People Don’t Actually Want Equality. They Want Fairness.

The invisible hand of egalitarianism.

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By Paul Bloom

Bernie Sanders talks about economic inequality all the time, and it’s a message that resonates. You don’t need to be a socialist to worry about the divide between rich and poor in America. Many Americans across the political spectrum claim to be deeply troubled by economic inequality, and many say they support changes that would yield a more equal distribution of income and wealth.

But in his just-published book, On Inequality, the philosopher Harry Frankfurt argues that economic equality has no intrinsic value. This is a moral claim, but it’s also a psychological one: Frankfurt suggests that if people take the time to reflect, they’ll realize that inequality isn’t really what’s bothering them.

People might be troubled by what they see as unjust causes of economic inequality, a perfectly reasonable concern given how much your income and wealth are determined by accidents of birth, including how much money your parents had, your sex, and the color of your skin. We are troubled as well by potential consequences of economic inequality. We may think it corrodes democracy, or increases crime, or diminishes overall happiness. Most of all, people worry about poverty—not that some have less, but rather “that those with less have too little.”

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Frankfurt argues, though, that we aren’t really bothered by inequality for its own sake. He points out that few worry about inequalities between the very rich and the very well off, even though these might be greater, both absolutely and proportionately, than inequalities between the moderately well-off and the poor. A world in which everyone suffered from horrible poverty would be a perfectly equal one, he says, but few would prefer that to the world in which we now live. Therefore, “equality” can’t be what we really value.

Some of Frankfurt’s arguments get technical, but it’s not hard to think of cases where a mistaken focus on equality makes the world worse. My favorite example here is from the comedian Louis C.K., where he describes how his five-year-old’s toy broke and she demanded that he break her sister’s toy, which would make things equal. “And I did. I was like crying. And I look at her. She’s got this creepy smile on her face.”

Can Frankfurt really be right that people don’t value economic equality for its own sake? Many scholars believe otherwise. The primatologist Frans de Waal sums up a popular view when he writes: “Robin Hood had it right. Humanity’s deepest wish is to spread the wealth.”

In support of de Waal, researchers have found that if you ask children to distribute items to strangers, they are strongly biased towards equal divisions, even in extreme situations. The psychologists Alex Shaw and Kristina Olson told children between the ages of six and eight about two boys, Dan and Mark, who had cleaned up their room and were to be rewarded with erasers—but there were five of them, so an even split was impossible. Children overwhelmingly reported that the experimenter should throw away the fifth eraser rather than establish an unequal division. They did so even if they could have given the eraser to Dan or Mark without the other one knowing, so they couldn’t have been worrying about eliciting anger or envy.

It might seem as though these responses reflect a burning desire for equality, but more likely they reflect a wish for fairness. It is only because Dan and Mark did the same work that they should get the same reward. And so when Shaw and Olson told the children “Dan did more work than Mark,” they were quite comfortable giving three to Dan and two to Mark. In other words, they were fine with inequality, so long as it was fair.

In research I’ve been involved with at Yale, led by then-graduate student Mark Sheskin, we find that younger children actually have an anti-equality bias—they prefer distributions where they get a relative advantage over equal distributions where everyone gets the same. For instance, children prefer one for them and zero for another child over an arrangement where everyone gets two.

This finding meshes well with what other psychologists have found—and which many parents have observed: When treats are being distributed, children will complain bitterly if they get less, but are entirely mellow if they get more. Other primates behave similarly. Monkeys enjoy cucumbers and will normally be happy getting one, but if they are handed one after having just seen another monkey getting a grape—which monkeys love—they freak out. The monkey with the grape, on the other hand, is perfectly comfortable with its relative advantage.

A different sort of argument in favor of a natural bias toward equality comes from observations of small-scale groups, which really do seem to be egalitarian. In small groups, goods are distributed roughly equally, the weak are taken care of, and the power of leaders is limited. It looks a lot like Occupy Wall Street.

It’s tempting to see small-group behaviors as reflecting some natural preference for equal treatment, but the anthropologist Christopher Boehm, who has extensively studied these groups, tells a different story. He argues that these egalitarian structures emerge because nobody wants to get screwed. Individuals in these societies end up roughly equal because everyone is struggling to ensure that nobody gets too much power over him or her. As I’ve discussed in my last book, Just Babies, there’s a sort of invisible-hand egalitarianism at work in these groups. Boehm writes, “Individuals who otherwise would be subordinated are clever enough to form a large and united political coalition. … Because the united subordinates are constantly putting down the more assertive alpha types in their midst, egalitarianism is in effect a bizarre type of political hierarchy: The weak combine forces to actively dominate the strong.”

This analysis helps us explain why such huge power differentials exist in the world right now, where it’s far harder for the weak to team up to dominate the strong. As Boehm tells it, in a small society, a wannabe dictator can be ignored or ridiculed by everyone else, and if he doesn’t get the message, he can be beaten up, expelled from the group, or killed. But this is a harder trick to pull in a society of millions where interactions are no longer face-to-face and where the powerful have guns and gulags.

What we see from studies of children and studies of small-scale societies is an early-emerging desire for fairness, and a particularly strong motivation not to get less than anyone else. But we don’t find a smidgen of evidence that humans or any other species naturally value equality for its sake.

Behavioral economists Michael Norton and Dan Ariely recently showed sample distributions of wealth to Americans, in which the people in the bottom fifth have X percentage of the wealth, those in the next fifth have Y percentage of the wealth, and so on. They found that Americans are very wrong about just how unequal their country is—they think that the bottom 40 percent has 9 percent of the wealth and the top 20 percent has 59 percent, while the actual proportions are 0.3 percent and 84 percent.

They also find that when asked about what distribution would be ideal, Americans, regardless of political party, want a far more equal society than they actually live in or believe that they live in. In an article published in The Atlantic, Ariely writes, “the vast majority of Americans prefer a distribution of wealth more equal than what exists in Sweden, which is often placed rhetorically at the extreme far left in terms of political ideology—embraced by liberals as an ideal society and disparaged by conservatives as an overreaching socialist nanny state.”

These are important findings, but Frankfurt’s analysis motivates us to question what they really mean. Ariely emphasizes that Americans want a far more equal society than they have, but it’s worth noting that they don’t actually want equality. The study finds that when asked to create a perfect society, respondents choose one in which those in the top fifth have about three times more wealth than those in the bottom fifth. This hardly settles the issue, but it should motivate us to take seriously Frankfurt’s skepticism about what we really want—and his concern that we worry too much about relative differences, and not enough about fairness and, above all, the suffering of the poor.

Originally published at Atlantic here.

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  • ARaybold

    Fairness is a form of equality, and it already is the sense in which ‘equality’ is used in most political discourse. Insofar as there is no significant practical distinction in this particular usage, Frankfurt is making an argument from the general to the specific that is pedantic at best.

  • Scrabble

    People Don’t Actually Want Equality. People don’t Actually Want Fairness. People want Richness. Most people say they want “Equality” because they wrongly think that their richness is BELOW medium richness. So their reasoning is : “If inequalities are fought, i will be richer”. In fact they just care about their own situation. But of course this is entirely false, because their situation is ABOVE those of the others. Also some of them think (wrongly) that distributing the richness of billionaires will get them richer. The term “richness” is very vague. What does mean “richness” ? Is it money, or is it food ? People need food, not money. But food is a limited earth resource. If people where intelligent, or at least honest, they would declare to care about themselves before others financial condition. It is funny to see that it is always when the medium condition of peoples decreases that people discover them beings “altruists”.

  • Alexander Zatko

    Money has two functions – economic and signaling and there is a body of research showing, that the later is the one which economically motivates people (once their “lower maslow-pyramid needs” are satisfied). Yet, most popular work – like this article – as well as behavioral research studying for example rational choice ignore this basic fact. The signaling function is more important for us because it serves as a guide – it reflects the quality of our individual mental models – their internal and external consistency. …and building the best mental world models possible seems to be the raison d’etre of our species.

  • Andrew Cummings

    I agree that fairness is an essential issue. Real fairnes implies that people have the capabilities necessary to take advantage of available opportunities with no discriminatory barriers in the way of achieving a life that we value as Sen argue. How to we create these capabilities in an way tha tall have an equal chance to build them? Free, accessible, quality public education for all, is essential. Look at Scandinavia. And how to we transform the discriminatory barriers like structural racism and sexism? This requires social movements and state support and is an equally if not more challenging, but totally necessary continued struggle.

  • Mark

    I enjoyed the article but a few points didn’t seem to get covered. Equality is often confused for equity, the idea that a person gets according to what they need, which is not equality but echoes the ‘fairness’ principle. E.g. if you don’t have heart disease, you wouldn’t expect to receive the same medicines as someone who does, just for the sake of equality.

    Yes, people worry about those at the bottom not having enough to survive, but they also worry about those at the top having far too much than what they need. In that sense, the benefits that society has accumulated are not being used in a utilitarian way, that is, to serve the greater good.

    Another important point about distributions is about how free markets ‘naturally’ distribute wealth. As risk goes in the opposite direction to wealth, it happens that wealthy people accumulate wealth at a higher rate relative to others, that is, they siphon wealth out of the mainstream economy. One measure of this is the size of the ‘luxuries’ market, since this is what wealth tends to get redirected into once it is siphoned out of the mainstream economy. The inequality therefore reflects a situation that can only get worse without a re-distributive mechanism.

    That takes us to the other side of the economic argument – what is the benefit of wealth? Large capital projects require large amounts of wealth. Farmers cannot build factories. But capital funds are by their nature ‘collective’ funds, and so wealthy individuals are not a pre-requisite.

    The other issue came to mind regarding the boy getting 3 rubbers for working harder. We would probably think it fair that a person’s work on cancer that saves an enormous amount of suffering and mortality would be rewarded more than someone who simply cleans the streets. We might expect this simply as a motivation for people to find cures for cancer etc.

    But in reality, the people who typically add the value do not necessarily get rewarded according to their contribution, simply because a company employs their expertise and will therefore gain the highest share of any value derived from that intellectual capital. In other words, thought fair rewards appears a natural part of our current system, it rarely works in a way that is fair – again, through ‘siphoning’ mechanisms that draw ‘value’ upwards and shift ‘risks’ and actual ‘work requirements’ downwards.

    Finally, the idea that because children might show a ‘natural’ tendency towards certain systems of distribution doesn’t make them either ‘natural’ or even a fair measure of ‘what is real’. One would expect adults to have far greater tools with which to refine and modify any system of distribution, either according to ideologies, morale codes, various economic rationales etc.

    For example, some competitive systems end up being a race to the bottom, and so a reliance on ‘selfish self-interest’ can have dire consequences for the overall wellbeing of the entire system, which works against ‘selfish self-interest’ in the longer term and in the big picture. The question is one of perspective – how much do people actually have when they make economic decisions?
    An economic analysis by adults and experts therefore makes things clear that you would not expect children to understand, so why make their opinions the benchmark for what is either ‘natural’ or expedient. Are adult behaviours not natural?

    It is therefore far too hasty to conclude that adults do not want ‘equality’ but fairness. In truth, they want a system that works, that takes advantage of our innovations, that distributions ‘fairly’, and that is secure against exploitation and corruption. The problem is that economists of various disguises seem to be telling them that this isn’t possible, when gut feeling tells them it is and should be possible.

    “But we don’t find a smidgen of evidence that humans or any other species naturally value equality for its sake.”

    Again, to conclude this from studies with children and also without clarifying issues of equity and where the ‘limits’ of equality are expected to operate is just lazy. It’s answering a question that isn’t worth answering – do humans think equality has ‘natural value for its own sake’? You might get a very different answer if you say that instead of just rubbers, we reward extra work with a house with central heating, and we reward normal work with a house without central heating. Clearly in that situation, people would say that ‘extra efforts’ should not be rewarded with essentials, but with luxuries.

  • Stone Bridge Studio

    Equality feels rational. Something we can measure, count and calculate. Equity feels more emotional. It feels right in that moment and under those circumstances. If the economy is being regulated by government, the rationality of equality feels right. If the economy is being guided by saving and investing as a moral compass guiding both enterprise and governance authentically towards peace through a prosperity of provisional sufficiency, sufficiently shared, or dysfunctionally, towards non-peace of insuffiency from insufficient sharing, fairness feels like the better measure of whether the economy is working correctly

  • Dick Burkhart

    People may want fairness and justice more than equality but in reality, human nature being what it is, excessive inequality leads to many kinds of societal dysfunction. For example, people naturally make comparisons and react to differences. When those differences in wealth and status get beyond a certain point, people on the bottom start to automatically start to feel resentful or inferior, unless those on the top act in tangible and persistent ways to benefit the less fortunate. But this is not the norm, as those on top tend toward attitudes of superiority and conspicuous consumption. Sometimes very strong religious and cultural institutions can lessen this dynamic, but more often these institutions themselves get subverted.

    Therefore I conclude that in practice inequality beyond modest levels is bad in itself.

  • Good article Paul – as far as it goes. Agree with most of what Mark writes, but while much of what Dick writes is accurate, it seems to me his conclusion in not warranted.

    We all cherish our differences. Very few people actually like total equality, being forced to be and do exactly the same as everyone else is a nightmare for most of us.

    And the idea of fairness means that when there are sufficient resources, then we all expect to get enough of those resources to be able to express our individual freedom and creativity in socially responsible (and individually different) ways.

    And there are many levels and modalities present in the spectra of human understanding and behaviour, and some of them are far less tolerant of diversity than others.

    The critical change that we now face is that fully automated systems make it possible to meet the reasonable expectations of every person on the planet to a high standard of living and choice and freedom, yet our market based systems value such abundance at zero, as any market measure of value has a scarcity component, and when scarcity drops to zero, value drops to zero.

    That isn’t necessarily a problem on the distribution side, but it is a fundamental issue on the planning side.

    So long as everyone has a high minimum standard (including material wealth, security and freedom), then asymmetries in the higher end of the distribution are fine.

    And our psychologies and physiologies are far more complex than most people have any real conception. Jordan Peterson does a good job of explaining many aspects of the embodiment of cognition, how evolution selects sets of systems that produce outcomes in practice that are far ahead of our conceptual understanding of them in many instances. We are amazingly complex entities, even singularly, far more complex than we can possibly understand.

    For all the many levels of very complex and valuable services markets have given us over recent centuries, the current explosion of computational capacity, and the automation and productivity that flows from it, are pushing markets out of the familiar and largely beneficial territory of our history and into territory that contains profound existential level risk profiles across an exponentially expanding set of domains.

    I am confident that the future can be empowering for individual life and individual liberty, but only if we move beyond markets and their abstract construct of value (money), and into conceptual territory that does actually, in practice value and promote individual life and individual liberty, where all such individuals acknowledge the social and ecological responsibilities that are an essential part of existence our in the very complex sets of systems that is our expanding technological, philosophical and cultural existence.

    We need to acknowledge that the competitive aspect of evolution drives systems to minimal complexity, whereas the cooperative aspect of evolution allows recursive emergence of ever more complex systems.

    Evolution is a profoundly complex systemic, strategic and computational domain that emerges from a remarkably simple set of systems.
    And to understand evolution, or time, or complexity, one must be prepared to examine far from equilibrium systems. One cannot understand evolution in terms of equilibria, however many near equilibrium sub-systems one can distinguish. That applies at every level, all systems, all domains.

    • Павел Каналиев

      The non-cyclic democracy is a permanent, constant election process which has its point of commencement but is infinite in terms of time perspective. It enables people to vote at any time they wish with no limitation on the number of votes.

      Open vote means the right of people, in case they wish, to step out of their anonymity as voters in the continuous election process of the non-cyclic democracy.

      Vote of correction means an open vote of confirmation or rejection at any, desired by people time from the continuous election process with the non-cyclic democracy.

      With the non-cyclic democracy, the number of mandates is changeable. It is defined by the sum from the number of anonymous cyclic votes, combined with the number of open and correction votes at any time from the continuous election process.

      Threshold of trust of an elected via voting candidate in elective office means half of the number of people who have voted for them minus one vote.

      With the non-cyclic democracy, the duration of the mandate of an elected via voting candidate is discontinued with the expiry of the allotted for the mandate time or with the reaching of the threshold of trust.

      The list of candidates in elective office is bulk of information of free public access with data about each candidate in elective office. There, at any time from the election process, each voter and each public organization can add candidates or withdraw their trust from the proposed by them candidates in elective office.

      The open-type voters have the right of a correction vote at any time from the continuous election process of the non-cyclic democracy.

      The vote of correction is as follows:

      1. Open vote against one’s own choice, leading the elected one closer to the threshold of trust at any time from the continuous election process.

      2. Open vote in favour of another candidate from the list of names, leading the elected one closer to the threshold of trust at any time from the continuous election process of the non-cyclic democracy.

      3. Open vote in favour of a chosen by other voters candidate, leading the elected one closer to the threshold of trust, distancing the newly-elected from the threshold of trust at any time from the continuous election process.

      With the non-cyclic democracy, the current updated rating of a candidate in elective office for the purpose of their positioning towards the threshold of trust must be freely and publicly accessible in the list of candidates at any time from the continuous election process… 🙂

  • Corin Thyans

    It is to the justice of a society i look. Equal before any idea in how we deal. Useful article.

  • Lady filosopher

    Fairness is how to reach equality of importance. On the ground variations to reach the civic theory of equal importance. A parent of disabled children needs more expensive care than those who are only sporadically compromised in health. All the same, both families and their children are equally important, no less nor more than the other. The sad incident of twisted sense of ‘fairness’ described by Louis CK is the description of ENVY, not fairness. The tearing down of someone’s positive aspects to make us, in our apparant inadequacy, feel superior to, or at least the same as, someone is exactly the opposite of the Universal moral syllogism of “Do unto others, as I would have done unto me” golden rule, bench mark, bottom-line guidance of human actions. No, Louis CK’s description is about falling for the cunning strategy using an important buzz word to cover up the uncomfortable lack the other daughter’s self-esteem. Fairness is motivated by the belief that each one of us has a right to same benefits that society can offer us in its collective projects and balancing eye.

    • Павел Каналиев

      There is a way. But to do that we have to remember him and apply it … 🙂

      • Lady filosopher

        and in my version of this message of transcendence I ‘Him’ as ‘Us’ and the effect of transcendence is there for me. Some people need an ‘other’ to transcend to… me I am ok with the terrestial ‘Us’

      • Lady filosopher

        or, remember Us and how interconnected we are

  • benleet

    I suggest you get a copy of $2 a Day, Living on Almost Nothing in America, by Kathryn Edin and H. Luke Shaefer. Both are professors. I also suggest walking into a very low income neighborhood some day and talk with people who live there. People who read these articles are sometimes the last people to actually experience or witness poverty. The authors of this book did that. That’s their lives. They also published at the Stanford Univ. Center on Poverty and Inequality. If you walk the poorest neighborhoods I believe you will be surprised, you might viscerally feel the poverty. It should depress you. On a mental level, though objectively we sense inequality, in actual fact equality is the most basic reality. Inequality is an illusion seen from a higher level of reality; but we tend to be too ignorant to understand or be fully aware? I include myself here. But on a certain intuitive level we get it. “There but for the grace of God . . .” — that sort of feeling. A sense of oneness with all.
    I wrote an essay published at Inequality.org, see this site: https://inequality.org/research/tale-two-1-percents/ — a longer version is at my blog, http://benL8.blogspot.com, (Economics Without Greed) I show the various levels of daily income and other known comparisons drawing on various reputable sources such as the Federal Reserve, the Social Security Administration report on wage income, and many more. We have two one percents, the top one and the bottom one, and they can be easily compared.

  • Павел Каналиев

    A wonderful analysis, with a small remark – inequality can not corrupt democracy because it has never existed. 🙂

    • SageThinker


  • Graham Shepherd

    Some of the article is at odds with the mass of research presented in The Spirit Level (Richard Wilkinson & Kate Picket)

  • SageThinker

    We need to temper wealth. A wealth tax would go a long way. We need more equality, more equity. Less glaring wealth in the midst of poverty. Land prices are out of reach.

    • Sabbie

      Why, do you think people are equal in their desires and abilities, so therefore people should have equal outcomes? If you look around I think it’s quite obvious that people are not made equal. Equality of opportunity is what people need. And the main thing standing in the way of that is not the fact that some people are very rich. The main thing standing in the way is that some very rich people use their wealth to purchase competitive advantage from their corrupt government cronies.

      • SageThinker

        Your first sentence is so deeply flawed with assumptions / straw men that i will not even go further. Bye.

        • Sabbie

          So basically, you can’t think of anything to respond with. Besides assuming that people are equal, you are operating on other false assumptions. You assume that the size of the pie is fixed, and that we can’t bake a bigger pie, or that people can’t bake their very own pies. You assume that there exists some level of “acceptable” wealth, and that somewhere there is an ivory tower technocrat who is qualified to identify it. You also seem to assume that greater equality will lead to lower land prices, I would love to hear the rationale for that one.

          The sources of gross inequality in America are many, but it is not mainly due to “capitalism” as some believe, but rather due to socialist interventions in the market, chief among them the manipulation of interest rates by a central banking ministry (see Stiglitz) which creates a system based on debt rather than production, the ability to hide behind the corporate veil, regulatory capture which stifles competition, and the ability to access unlimited amounts of taxpayer dollars in order to socialize losses while enjoying private profits.

          • SageThinker

            Nope, basically you’re not worth it.

  • David Garrett

    Yes, a healthy society yearns for fairness, and this means equality of opportunity rather than actual wealth. But a greater degree of equality of wealth is also needed for a healthy and happy society. This is well researched and documented with facts in “The Spirit level” by Richard Wilkinson and Kate Picket and books by Michael Marmot. These are clear facts, not just bright ideas which permit smugness.

  • A Sethuramiah

    Educative. It appears to me that concepts like equality and fairness have different levels. What need to be strived is to first smoothen the extremes.
    We need to distinguish between two types of inequality. One type of inequality is knowledge based and has a positive part to it.If we look at knowledge in terms of pyramids of excellence the higher step in the pyramid is likely to be built by the top most echelons. Thus the growth becomes elitist and concentrated. This can also lead to problems of monopoly by those who have knowledge and resources.The second type of growth disparity comes from greed and crony capitalism with far less innovation and can lead to the tyrany of poverty in many developing countries.Communism is not a desirable way out though it was made to work in China. In short I would love innovative socities tempered with mechanisms that improve distribution of wealth.

  • Andrew

    Great article. As an insight into the human mind I think this throws a lot of light on our politics. I think political psychology would be a fascinating and productive area of study. Underlying concerns of fairness are not just a concern of those who advocate equality. How do libertarians frame their objection to wealth redistribution and welfare? That it is unfair to “wealth creators” not to receive the full reward of their labours as others do, and that it is unfair that the poor should not pay the full cost of services as the wealthy do. This is a concept of “fairness” turned on its head, but it still argues from the concept of fairness. The strong motivation you describe “not to get less than anyone else” (or to avoid the feeling that you are getting less than someone else) is very powerful and explains so much in our behaviour and attitudes. It also shows how clever political operatives can manipulate people’s resentment by framing something as unfair, even if it leads to a greater unfairness to others. I can only presume that this pre-occupation with fairness evolved as a survival mechanism within highly interdependent hunter gatherer societies. If we could remember that the reality of that interdependence still ultimately underlies our social and economic relationships we might do better.

  • Macrocompassion

    Fairness is a rather simple way of describing it. What is really meant is equality of opportunity, which is not the same as the old socialistic equality. But we don’t have it or are anywhere near it. The following essay explains how it might be made possible.

    Socially Just Taxation and Its Effects (17 listed)

    Our present complicated system for taxation is unfair and has many faults. The biggest problem is to arrange it on a socially just basis. Many companies employ their workers in various ways and pay them diversely. Since these companies are registered in different countries for a number of categories, the determination the criterion for a just tax system
    becomes impossible, particularly if based on a fair measure of human work-activity.
    So why try when there is a better means available, which is really a true and socially just method?

    Adam Smith (“Wealth of Nations”, 1776) says that land is one of the 3 factors of production (the other 2 being labor and durable capital goods). The usefulness of land is in the price that tenants pay as rent, for access rights to the particular site in question. Land is often considered as being a form of capital, since it is traded similarly to other durable capital goods items. However it is not actually man-made, so rightly it does not fall within this category. The land was originally a gift of nature (if not of God) for which all people should be free to share in its use. But its site-value greatly depends on location and is related to the community density in that region, as well as the natural resources such as rivers, minerals, animals or plants of specific use or beauty, when or after it is possible to reach them. Consequently, most of the land value is created by man within his society and therefore its advantage should logically and ethically be returned to the community for its general use, as explained by Martin Adams (in
    “LAND”, 2015).

    However, due to our existing laws, land is owned and formally registered and its value is traded, even though it can’t be moved to another place, like other kinds of capital goods. This right of ownership gives the landlord a big advantage over the rest of the community because he determines how it may be used, or if it is to be held out of use, until the city grows and the site
    becomes more valuable. Thus speculation in land values is encouraged by the law, in treating a site of land as personal or private property—as if it were an item of capital goods, although it is not (Mason Gaffney and Fred Harrison: “The Corruption of Economics”, 2005).

    Regarding taxation and local community spending, the municipal taxes we pay are partly used for improving the infrastructure. This means that the land becomes more useful and valuable without the landlord doing anything—he/she will always benefit from our present tax regime. This also applies when the status of unused land is upgraded and it becomes fit for community development. Then when this news is leaked, after landlords and banks corruptly pay for this information, speculation in land values is rife. There are many advantages if the land values were taxed instead of the many different kinds of production-based activities such as earnings, purchases, capital gains, home and foreign company investments, etc., (with all their regulations, complications and loop-holes).

    The only people due to lose from this are those who exploit the growing values of the land over the past years, when “mere” land ownership confers a financial benefit, without the owner doing a scrap of work. Consequently, for a truly socially just kind of taxation to apply there can only be one method–Land-Value Taxation.

    Consider how land becomes valuable. New settlers in a region begin to specialize and this improves their efficiency in producing specific goods. The central land is the most valuable
    due to easy availability and least transport needed. This distribution in land values is created by the community and (after an initial start), not by the natural resources. As the city expands, speculators in land values will deliberately hold potentially useful sites out of use, until planning and development have permitted their values to grow. Meanwhile there is fierce competition for access to the most suitable sites for housing, agriculture and manufacturing industries. The limited availability of useful land means that the high rents paid by tenants make their residence more costly and the provision of goods and services more expensive. It also creates unemployment, causing wages to be lowered by the monopolists, who control the big producing
    organizations, and whose land was already obtained when it was cheap. Consequently this basic structure of our current macroeconomics system, works to limit opportunity and to create poverty, see above reference.

    The most basic cause of our continuing poverty is the lack of properly paid work and the reason for this is the lack of opportunity of access to the land on which the work must be done. The useful land is monopolized by a landlord who either holds it out of use (for speculation in its rising value), or charges the tenant heavily for its right of access. In the case when the
    landlord is also the producer, he/she has a monopolistic control of the land and of the produce too, and can charge more for this access right than what an entrepreneur, who seeks greater opportunity, normally would be able to afford.

    A wise and sensible government would recognize that this problem derives from lack of opportunity to work and earn. It can be solved by the use of a tax system which encourages the proper use of land and which stops penalizing everything and everybody else. Such a tax system was proposed 136 years ago by Henry George, a (North) American economist, but somehow most macro-economists seem never to have heard of him, in common with a whole lot of other experts. (I would guess that they don’t want to know, which is worse!) In “Progress and
    Poverty” 1879, Henry George proposed a single tax on land values without other kinds of tax on produce, services, capital gains etc. This regime of land value tax (LVT) has 17 features which benefit almost everyone in the economy, except for landlords and banks, who/which do nothing productive and find that land dominance has its own reward.

    17 Aspects of LVT Affecting Government, Land Owners, Communities and

    Four Aspects for Government:

    1. LVT, adds to the national
    income as do other taxation systems, but it replaces them.

    2. The cost of collecting the LVT is less than for all of the production-related taxes–tax avoidance becomes impossible because the sites are visible to all.

    3. Consumers pay less for their purchases due to lower production costs (see below). This creates greater satisfaction with the management of national affairs.

    4. The national economy stabilizes—it no longer experiences the 18 year business boom/bust cycle, due to periodic speculation in land values (see below).

    Six Aspects Affecting Land Owners:

    5. LVT is progressive–owners of the most potentially productive sites pay the most tax.

    6. The land owner pays his LVT regardless of how his site is used. A large proportion of the ground-rent from tenants becomes the LVT, with the result that land has less sales-value but a significant “rental”-value (even when it is not used).

    7. LVT stops speculation in land prices and the withholding of land from proper use is not worthwhile.

    8. The introduction of LVT initially reduces the sales price of sites, even though their rental value can still grow over a longer term. As more sites become available, the competition for them is less fierce.

    9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to the additional sites that come into use.

    10. With LVT, land prices will initially drop. Speculators in land values will want to foreclose on their mortgages and withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow these speculators sufficient time to transfer their money to company-shares etc., and simultaneously to meet the increased demand for produce (see below).

    Three Aspects Regarding Communities:

    11. With LVT, there is an incentive to use land for production or residence, rather than it being unused.

    12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses and because they pay less ground-rent–demand grows, unemployment decreases.

    13. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods too.

    Four Aspects About Ethics:

    14. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this extortion by gathering the surplus rental income, which comes without any exertion from
    the land owner or by the banks–LVT is a natural system of national income-gathering.

    15. Bribery and corruption on information about land cease. Before, this was due to the leaking of news of municipal plans for housing and industrial development, causing shock-waves in local land prices (and municipal workers’ and lawyers’ bank balances).

    16. The improved use of the more central land reduces the environmental damage due to a) unused sites being dumping-grounds, and b) the smaller amount of fossil-fuel use, when
    traveling between home and workplace.

    17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in
    a natural way– to provide more jobs. Then earnings will correspond to the value that the labor puts into the product or service. Consequently, after LVT has been properly introduced it will eliminate poverty and improve business ethics.


  • Brux

    This is a truly important article … which begs the question, why is it that in terms of important political issues the Left always seems miraculously to get the messaging wrong.

    In this case – complaining that the system does not treat people equally instead of complaining that it is completely corrupt, rigged and unfair – to all genders, races and religions.

    Because the right-wing who really dominates, runs and pays for what we think of as the left … or most of the left, does not want to see in place a system that treats people based on their class. The right wants equal opportunity to work via race so they can stir up racism, so they influence the left to propagandize and legislate like that.

    There is no real opposition party in the US because there is no real democracy. It is like the children in a family voting … they are portrayed as stupid, immature, frivilous, like wanting to eat ice cream for every meal. Then when they show examples of Liberals, there is always something off about them.

    What our country has morphed into is the most totalitarian military dominated society ever, able to confused and bewilder all of its citizens by allowing them to think they are free and listened to. The important things to the cast majority of Americans are not even covered in the media.

    The messaging from the Democrats is toxic because they are run by slightly less extreme Republicans … except for a handful … Bernie Sanders, Elizabeth Warren, Kamala Harris … all of who are ignored or relentlessly attacked in the media, or the fake news, and then the Russians are blamed for it to get our Cold War hackles up again.

  • Duncan Cairncross

    This article just keeps thumping a Strawman – Nobody is asking for “Equality” – NOBODY

    What we want is simply less inequality – which is NOT the same as “Equality”

    The author keeps bringing equality in – as far as I can see just so that he can muddy the waters

    • Sabbie

      Oh come on, less inequality is more equality.

      I could care less if someone has a billion times more money than I do. What matters is that I have an equal opportunity to reach my own financial goals. And to a lesser extent, was their money earned through productive activity or gained through financial voodoo, and was the financial voodoo enabled through government cronyism.

      • Noel Darlow

        Actually it does matter. Human societies simply do not function properly with high levels of equality. Every social ill you can imagine is worse according to the amount of inequality (NOT absolute poverty). The consilience is quite striking – and even the richest have worse outcomes in highly unequal societies despite their greater material wealth. (google TED talks The Spirit Level for more).

        We are a social animal. We live in co-operating groups. As such, it should be a statement of the obvious to say that we cannot have individual success without group success. A diverse, successful, high-functioning society full of opportunity creates the best chance we have to fulfil our personal goals and therefore – even for purely selfish reasons – we have to fight for everybody else’s rights and needs just as hard as we would fight for our own.

        That’s why equality is so important (ie reasonable limits on the amount of inequality we allow). Co-operation is our super-power but without the fundamental moral principle that all rules must apply equally to all, co-operation and the bonds that hold our societies together will tarnish and break down.

  • It is unfortunate that research and conversations about concepts such as freedom and equality start with the assumptions that everyone has exactly the same idea as to what they mean. Equality has two distinct meanings: a) The mathematical interpretation where equality = sameness, and b) The political interpretation where equality has always meant fairness.

    Of course no one wants sameness, I’d much prefer diversity… unfortunately both socialists and their critics seem to think that is the only way to understand the term. Perhaps we need to reframe the ideals of the French Revolution…
    Get rid of ‘Fraternity’ because it undermines equality… let’s go with ‘Compassion’
    Get rid of equality and let’s go with ‘Fairness’
    Clarify Liberty as ‘Freedom from bullshit jobs’

  • Vladimir Mitrovic

    “the vast majority of Americans prefer a distribution of wealth more equal than what exists in Sweden….” Well if the USA really was a democracy this would matter.Unfortunately its democracy is a farce where they only get to choose whether the witch or the clown shall impose the will of their oligarchy.

  • Noel Darlow

    In practice, “equality” and “fairness” are the same.

    Let’s first discard the naive, literalist interpretation of equality as everyone having the same wealth.

    Equality is really an expression of the fundamental law at the root of any system of morality: “all rules must apply equally to all”. Translated to the economic sphere, this means reasonable limits on the amount of inequality which we tolerate. Everyone should receive a fair reward for the work they do – but no more than a fair reward for the work they do.

    The opposite end of the scale is what you might call the feudal model. This is specifically designed to break the connection between wealth received and productive work in order to support a self-styled elite who have not earned their privilege and do not deserve it.

    In the modern world unearned wealth has many forms: excessive exec-level pay & bonuses, tax avoidance/evasion, inheritance, all forms of rent-seeking, profiteering, over-charging etc. They all have this in common: wealth is received which cannot reasonably be claimed to have been earned by virtue of any work done*.

    This isn’t simply a matter of economic equality. Any society which does not act vigorously against unearned wealth cannot claim to be a true democracy. Money will always find a way to power and so, in a highly unequal society, the needs of the many will often come second to the desires of the few whatever harm may be caused to the wider society which grants them the privileges they enjoy.

    Finally, any discussion on inequality which does not mention The Spirit Level by Kate Beckett & Richard Wilkinson is a bit like a tour guide to the Hebridean island of Islay which makes no mention of its distilleries. If ordinary people were given all the information they need to judge the fundamental importance of equality I have no doubt what the majority would choose.

    *obvious exceptions for the sick, elderly, unemployed, disabled etc