure or happiness is the ultimate end. I’m a preference utilitarian, not a hedonistic utilitarian, so on my view, we ought, roughly speaking, to be trying to increase the extent to which people’s preferences are satisfied and reduce the extent to which they are thwarted. But as far as equality is concerned, the point remains: we should give equal consideration to all preferences, irrespective of whose preferences they are.

This fundamental principle of equal consideration is compatible with a great deal of inequality. Economists have long maintained that allowing the market to provide incentives for people to produce cheaper and better goods and services is the best way to raise the welfare of all, including the poor. If that is correct, and if the poor want a reasonable level of prosperity more than they want to have an income that is no less than anyone else’s, then giving equal consideration to the interests of the poor will require us to allow the talented to become rich.

Against that, the law of diminishing marginal utility pulls utilitarians towards a more egalitarian outcome. To Joe Rich, the loss of $1000 will have no perceptible welfare impact. To Jane Poor, the gain of $1000 will make a significant difference. Other things being equal, therefore, we should redistribute from the rich to the poor until the marginal welfare loss to the rich equals the marginal welfare gain to the poor. But of course, if humans need incentives to make them productive, other things are not equal. So when we plan social policies, we must take account of human nature as it is, not as we might wish it to be. (What we do for ourselves, in terms of our charitable donations, is another matter: I have discussed it elsewhere.) [1]

* * *

The principle of equal consideration of interests is also compatible with a more fundamental kind of inequality. Suppose that the world consists of two kinds of people. The plebians are capable of having only a limited range of preferences which are not difficult to satisfy, whereas the patricians are capable of a wider range of preferences, which they care about passionately, and which are more difficult to satisfy. (Let’s suppose, too, that these differences are genetic in origin, and unalterable.) Then equal consideration of interests will tell us—other things being equal —to spend more of our limited resources on satisfying the preferences of the patricians than on satisfying those of the plebeians. We should do so, not because we care less about the plebians, but simply because that is the way to do the most in terms of satisfying preferences.

This example may seem fanciful. The world is not divided into two different kinds of people, and even if there are biological differences in people’s capacities to have a wide range of preferences, or to care intensely about the satisfaction of their preferences, these are not things we can measure. Since we have no reliable way of comparing the intensity with which people prefer different things, it seems reasonable to base public policies on the assumption that all human beings—except, perhaps, those in a persistent vegetative state, or with similarly serious cognitive deficiencies—have equal capacities in this respect. But a division reappears when we consider the differences between species. There is no reason why animals should be excluded from the scope of consideration. The principle of equal consideration of interests extends to every being who has interests, which means every being who is capable of conscious preferences, or likes or dislikes. The limit of consciousness, rather than the limit of species, is the point beyond which equal consideration of interests cannot go, simply because beyond that limit there are no interests to consider.

In respect of pain or physical suffering, other mammals, birds, and perhaps all vertebrates, appear to have capacities that are broadly similar to our own—or at least, we cannot assert with any confidence that they are generally less sensitive to pain than we are. For that reason, many of our current practices with regard to animals seem indefensible. Confining hens in small wire cages for their entire productive lives causes great misery to them, and produces eggs that are only a few cents less expensive than eggs produced by hens not so confined. We can do this only because we do not give any consideration at all to the interests of hens to stretch their wings, lay their eggs in a nest, and be able to walk around freely. We are sacrificing their major interests for the sake of very minor interests of our own.

In regard to other preferences, however, the distinction between normal humans and nonhuman animals resembles the imaginary distinction between plebians and patricians. I have argued elsewhere, for example, that normal humans, once they are beyond infancy, are aware of their existence over time in a manner that nonhuman animals are not. [2] Therefore they can have preferences for what they will do next week, next summer, or over the course of their lives, that nonhuman animals cannot have. This may justify us in taking the killing of a normal human being much more seriously than we take the killing of an animal. That, of course, is consistent with our common moral convictions on that point. The implications of this view for the killing of human beings who lack the cognitive capacities of normal humans, however, are very much at odds with those same common convictions. So here we have a real-world example of how applying a basic principle of equal consideration of interests can, on the one hand, lead to a vast improvement in the situation of those who previously were not recognized as entitled to any form of equality; and yet at the same time, this principle is compatible with significant differences in how we should actually treat those to whom we give equal consideration.

Notes

* This essay is not exactly a reply, because I didn’t disagree with Schmidtz all that much—though maybe in the further discussion, some differences will emerge, now that our different frameworks have been laid out.

[1] “Famine, Affluence and Morality,” Philosophy and Public Affairs, vol. 1 (Spring 1972), pp. 229-43; Practical Ethics, 2nd ed., Cambridge University Press, Cambridge, 1993, ch. XX; One World, Yale University Press, New Haven, 2002.

[2] Practical Ethics, 2nd ed., Cambridge University Press, Cambridge, 1993, ch XX; Rethinking Life and Death, St Martin’s Press, New York, 1995.

I’ll start where David Schmidtz leaves off. He concludes his contribution to this issue with the statement that “A truly foundational theory would start by acknowledging that there is a prior moral question about which inequalities are ours to arrange.” That is an extremely important question and one that is rarely, if ever, addressed by advocates of egalitarian redistribution of wealth, income, or welfare. Most–perhaps all–of those who are intent on eradicating inequalities of wealth, or income, or welfare start by assuming that they are entitled to rearrange the lives and entitlements of other people. It’s just obvious to them that they have a legitimate right to determine how other people live. Of course, they assume that it’s not “they” who have those rights; rather it’s the state, which is assumed to be their–er, our–agent, that has those rights.

Underlying the assumption that the state is the rightful agent to allocate goods is a theory of rightful authority. In the past, it was common to rest such rights in the ruler on the basis of theories of divine right or inherent racial or class superiority. Those are rarely invoked today. Instead, we typically find a theory of rightful authority that rests on further dubious theories of value and desert, which are used in the attempt to justify the belief that the state is the rightful allocator of goods. These theories are a throwback to primitive views about causation and the attribution of value in acts of production.

It’s worth bringing to light the foundations of the assumption that it is the state’s business to allocate or reallocate goods. Just as an airline or air traffic control system that rested on the theory that things seek out their “natural place” would be in serious trouble, a theory of justice that rested on faulty and outmoded theories of social cooperation and value would be in serious trouble.

After showing why the assumption that the state has the right to allocate assets (whether to achieve equality, the case under discussion here, or something else) is faulty, I’ll briefly suggest a justification for what Schmidtz seems to consider the commonsensical alternative, viz. that each person should be able to dispose of her own person and the wealth that is imputed to it through exchange.

The Cops Own Your Stuff

When egalitarian redistributors make an effort to justify the assumption that the state has the legitimate right to rearrange entitlements to achieve equality, it’s usually in the form of an invocation of the theory that all production is inextricably joint, that is, that all that you have (at least above the barest and meanest possible kind of brute existence) would be impossible without the farmers in the fields growing the crops that nourish you, the cop on the beat protecting you from thieves, and so on, and that none of the inputs into that process could be added or withdrawn. It’s the cop on the beat, i.e., the state, however, that gets the attention, since it’s assumed that the enforcement of claims to wealth and income is what accounts for the fact of your having wealth and income at all, and thus the state, as the sine qua non of that wealth and income, is entitled to dispose of all of it. Cass Sunstein makes his reliance on that theory explicit in his defense of redistributive programs, “In fact government is ‘implicated’ in everything people own.” [1] He admits that the state didn’t actually do all that hard work to create the stuff that people think they “own,” but insists that without the cop on the beat, none of the work would have been done:

If rich people have a great deal of money, it is because the government furnishes a system in which they are entitled to have and keep that money. Of course this is not to deny that many people work very hard for what they earn. But without government, people would face a free-for-all, a test of strength. Who knows what would emerge from that test?

From such little thought experiments Sunstein and others conclude that the state is entitled to dispose of what has been created.

Writers who rely on such thinking seem unaware that classical economics was updated by the marginal revolution. For them, Leon Walras, William Stanley Jevons, and Carl Menger never existed. Their economic theory of value is stuck at the level reached by Adam Smith and Karl Marx. A major project of classical economists was to attribute all value to that one factor of production without which value would not be possible. For many of the classical economists, it was labor. (For some others, it was only agricultural labor, since if you don’t eat, you can’t make anything else.) Sunstein simply substitutes the state for labor. But no serious thinker should make such a mistake. It’s as if modern astronomers were attempting to illuminate our understanding of the heavens by writing about the interaction of the celestial spheres. Value attribution is not about finding that one thing without which not and then attributing all value to it, as if there were no possibility of marginal incremental adjustments of any inputs. Serious social scientists understand that we act across a great many margins and that total value in all jointly produced goods is not attributed to one single necessary factor of production. We might say that farmers produce all value, since without food, none of the rest of us would produce anything else. And so on for other groups and factors of production. But that would be remarkably naïve and primitive.

John Rawls tries to move the discussion from the purely primitive level to one informed by bargaining theory by creating a pure bargaining game based on a problem of inextricable jointness, a condition that is indistinguishable from bargaining among parties to a bilateral monopoly. [2] In setting the framework for a bargaining situation that will establish the basic rules of society, Rawls assumes that all contributions are inextricable, for “the context of a social contract”

must allow for three facts, among others: namely, that membership in our society is given, that we cannot know what we would have been like had we not belonged to it (perhaps the thought itself lacks sense), and that society as a whole has no ends or ordering of ends in the way that associations and individuals do. The bearing of these facts is clear once we try to regard the social contract as an ordinary agreement and ask how deliberations leading up to it would proceed. Since membership in their society is given, there is no question of the parties comparing the attractions of other societies. Moreover, there is no way to identify someone’s potential contribution to society who is not yet a member of it; for this potentiality cannot be known and is, in any case, irrelevant to their present situation.

[3]

That approach infects all of his treatments of distributive justice, for Rawls assumes that all that you are, all that you do, all that you make, and all that you have is a result of a process of productive interaction that is inextricably joint and thus that there is no distributive principle that would allow one to invoke what might happen were one not a member of a joint enterprise, i.e., were one able to withdraw or add to one’s contributions. (Of course, that assumption is at war with Rawls’s invocation of incentives in the discussion of the difference principle, but let’s set that example of incoherence in his theory aside as only incidental to our concerns about equality here.) [4]

So, the theory behind the assumption that the state has the legitimate right to allocate all jointly produced resources rests on three deeper assumptions:

1. That all products are inextricably joint, i.e., that one cannot add to or subtract from one’s contributions;

2. That the one factor of production to which all value is to be attributed is the state (rather than farmers, physicians, optometrists, etc., etc.); and

3. That the factor of production to which value is attributed has a right to dispose of the full product. [5]

Remove those assumptions and the theory collapses. There is no good reason to assume that the state, which is certainly an input into the process of production (as well as a major cause of destruction and predation, as any even moderately diligent student of history should know), should have rights to dispose of the full product of all factors of production. Protection from criminals is certainly a factor in production, but so are many others, and the ability to add or withdraw one police officer (assuming that there were no vice squads, crooked cops, or other criminal activities among the police and that all added to valuable productive activities) tells us that the police, too, have a marginal product, just like the farmers, the optometrists, and the photographers.

A Property in One’s Own Person

But if a sophisticated theory of distributive justice should take into account the possibility of marginal contributions (one more or less unit of labor, one more or less bucket of sand, etc.), then it must presuppose that some agent, or group of agents, has the rightful power to dispose of those units. The best articulated theory is surely that which rests on the property each has in his or her own person–a theory that was advanced and articulated by various Spanish Scholastics, the Levellers, John Locke, and others who laid the foundations for classical liberalism. [6] That theory, in turn, rests on the concern for equal consideration that Peter Singer invokes, but without the assumption that the state is the legitimate agent for deciding how all the goods of the world are to be allocated. At base, one’s own talents, body, and time are not for others to allocate. That provides a remarkably robust foundation for the establishment of rights to other goods. The theory is incomplete without specifications of how we come legitimately to acquire rights over those goods, but there is an enormous body of positive law and of jurisprudence that fleshes it out in greater detail than could be done here. [7]

In short, Schmidtz’s closing question is a good candidate for the opening problem of a theory of justice. The theory underlying most–perhaps all–assumptions of the right of the state to allocate resources rests on a primitive and long since superceded theory of value. The liberal theory of the equal right of every person to exercise choice over his or her own person, in contrast, is both well grounded (i.e., one can articulate clear and plausible reasons for it) and a presupposition to any account of the complex distributional outcomes that emerge from the voluntary interaction of countless persons unknown to one another, that is, to the arrangements of assets that characterize a modern, cosmopolitan, great society.

Notes

[1] The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need it More than Ever, by Cass Sunstein (New York: Basic Books, 2004), p. 199.

[2] In a bilateral monopoly there is both only one seller (“monopoly”) and only one buyer (“monopsony”), meaning that only a range of prices could be theoretically established, i.e., between the lowest price that would be accepted by the seller and the highest price that would be paid by the buyer. Precisely where the actual price would fall between these two boundaries is purely a matter of bargaining. As Richard Posner notes, “When a monopolistic supplier of labor confronts a monopsonistic buyer of labor, the exact price and quantity that will be set depend upon the parties’ relative skills at bargaining, ability to use intimidation or bring political pressures to bear, and perhaps other factors.” Richard Posner, Economic Analysis of Law (Boston: Little, Brown and Company, 1972) p. 136.

[3] John Rawls, Political Liberalism (New York: Columbia University Press, 1993), pp. 275-276.

[4] If the idea of the margin is rejected as entirely inappropriate to the analysis of justice, perhaps because individual contributions to the “joint product” in question (the products of social cooperation) cannot in any way be identified, then the basis of the difference principle, Rawls’s rule to justify divergences from strict equality, is altogether obliterated. As Robert Nozick notes, “When it is necessary to provide incentives to some to perform their productive activities, there is no talk of a joint social product from which no individual’s contribution can be disentangled. If the product was all that inextricably joint, it couldn’t be known that the extra incentives were going to the crucial persons; and it couldn’t be known that the additional product produced by these now motivated people is greater than the expenditure to them in incentives.” Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, 1974), p. 189. Knut Wicksell (“A New Principle of Justice Taxation,” in Richard A. Musgrave and Alan T. Peacock, eds., Classics in the Theory of Public Finance (2nd ed.; New York: St. Martin’s Press, 1994), similarly argued against Mill’s principles of distributive justice, for even when considering activities of the state (rather than all social activities, as Rawls does), “The discussion is almost always concerned with this or that change in the scope of the State’s operations, this or that extension or (much more rarely) contraction of the separate branches of public activity.” (p. 78) Wicksell defended the marginal principle against Mill’s claim that “Government must be regarded as so pre-eminently a concern of all, that to determine who are most interested in it is of no real importance,” i.e., that allocation of burdens on the basis of benefits is beside the point. (quoted by Wicksell on p. 78) An attempt to update the theory was made by G. A. Cohen in his Self-Ownership, Freedom, and Equality (Cambridge: Cambridge University Press, 1995). His case for equal distributions of jointly produced products rests on a simple error in his theory of bargaining, as I show in “G. A. Cohen on Self-Ownership, Property, and Equality,” Critical Review, 12, No. 3 (Summer 1998), available at http://www.tomgpalmer.com/papers/palmer-cohen-cr-v12n3.pdf. I deal with his student Michael Otsuka’s attempt to apply the theory in his work Libertarianism Without Inequality (Oxford: Oxford University Press, 2005) here: http://www.reason.com/0501/cr.tp.john.shtml.

[5] Anthony de Jasay refers to that as the theory that, since he guards you and your assets, “Your Dog Owns Your House.” http://www.econlib.org/library/Columns/Jasaydog.html

[6] I lay out the history of the approach and explore its implications in “Saving Rights Theory from its Friends” in Individual Rights Reconsidered: Are the Truths of the U.S. Declaration of Independence Lasting?, ed. by Tibor R. Machan (Stanford, Calif: Hoover Institution Press, 2001), available at http://www.tomgpalmer.com/papers/palmer-individualrightsreconsidered-chapter2.pdf.

[7] A good place to start is Richard Epstein’s Simple Rules for a Complex World (Cambridge, Mass.: Harvard University Press, 1995) and Randy Barnett’s The Structure of Liberty: Justice and the Rule of Law (New York: Oxford University Press, 1998.)

As an empirically minded political scientist, I find myself in an odd position responding to Schmidtz’s essay. I am familiar with the claims of the theorists he discusses, and I believe I understand where he is taking me in discussing them. And yet Schmidtz’s essay seems to circle around the central question without ever firmly coming down to earth. That central question, as I glean it, is whether we should be concerned about the substantial increase in economic inequality in the United States over the past generation—and, equally important, whether we should feel any obligation to do something about it. And the thrust of Schmidtz’s essay–again, as I glean it–is that we may feel a modest degree of concern ( “disappointment,” to use Schmidtz’s word), but that rising inequality should not be a cause for alarm, much less a target of redress. [1]

The irony of Schmidtz’s essay, however, is that for all his emphasis on the “historical” theories of justice pressed on us by Nozick and Young, and despite his repeated invocation of phrases like “under real-world conditions” and “we need to look at actual changes,” his essay is airily abstract, as if he had been dropped into the midst of America’s debate over inequality from some distant planet. (“Greetings, Earthlings, why do you care about inequality?”) But most of us have been living here long enough to know a thing or two about the basic dimensions of what’s happening, and these things would seem to be relevant in answering the question of “When Inequality Matters.”

So let us start with some basic facts:

* Between 1979 and 2003, the income of the richest 1 percent of Americans more than doubled, while the income of Americans in the middle of the income spectrum grew by 15 percent and the income of the poorest fifth of Americans grew by less than 5 percent. [2]

* It is not that the overall economy has stagnated. To the contrary, between 1966 and 2001, productivity growth averaged a healthy 1.5 percent. Yet little of this growth has “trickled down.” According to one recent study, only Americans in the top 10 percent of the income spectrum saw their real wages grow faster than the 1.5 percent overall rate of productivity growth. The wages and salaries of middle-income Americans grew by only half a percent a year. [3]

* As a consequence, by the late 1990s, the richest one percent of households had come to hold a larger share of the nation’s income than at any time since the mid-1930s. [4] Wealth is even more concentrated, with the richest 1 percent holding approximately a third of all wealth in the economy. [5]

* Incomes are substantially more unequal in the United States than in other rich democracies. Over the last twenty or so years, moreover, other rich nations for which we have data have increased the degree to which they reduce inequality through government taxes and transfers. In the United States, government taxes and transfers actually reduce inequality less today than a generation ago. [6]

To be sure, these are not the only trends worth reporting. As Schmidtz rightly notes, inequality is multidimensional, and there are certainly dimensions on which our society has grown much more equal in the past generation. Still, the economic dimension is a crucial one, and these are remarkable trends. In long historical relief, they bring us back to levels of inequality not seen since the Gilded Age. Moreover, they give the lie to some common conceits. For example, it is not just immigration or family breakdown that accounts for rising inequality, since most of the rise in inequality is driven by gains at the very top. Nor is inequality simply a consequence of the growing gap between the well educated and the less well educated. Indeed, a large share of the rise in inequality is caused by the growing dispersion of income among Americans with the same level of education. And, lastly, the United States is not becoming more unequal only because our competitive market is producing greater inequality, but also because our government is doing less to offset the increasingly unequal rewards that our economy is producing.

I should emphasize that none of this tells us whether the substantial rise in economic inequality in the United States is good or bad. I believe it is bad, but empirical trends can only inform moral judgments, not dictate them. In explaining why I believe the dramatic increase in U.S. inequality is bad, I find it helpful to distinguish three reasons why rising economic inequality might be a cause for concern:

1. Economic inequality is bad in itself.

2. Economic inequality is bad because it reflects other, more profound inequalities.

3. Economic inequality is bad, because it causes other, more profound inequalities.

I will say very little about the first reason. [7] Not only am I not a theorist of distributive justice, but I also agree with Schmidtz that critics of inequality need to “offer reasons why [any] particular inequality matters enough to warrant being called unjust.” (Indeed, I cannot think of a single egalitarian theorist who does not offer such reasons.) Furthermore, it is clear from the evidence that most Americans, while not favorable toward rising inequality, do not view inequality itself as a major cause for concern. [8]

With regard to the second potential line of critique—that economic inequality reflects more profound inequalities—there are plenty of arguments to make. The most fundamental, to my mind, is that economic inequality is an indirect indicator of inequality of opportunity. Schmidtz reassures us that “No one needs to win, so no one needs a fair chance to win.” But some people do win and others do not, and it is cause for concern if people who are from privileged backgrounds consistently win while people who are not from such backgrounds consistently do not. It is difficult to see how even a positive-sum system can reasonably be considered fair if it gives citizens vastly unequal chances to succeed economically—if the circumstances of one’s birth and brute luck (more on which later) all but dictate success. To put the point more simply, inequality is less worrisome in societies with high levels of mobility. Yet recent studies suggest that U.S. economic mobility has not risen even as inequality has skyrocketed. In cross-national perspective, in fact, current U.S. levels of mobility are surprisingly unexceptional. [9]

Critics of rising inequality are on equally strong ground, in my view, in arguing that economic inequality causes other fundamental inequalities. Given my professional background, it will come as no surprise that my greatest concern about rising economic inequality is that it is undermining what Schmidtz calls “liberal political equality.” As the political scientist Sidney Verba has written, democracy is based on the ideal of equal consideration of citizens’ interests. [10] In theory, this ideal is compatible with vast inequalities in other spheres of social life. The problems arise when resource inequalities translate into substantial, cumulative, and self-reinforcing inequalities of political power. Sadly, I believe that these sorts of inequalities—which, again, are reflective of economic inequality, not synonymous with it—have become increasingly apparent in American politics.

This is not the place to lay out the reasons for my concerns. Instead, I will merely refer readers to the work of the American Political Science Association’s Task Force on Inequality and American Democracy, of which I was part. The Task Force considered the political effects of growing economic inequality from a variety of perspectives and drew on a huge range of cutting-edge research. Its conclusion was that growing inequality did in fact threaten political equality in the United States:

Generations of Americans have worked to equalize citizen voice across lines of income, race, and gender. Today, however, the voices of American citizens are raised and heard unequally. The privileged participate more than others and are increasingly well organized to press their demands on government. Public officials, in turn, are much more responsive to the privileged than to average citizens and the least affluent. Citizens with lower or moderate incomes speak with a whisper that is lost on the ears of inattentive government officials, while the advantaged roar with a clarity and consistency that policy-makers readily hear and routinely follow. [11]

For all I know, Schmidtz may not disagree with this assessment. Indeed, he suggests at one point that political inequality is the fault of those who foolishly try to reduce economic inequality. “When we insist on creating enough power to beat the best players in zero-sum games,” Schmidtz claims, “it is just a matter of time before the best players capture the very power we created in the hope of using it against them.”

The best (or at least the richest) players do seem to have captured power in American politics, but it is rather perverse to suggest that this is the fault of egalitarianism. Instead, what we have here is a classic story of cumulative advantages—people who have more are being heard more by political leaders, and what government does reflects this imbalance. The political scientists Larry Bartels and Martin Gilens have found, for example, that the votes of elected representatives and the direction of public policy are both greatly more responsive to the opinions of high-income citizens than they are to the opinions of Americans of more modest means. [12]

Let me close by returning to a point briefly glided over earlier—the place of “brute luck” in assessments of inequality. Schmidtz approvingly cites Elizabeth Anderson’s claim that “The proper negative aim of egalitarian justice is not to eliminate the impact of brute luck from human affairs, but to end oppression.” Whether that claim is correct or not, it does seem to me that any consideration of the role of government in tempering market forces does hinge greatly on whether we think brute luck is an important cause of observed inequalities. This is because inequalities caused by free choice naturally offend us less than inequalities caused by brute luck—which is one reason why even highly individualistic Americans are highly supportive of government programs that provide insurance against such financial catastrophes as disability, ill health, unemployment, and the loss of private retirement savings.

In my own research, I’ve shown that over the past thirty years these sorts of economic risks have come to be borne increasingly by individuals, rather than larger risk pools. [13] In the perspective embodied in Schmidtz’s essay, this is a victory for freedom. Yet Americans do not seem to feel more free. Instead, they are feeling greater anxieties about their economic future than at any time in the last two decades. It may well be that inequality will only start to “matter” politically when Americans begin to interpret recent economic shifts in terms of growing insecurity, rather than the rising gap between the rich and the rest.

Notes

[1] Now, I may well be reading too much into Schmidtz’s essay, and I hope I can be forgiven if I am. But how else am I to understand his highly stylized example of tax cuts, which suggest there’s nothing inherently wrong with providing 90 percent of the benefits of a tax cut to the rich? Or his story about the stolen wallet, which suggests, none too subtly, that redistribution is theft? Or his unlikely paean to Karl Marx (“To redistribute under real-world conditions, we must alienate producers from their products”), which just goes ahead and says redistribution is theft? And what else can I take to be the verdict of the following?

We form societies with the Joneses so that we may do well, period, not so that we may do well relative to the Joneses. To do well, period, people need a good footing, not an equal footing. No one needs to win, so no one needs a fair chance to win. No one needs to keep up with the Joneses, so no one needs a fair chance to keep up with the Joneses. No one needs to put the Joneses in their place or to stop them from pulling ahead.

And no one should worry when people like the Joneses hold 90 percent of the wealth, reap 90 percent of the income gains of the last thirty years, and get 90 percent of the tax cuts.

[2] Congressional Budget Office (CBO), Historical Effective Federal Tax Rates: 1979 to 2003 (Washington, D.C.: CBO, December 2005).

[3] Ian Dew-Becker and Robert J. Gordon, “Where did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income, Brookings Papers on Economic Activity 2005:2 (forthcoming).

[4] Thomas Pickety and Emmanuel Saez, “Income Inequality in the United States, 1913-1998,” Quarterly Journal of Economics 118 (2003). Updated data available at http://emlab.berkeley.edu/users/saez/.

[5] Marco Cagetti and Mariacristina De Nardi, “Wealth Inequality: Data and Models,” Federal Reserve Bank of Chicago Working Paper 2005-10, http://www.chicagofed.org/publications/workingpapers/wp2005_10.pdf.

[6] These data are from the Luxembourg Income Study (http://www.lisproject.org), a cross-national research project that harmonizes and standardizes micro-data from national income surveys in order to facilitate comparative research.

[7] But I will pause here to note that there is plenty of empirical research that suggests that inequality itself has negative social effects, although this research is certainly contested. My impression, for example, is that the seminal research on the relationship between inequality and economic growth indicates that inequality impairs growth. And there is a growing body of research that suggests that inequality itself is harmful to the physical and sociological health of citizens on the bottom of the economic ladder, though, again, I have seen dissenting views that seem to have solid empirical grounding.

[8] Everett Carll Ladd and Karlyn H. Bowman, Attitudes toward Economic Inequality,/em> (Washington, D.C.: American Enterprise Institute Press, 1998),

[9] For an accessible review, see “Meritocracy in America: Ever Higher Society, Ever Harder to Ascend,” Economist, 29 December 2004, http://www.economist.com/world/na/displayStory.cfm?story_id=3518560.

[10] Sidney M. Verba, “Would Dream of Political Equality Turn Out to be a Nightmare?” Perspectives on Politics 1:4 (December 2003), http://www.apsanet.org/imgtest/verba.pdf

[11] Task Force on Inequality and American Democracy, American Political Science Association (APSA), American Democracy in an Age of Rising Inequality (Washington, D.C.: APSA, 2004), http://www.apsanet.org/imgtest/taskforcereport.pdf.

[12] For discussions of these studies and others, see Lawrence R. Jacobs and Theda Skocpol, ed., Inequality and American Democracy: What We Know and What We Need to Learn (New York: Russell Sage Foundation, 2004).

[13] Jacob S. Hacker, “Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Retrenchment in American Social Policy,” American Political Science Review 98:2 (May 2004), http://www.apsanet.org/imgtest/hacker%20APSR%20(May%2004).pdf. These themes are explored in my forthcoming book, The Great Risk Shift: The New Economic Insecurity–And What Can Be Done About It (New York: Oxford University Press, 2006).

I think I probably should be delighted with the conversation the editors have started on the topic of “when inequality matters” and for identifying me as someone who would be likely to have something to contribute on that topic. I have not been a participant or even a browser in the blogosphere. I contributed once to Left2Right, and enjoyed a few of the postings there. Something about getting dozens of instant replies, and anonymous replies, and replies from people clearly unfamiliar with the academic culture that I’ve come to inhabit, though—it threw me off a bit.

Some of those same things are throwing me off this time, too, as I expected. But I wrote what I wrote for the sake of starting a conversation. I was not writing to wrap anything up in the space of 2500 words, and I was not writing with an academic audience in mind. Perhaps that was a mistake, since I see there were many responses from academics, which have been (so far as I’ve had time to read) unfailingly intelligent and even generous. (Brighouse and Bertram come to mind as an obvious and much-appreciated example. These are people of substance. They honor me by being moved to reply at all.) Overall, I see lots to disagree with, but little to quarrel with. I have followed a few threads, reading replies to replies until the dialogue stops for the time being, and I see that many of the things with which I would disagree have already been disagreed with, pretty much in the way in which I would have voiced disagreement.

Regarding my official commentators, forgive me for saying little, other than to humbly acknowledge the compliment of their attention. Tom Palmer precisely captured my intent (not the first time he has done so) when he says my last sentence is a good place to start in building a theory of justice.

Peter Singer is gracious, and I am glad he would want to extend some parts of my analysis to animals. Just in case some of his remarks seem a bit distant, I should add that he has read an essay I wrote for a volume called Singer Under Fire, which should appear next year. Some of his remarks are more transparently relevant to that paper, so I have posted a copy of that paper on my web page [.doc]. If you’re interested in Singer (or me), please take a look! That’s a sample of how I currently write when I’m writing for academic audiences. Comments welcome.

Jacob Hacker’s response is good, really good. It’s right to the point. No doubt it is exactly what the editors were expecting, and hoping for. It is the sort of view that is very much in the air, and has been for longer than I can remember. He chides me for my level of abstraction, although I’d say both that Hacker at his most abstract and Schmidtz at his most abstract are pretty much at the same level, and likewise with Hacker and Schmidtz at their most concrete. Obviously I don’t mean to be chiding him for that, only for chiding me. (If Hacker is right that I write as if I come from a distant planet, let me just say I come from a 160-acre Saskatchewan farm. I remember when getting a flush toilet was news. And I was at Yale for 6 years, so I’ve had a glimpse of Hacker’s world. Yeah, I might as well have been a Martian there. I don’t deny it. But if he means to suggest I’ve never seen the bottom quintile, he has no idea what I’ve seen.)

I completely agree, as my essay (I hope) made clear, that I don’t like to see economic muscle being translated into political muscle. I don’t like increasing opportunities to prosper (or simply to get one’s way) at the expense of other people. The buying and selling of political power is a daily commonplace everywhere. I realize it is happening. I realize it isn’t going away. But I don’t have to like it. I don’t have to advocate it. In fact, I wouldn’t advocate it, not even if that is what I had to do to prove to powers-that-be that my heart is in the right place. I’d like to see a world in which there is less power for sale, period. I don’t know how to get there from here.

(Ian Shapiro set up an Ethics, Politics, and Economics program at Yale, while I was there, and his vision was to have it last for about ten years, then quietly go away. He wasn’t trying to create a program that “no damn politician” could abolish, and I appreciated that humility and forward vision. I wish that basically all government programs were set up the same way, to not last beyond the point when we should have had time to think of a better or at least more currently relevant way. A lot of government is about protecting manufacturers of buggy-whips. I am glad to see folks on left and right coming to a consensus on the abhorrence of agricultural subsidies. But actually getting rid of agricultural subsidies, even after agreeing that we must, is a whole different problem.)

To be clear, I am not blaming political inequality on egalitarians, per se, but on those who create political power in the hope that it will end up in the hands of someone other than those who have been most adept at capturing such power so far.

Let me say something else, at the risk of seeming to be in rebuttal mode, which I don’t do much anymore. (As I bet Singer would agree, life is too short for “philosophy to win.” Critics are welcome. Replying for the sake of replying, though, somehow just isn’t very exciting after a while.) What I have in mind is Hacker’s thought that,

To put the point more simply, inequality is less worrisome in societies with high levels of mobility. Yet recent studies suggest that U.S. economic mobility has not risen even as inequality has skyrocketed. In cross-national perspective, in fact, current U.S. levels of mobility are surprisingly unexceptional.

I have a quick reply to this, although I’m not sure it’s right. I’ll toss it out there, anyway, so someone, hopefully including me, will learn something. My thought is that if you take a distribution and stretch it out, so that the absolute gaps between quintiles (or whatever) increases, then you ought to see less mobility, if mobility is measured as propensity to move into different quintiles. If mobility had risen, that would be astounding. If mobility merely “has not risen” but remains middle of the road compared to countries where the distribution is flat by comparison, that in itself is surprising, and wants explanation.

It also seems to me that the percentage growth that Hacker finds at the bottom of the income distribution is a spectacularly good thing in the long run. If there were truly a problem at the top, the problem would be that what is happening there (an economic or political bubble about to burst, say) will some day halt growth at the bottom (and perhaps everywhere else).

I’ll close with a few notes, gleaned from what I intended to be the final draft of my “When Inequality Matters” essay. I didn’t get that final draft back to the editors in time, so they had to go with the earlier draft.

* Rachana Kamtekar (Philosophy, U of Arizona) notes that many situations are almost impossible to see as anything other than zero-sum. If you get the job I coveted, or are admitted to my first choice law school when I was denied, I will see you as having beaten me (no doubt unfairly) in a zero-sum game. I suppose this problem has no solution. Perhaps the best I can do is acknowledge that the zero-sum game I just lost is part of a much larger game that benefits me almost as much as it benefits yo—namely, the game of inducing people to identify the best within them, develop it, and bring it to market in a form that other people will appreciate.

* Suzi Dovi (Political Science, U of Arizona) notes that sometimes there is something intrinsically joyful in people treating each other as equals. Life is simply better when we greet each other with handshakes rather than with bows and curtsies. To salute someone as an equal rather than as a superior is to acknowledge and celebrate one’s own worth at the same time.

* Children often are jealous when comparing their shares to those of siblings: more precisely, when comparing shares doled out by their parents. Why? Because getting a lesser share from their parents signals that they are held in lower esteem. They are not so upset about getting less than their rich neighbor, because so long as no one is deliberately assigning them a smaller share, no one is sending a signal of lesser esteem. Note: as children grow up, we expect them to resent siblings less rather than to resent neighbors more. Resenting siblings less is a sign of maturity. Resenting neighbors more is not. So, to some extent, envy is something we simply need to outgrow, although as Joan MacGregor (Philosophy, Arizona State) notes in conversation, there are things we can do to take the edge off. For example, some schools require students to wear uniforms, thereby taking the edge off the students’ race to outdo each other along the apparel dimension.

* One of the effects of a price mechanism is that some forms of labor (the ability to dunk a basketball) will command a higher price than forms of labor that are in some sense more important (the ability to teach children how to read). The reason is that prices track scarcity, not only real value. This is why diamonds are more expensive than water, not because diamonds are relatively important but because diamonds are relatively rare. That not every commodity commands the same price is an inequality that matters, in some sense, but not in a way that suggests any obvious fix. When there are many suppliers of a commodity, its price will tend to be bid down to the cost of production. When there is only one supplier, the price will tend to be bid up to a buyer’s maximum willingness to pay. We may know that basketball players would supply their services at a far lower price, and that diamond miners would supply their services at a far lower price, and that suppliers of water and educational services would supply their services at a somewhat lower price. What would get us from here to a conclusion that we have a right to prevent would-be buyers from paying market rates for services in great demand? I thank Houston Smit and Michael Gill (philosophers at the U of Arizona) and Chris Griffin (Philosophy, Northern Arizona) for, in different ways, raising this question.

* I want to put in a plug for my colleague Thomas Christiano’s forthcoming book, The Constitution of Equality, (Oxford: Oxford University Press).

Enough. Enjoy the day.

David Schmidtz acknowledges the obvious point that the prices of goods and services vary in accordance with their scarcity, not with how important they are to us. He admits that we may know that those who supply scarce goods and services would be willing to supply their goods and services even if the price were far lower, but then asks: “What would get us from here to a conclusion that we have a right to prevent would-be buyers from paying market rates for services in great demand?”

But why is that the question to ask? Why should we assume that sellers have the right to get as much as the market will bear? Two families acquire similar looking acreages of Texas grazing lands. One is fortunate: their land has oil beneath the surface and they become fabulously wealthy. The other is unfortunate: their land has no oil, and despite working as hard as their neighbors, and applying similar intelligence, they remain poor. What gives the former “a right” to their wealth? In my view, nothing. We believe in an inherent right to property because we believe that somehow rugged individuals living in a state of nature can acquire and retain wealth. That is nonsense, of course. Oil would have little value if society did not provide the infrastructure that enables us to use it. Wealth does not exist without society, and the security that society provides.

So instead of asking what gets us to the conclusion that “we have a right” to interfere with market mechanisms, why not ask, instead: “Would interfering with market mechanisms make people, on the whole and in the long run, better off?” That’s an empirical question, and the answer will obviously depend on the precise nature of the interference, and the context in which it occurs. Often, the answer will be in the negative. But sometimes, it might be “yes”. Bertram and Brighouse, in their blog, mention the evidence that in societies that are more egalitarian than the U.S., those at the bottom are significantly better off, while there is ample reason to believe that those at the top would not be significantly worse off if they had a little less income. When such opportunities to make people better off are on offer, we should not allow vague ideas of supposed rights to block governments from improving the welfare of those who live within their jurisdiction.

Peter Singer says, “Oil would have little value if society did not provide the infrastructure that enables us to use it. Wealth does not exist without society, and the security that society provides.” I agree, and I believe in providing that security. Perhaps that leads to a point about inequality. But it seems more obviously to lead to a point about property rights. Suppose we substituted “property rights” for “society” in Singer’s sentence. It would seem to be a more precise way of making Singer’s point, but perhaps he has something else in mind. In any case, I am a big fan of living in a society. I wish other people were as mindful of how grateful we should be for the prosperity it has given us. Or more precisely, for the prosperity it enables us to produce, when it enables us to produce.

Singer adds, So instead of asking what gets us to the conclusion that “we have a right” to interfere with market mechanisms, why not ask, instead: “Would interfering with market mechanisms make people, on the whole and in the long run, better off?”

Singer is asking an honest question here. I do not read this as a debating point. So, I’ll try to answer in the spirit in which I believe it was asked. First, I think some people believe in rights and some don’t. Of the people who believe in rights, some people are content merely to assert that we have the rights they think we have. Other believers in rights want to produce an argument. To produce an argument for rights, they have to start from premises that do not beg the question by assuming the rights for which they meant to argue. So, suppose one honestly came to the conclusion that the answer to Singer’s question is, no: at least some kinds of interference, say interfering with people wanting to vote, people wanting an abortion, people wanting to buy and sell marijuana, or whatever you like, indeed do more harm than good. That starts to approximate a real argument that we have reason to treat people as having a right not to be interfered with in those ways. I realize that confirming the premise that interference does net harm does not clinch the conclusion that there is a right against such interference, but I wasn’t saying it does. I’m just saying that confirming the premise accomplishes quite a bit beyond merely asserting rights. Deontologists would not be impressed with an argument that begins this way, but actually, I think they should be, because the point is that we could start from utilitarian premises and still end up moving in the direction they think is called for by their deontological premises.

I am not a utilitarian, but I play one on TV. Not really, but I do take utilitarian arguments seriously, because even though I am not persuaded to buy into the theory wholesale, I think utilitarian arguments tend to be the least question-begging kind of argument for conclusions about rights, and also for sorting out why I should believe in one rights-claim rather than another, in cases where I have no particular ax to grind. (Drug legalization would be one such case.) One thing I like about utilitarians as such. They grasp what should be a plain fact: that showing that some people don’t have rights does not begin to imply that anyone else has a right to interfere. More controversially, I agree with utilitarians that to justify a claim to have a right to interfere, one has to show that interference does more good than harm. I do not agree that this is sufficient. Nonutilitarians will grant me this point. Utilitarians won’t, and I won’t blame them for refusing to concede. To engage utilitarians, I would have to argue from their own premises (because that’s where they are). I would have to argue that making it legal for people to sacrifice one to save five would systematically have bad consequences, and so is not to be systematically permitted even from a utilitarian perspective. Actually, as I recall, I already made that argument, so I won’t cover it again here.

A small digression. It occurs to me that when I read a newspaper, I get the impression that it is wildly unsafe to drive a car, or more generally, to leave the house at all. It’s also unsafe to stay at home. I get the impression that normal people get shot at every day, unless they get run over by a drunk driver first. I also read in the newspaper that people are starving, and that to have the income of a graduate student is to be utterly desperate. I get the impression that I and everyone I know are the lone exceptions to the rule that people are desperately short of the means of looking after themselves. Every time a newspaper reports a plane crash, people overestimate the odds of plane crashes for a while. Anyway, my impression is that inequality is news, where equality isn’t. Just a thought. How much do you know from personal experience about how much worse it is to be relatively poor these days, compared to, say, fifty years ago?

Peter Singer notes one of the many good points made by Brighouse and Bertram, namely that there are more egalitarian societies in which the relatively poor are wealthier in absolute terms than are the poorest Americans. Maybe Norway is an example. One thing I wish I knew: Are the poorest Norwegians a lot richer than the poorest Norwegian Americans? Are the poorest Spanish a lot richer than the poorest Spanish Americans? My point (I make no claim to originality here) is that America is a huge, diverse country. If you look to Europe for a population that big and that diverse, you’d have to be looking at the whole of Europe. If we did that, would we discover that Europe is a lot more egalitarian than America? Would we find that Europe’s poor do a lot better than America’s poor? I don’t know, but I thought it would not hurt to raise the issue.

Be careful what you wish for. I started out by chiding Schmidtz for his abstraction, and now we’re on the verge of debating the technical bases of the Consumer Price Index (CPI)!

I don’t want to go there—not because I am not familiar with the debate, or don’t have things to say, but because I truly don’t think it’s crucial to our differences. If the CPI is overstated, then, yes, middle-class Americans have seen better income growth than the official statistics suggest. But this potential alternative scenario does not change two essential facts: First, that growth has been dwarfed by growth at the top (obviously, if the CPI is wrong, it’s wrong for the rich as well as the middle class). Second, whatever the true inflation level, the United States has still seen a massive reversal of the twin post-war trends of (a) declining inequality and (b) huge income gains for the middle class. From the end of World War II until the mid-1970s, the incomes of middle-class families rose in lockstep with the overall economy, essentially doubling during the period. Since then, they’ve not. The economy has grown fairly quickly. Middle-class incomes have not, mostly because most of the gains in the economy have gone to those at the top. The fact that the economy failed to lift all boats after the early 1970s as it had before—indeed, that it lifted the yachts at the top much more than the rowboats in the middle or the lifeboats at the bottom—doesn’t hinge on any assumptions about the CPI.

By the way, the dramatic concentration at the top of the income ladder since the 1970s—which is well documented—seriously undercuts any attempt to link America’s openness to immigrants to rising inequality. Struggling immigrants might drag down the bottom, but it’s hard to see how they bring up the top.

Schmidtz mentions fringe benefits as a conflating factor in earnings figures, but he’s treading on thin ice here. Inequality of fringe benefits—both the likelihood of getting them and their generosity—has actually grown much faster than inequality of earnings in the last two decades. I won’t go into the specifics, but there is good analysis by Brooks Pierce available online here.

The same goes for the wealth holdings that emerge out of fringe benefits: The economist Edward Wolff has calculated that only families with wealth holdings above $1 million saw consistent increases in their retirement wealth during the massive run-up of the stock market between 1983 and 1998. All other families saw their retirement wealth fall. In 1983, a family with enough wealth to place it at the 99th percentile of the wealth distribution held just over four times as much pension wealth as families in the middle of the wealth distribution. By 1998, they held almost eleven times as much.

And this is inequality that truly matters. If a worker’s employer doesn’t offer a health plan (true for more than 75 percent of workers in the lowest wage quintile—up from around 60 percent in the late 1970s), then that worker is going to be very hard pressed to find adequate private coverage on his or her own. Ditto for workplace pension accounts like 401(k) plans, the tax advantages of which can only be enjoyed if one’s employer actually offers an account.

David says he writes a lot about social mobility. I do not—or at least not upward mobility. But I still find myself concerned that none of the major measures of upward mobility (intergenerational, movement from one income share to another, and so on) appears to have risen during the era in which inequality has dramatically increased—indeed, that some may even have dropped. The reason for my concern is that social mobility can be a powerful equalizer of long-term incomes, guaranteeing that large inequalities we see in one year or one generation don’t persist over time. If those inequalities are instead as stark and enduring as recent mobility studies suggest they are, then our society is almost certainly not doing enough to ensure equality of opportunity for all Americans.

And if we are going to talk about mobility, we shouldn’t forget about downward mobility. (To my mind, economic insecurity is at least as serious a concern as economic inequality—though the two are so intertwined they’re hard to rank.). My own research indicates that families are facing much greater year-to-year income swings than they did a generation ago, and that families that experience drops in income—about half of families in most years, now and in the past—are experiencing much larger drops.

I return, however, to fundamental message of my response. Inequality is very high in the United States—much higher than in other nations, and much higher than in past. There is no real debate about that. What there is debate about is whether this is cause for concern—whether, in Schmidtz phraseology, it “matters.” I provided two strong reasons to think it matters. They are not the only reasons, but I still think they are good reasons.

1. Rising inequality suggests that equality of opportunity is being compromised. There are other indicators that also point in this direction: financial assets that are increasingly crucial to starting out on an equal footing are more unequally distributed than ever, with a higher share of families having essentially no wealth at all; the gap in college attendance between kids from high-income families and kids from low-income families has grown; the financial profile of children in selective institutions of higher education has become progressively more affluent.

2. Rising political inequality has abetted political inequality, which in turn may be helping to further cement and widen economic inequality. Disparities in political participation across economic lines have, in crucial areas, grown. Money is more important in politics than it was a generation ago, and money is of course the most unequally distributed political resource—and growing more unequal. Fraternal organizations, labor unions, and other groups that once incorporated and represented less affluent voters have substantially atrophied, without other organizations fully taking their place.

I appreciate having had the chance to participate in this discussion and to consider the important issues that Schmidtz, Singer, Palmer, and the others who have weighed in have raised.

1. I have personally asked Edward Wolff, in a quasi-public setting (the workshop session on his contribution to the 2002 Social Philosophy and Policy volume on differences in wealth and income), whether he had any response to the Boskin report, given that Wolff uses the very measures that Boskin repudiates. Wolff’s response was that he did not think it would be fruitful to debate the fine points of the CPI. I told him we are talking about the difference between positive and negative here, not just decimal places. Wolff literally shrugged his shoulders and said no more.

2. What difference does it make whether “that growth has been dwarfed by growth at the top”? Jacob writes that this is inequality that truly matters. I agree that what he is talking about truly matters—that not everyone has access to health insurance and not everyone has adequate

pension coverage. I would tentatively advocate retrying institutional mechanisms (the friendly societies that I have written about, borrowing extensively from the firsthand research of David Beito and David Green) that were as adequate as the technology and resources of the time

permitted.

Things are a lot different now, so that’s why I can’t be more than tentatively in favor of this, but we already know that what we have been trying to do since the 1960s has not worked in the way that Lyndon Johnson said it would. It has been about as successful as the Vietnam war. I agree, as I said, that he is talking about things that really matter. I would not agree so readily agree that he is talking about inequality. This sounds to me like poverty, not inequality. I don’t care if more people can afford yachts today. Actually, if this is true, I’m glad. I went shopping yesterday and priced some designer tiles. I discovered that I could not afford them. But just walking around my middle class neighborhood, I see that many of my neighbors evidently can afford them. And I’m glad. Life in a wealthy society is a cornucopia of positive externalities. I realize that a lot of middle class people do not feel the way I do, but most middle class people who started out poor do feel as I do. You kinda have to be born privileged in order to resent those who were born more privileged. Or so I infer from my limited experience.

3. Look at the tone of Jacob’s posts (I could say the same of Singer and Palmer, and several other bloggers I have encountered in this brief foray). Jacob is a class act. I don’t think any thoughtful person will take us to have settled this debate, either way. I count myself a winner only in the sense that I go away with a feeling of having dealt with honorable people. Anyway, thanks Jacob. I hope to meet you down the line, and I wish you all the best in your research, and I thank you for doing your best to make the world a better (whether or not more equal) place.

I should probably be distressed about being unable to pen a vigorous dissent to David Schmidtz, but when he writes “Poverty Matters, But That’s Not Inequality,” I can only applaud. It’s what I’ve said myself in One World, discussing whether trade liberalization has been bad for the poor. Showing that the WTO trading system has widened the gap between rich and poor isn’t the issue. What really matters is whether the poor benefit from it. (The answer, as far as I can tell, is that a large number of the fairly poor have benefited, but the poorest 10 percent have not.)

Using this example makes me wonder why a discussion about when inequality matters soon turned into a debate about inequality in America. Since the greatest inequalities are not within America, but between the richest and poorest people globally, why aren’t we focusing on them? Why do so many discussions among American academics assume that only one country matters?

Again, I’m not saying that global inequality matters in itself. It’s global poverty that really matters. And here, the extreme degree of inequality becomes an opportunity, rather than a matter for concern. The rich are so rich, and the poor are so poor, that it is much easier for the rich to assist the poor to escape poverty than it would be, if the rich had less income. In The End of Poverty, Jeffrey Sachs roughly calculates that it would take an additional $124 billion a year in well-directed aid to bring the 1.1 billion people living under the World Bank’s poverty line above that line—the line at which they can meet their basic needs. Given that the income of the 22 wealthy nations that make up the OECD’s Development Assistance Committee is around $20 trillion, that’s a very modest extra contribution—only 60 cents in every $100 earned, and barely more than the US alone spends on alcoholic beverages each year.

Maybe Sachs is wrong—he admits that he’s left out distribution costs, and other factors – and we would need to spend twice or even three times that much. That would still be no more than the Iraq war has cost the US to date—in more than one year, granted, but unlike the costs of the war, the cost of fighting poverty global would be shared by 21 other nations.

Global economic equality is a fantasy not worth contemplating. But a world without widespread and severe poverty is a noble, and achievable, goal. At present, the U.S. gives shamefully little—either in public or private money—for the relief of serious poverty beyond its borders. I’d be more than happy to forget about economic equality if by doing so I could bring it about that everyone, liberals and conservatives alike, would work together to eliminate global poverty.

Let me begin with a brief apology to my fellow contributors. Because I’ve been traveling through a region of the world where there is real poverty—lots of it—I had almost no chance to check the internet at all. (Combined with the fact that my hosts exploited my presence in a very welcome but particularly ruthless way, with meetings, lectures, seminars, and interviews from 8 am to 2 am, that meant that I couldn’t even read the ongoing discussion until today.) Having seen a great deal of real poverty in the southern Caucasus, I can only applaud Professor Singer’s focus on poverty, rather than on inequality per se. I agree entirely with the focus, but not with the remedy. There is a problem with his recommendation of the Jeffrey Sachs approach to alleviating poverty by sending taxed dollars to poor countries; it doesn’t seem to have worked so far. The experience with state-directed aid is not a very happy one and, if anything, has worked to increase poverty (and inequality), because it is directed by the generally predatory elites of the recipient states. (A quick look at aid to African states shows how badly development aid has worked. For those reasons, I am not in favor of increasing foreign aid and instead favor freeing trade and promoting improved domestic governance in poor nations.)

Of greatest importance, the best way to reduce poverty is to increase wealth. As the late Peter Bauer, a pioneer of development economics, used to put it, poverty doesn’t really have causes; it’s the natural state of humanity. Wealth is what is caused. And it’s wealth that needs an explanation. We now have a rather good understanding of what causes wealth: good institutions. The most important institutions for producing more wealth are those associated with security of property and the freedom to exchange. A look at the data (all of which are publicly available for examination at www.freetheworld.com) makes it quite clear that wealth production is so positively correlated with economic freedom that one has to conclude that it is the cause, rather than, say, resources. (A good recent overview of the international data can be found in Yi Feng’s Democracy, Governance, and Economic Performance [Cambridge, Mass.: MIT Press, 2003].)

One notable finding of the studies done in recent years is that there seems to be no significant correlation between income inequality and economic growth; what is important (and quite relevant to Professor Singer’s laudable concerns) is that in absolute terms those with lower incomes do much, much better under conditions of greater economic freedom than they do under conditions of lesser economic freedom. (The data from the Economic Freedom of the World studies indicate that the share of income earned by the poorest ten percent of the population is about the same in the least free and in the most free nations, with a dip in the share of the lowest ten percent in the nations in-between on the scale of economic freedom.)

Although I am in substantial agreement with Professor Singer’s targeting of poverty reduction (better known as wealth creation), I think that he misses the mark in his remarks regarding the inherent value of certain kinds of goods. He states that, “the prices of goods and services vary in importance with their scarcity, not with how important they are to us.” I think that that remark reflects an important conceptual confusion and that that confusion carries over to the inferences he draws from the claim that “Wealth does not exist without society, and the security that society provides.” Scarcity refers to the value of a unit at the margin, not to the value of the aggregate of all the units of a good; the former refers to the choice of one unit more or one unit less, the latter to the choice of all the units of a good compared to all the units of another good. It is the marginal unit that determines “how important they are to us,” not the aggregate of all the units together. (That is why, as Professor Schmidtz points out, a unit of water costs less than a unit of diamonds, although the aggregate of all the water would surely be worth more than the aggregate of all the diamonds.) Professor Singer’s confusion of the two is, I think, what leads him to the inference that “society” (more realistically, those elites who make the decisions that guide the deployment of state powers) is entitled to choose how to intervene to alter or override the decisions of others, presumably because “society” provides security, which is an input to production that can also be valued on the margin. That very confusion was the main target of my original comment.

Professor Hacker is quite focused on inequalities in income, but shows no concern about inequalities in consumption, which seems to me the thing that should most concern an egalitarian as such. If someone earns $100,000 and invests $60,000 of it (thus increasing the ratio of capital to labor and tending to increase the marginal productivity—and thus the wages—of labor), or even gives $60,000 away to the poor, is that of greater concern than the person who earns $80,000 and spends it all on consumption? If one compares measures of income inequality over time (notably the Gini index) with measures of consumption, one finds that greater inequality of income does not translate into greater inequality of consumption. Differences in wealth do not always translate into differences of consumption, for a variety of reasons, including increased investment, gifts and charitable donations, and likely errors in capturing some of the income of the poor. Moreover, the European welfare states that Professor Hacker compares favorably with the U.S. target a far greater share of their welfare payments to middle and upper income people, in comparison to the U.S. When you take the lid off European welfare states, you find something rather different than what is often represented by their enthusiasts. (The data for the above paragraph are available in chapter 15 of Olaf Gersemann’s Cowboy Capitalism: European Myths, American Reality.)

In addition, Professor Hacker’s laudable concerns with the health and sustainability of liberal democracy have led, I think, to a misdirected set of priorities. If the concern is that disparities of wealth are translated into disparities of political power (presumably as people compete for access to the state), I submit that a better way to address the issue is to limit the powers of the state, and thus its value to potential bidders, rather than to use the state’s coercive powers to redistribute income, which is more likely to increase competition for control of the state’s powers. (The greater share of transfer payments captured by the non-poor in France, Italy, and Germany, in comparison to the U.S., is consistent with that claim.) Moreover, it is worth noting that income is not the only determinant of political power. Differences in ability to articulate one’s ideas should be of at least equal concern. Those who write, speak, and profess professionally (including professors at Yale and writers at the New York Times), have a great deal more political influence than many people—most, in fact—whose monetary incomes are greater. I’m as concerned to limit the differential political power of the more articulate as I am the differential political power of the wealthier, because I believe that the ideal of equality before the law should move us more than equality before the cash register or the bank counter.

By attempting to diminish the ability of those with monetary incomes to affect political outcomes, we tend to increase the relative strength of those with the ability to lead (or mislead) the public through their ability to speak and write. The dictatorship of the articulate is not obviously more attractive than the dictatorship of the rich. What is more attractive, to this old-fashioned liberal’s mind, is the elimination of dictatorship.