Inequality

The Fairness Divide: Intervention That Liberals and Conservatives Can Agree On

The economics of opportunity and outcomes

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By David Brin

Largely unspoken, amid hand-wringing over Donald Trump’s potential Republican nomination, is a scenario that could deeply discomfit GOP elders. Oh, Trump would battle Hillary Clinton or Bernie Sanders hard. But at some point in the summer and autumn debates, he is almost certain to say: “Of course the rich pay too little tax!” 

Moreover, with both nominees agreeing, on live TV, that needle would shift, hard. With almost a consensus sigh, Supply Side will be finished, precipitating the first of several convergences of left- and right- populisms.

At one level, this is only to be expected. Today’s American uber-rich are now paying their lowest averaged rate since income taxes began. The latest budget bill, passed by this GOP Congress, sweetened the deal even more, helping accelerate, as economist Robert Samuelson wrote the “hollowing out of the middle class.”

And yet, the public rightfully frets over “interventions” to level the playing field. Government is inherently worrisome and “leveling” strikes a dissonant chord to American ears. We can argue over ways and means to improve both fairness and competitiveness. But is there a fundamental metric to differentiate among our options?

Two kinds of “meddling”

Americans have a tendency to differentiate between government interventions that increase opportunity versus interventions that aim at fairness in outcomes.

Step back a bit. Most of us fret about fairness to some degree. Social psychologist Jonathan Haidt and others have shown that human moral reasoning has an innate modularity divided into: Care, Fairness, Liberty, Loyalty, Authority, and Purity.

Progressives tend to stress the first two: Care and Fairness. Libertarians stress Liberty and Fairness, while conservatives stress all six more equally. Brain function scans show, for example, that conservatives tend to have a stronger sense of visceral revulsion to things they find distasteful (impurity), hence judging them morally, and we all know their stronger fealty towards authority. However, regardless of partisanship, all three groups overlap with a clear moral concern about fairness.

So, now let’s go back to why people differ between fairness of opportunity or of outcomes.

Types of fairness

The latter of these two – aiming to flatten or level economic results or wealth – would strike some as a “European thing.” Which is, of course, ironic since oligarchy has always been (and in many ways remains) far more embedded in European life than in North America.

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Even when well-motivated, outcomes-leveling can become a calcified, meddlesome process, providing sinecures for paternalistic bureaucrats and – as bruited by conservatives and libertarians – foster dependency.

Outcomes-equalization puts negative pressure on what Americans feel are positive sum games that, in order to function well, must remain competitive and thus have winners. Viscerally, they feel it undermines ambition, encouraging laziness and whining. We have all heard this story in its nastier forms, but there is some sound, underlying basis. Our spectacular successes – which created the wealth enabling us to do many good deeds – arose from positive sum competitive arenas: markets, democracy, science, courts, sports, and now, crudely, the Internet. These all require some degree of inequality of outcomes in order to spur creative vigor.

At one scale or another (subject to fierce argument) outcomes-intervention by the state could stifle these arenas. Americans tend to set the boundary farther to the “right” in that demands for government outcomes-intervention should face a burden of proof. 

Now mind-you, very few of my fellow citizens would express it in the way I just did, using five dollar words, game theory and such. Still, it is important to recognize this underlying motif of American sensibility. Some might attribute it to the long Frontier Experience, or to the “American founder” who never actually visited the continent, Adam Smith. There is a sense that equalizing outcomes is a self-defeating process that could kill the golden egg-laying goose – a reflex that has been manipulated skillfully by right-wing media.

To be honest, I share all of these reservations! Surprised? Given my denunciations of the madness that has taken over U.S. conservatism? And indeed, my harsh critiques of today’s version of libertarianism? Well, there is a simple explanation. It arises when you look at the other modern approach to bringing economic fairness.

Opportunity

Things are very different when it comes to opportunity-equalization.

Even most Americans see real value there, voting repeatedly over two centuries to build highways and schools that can be used by all, subsidizing research shared by all, expanding rights protection (albeit far too gradually) to all races and genders, and building the finest universities on the planet. To the extent that we have been failing in this mission — e.g. the horrendous student loan scandal, and allowing even a single American child to lack nutrition and health care — I tend leftward, just as I tend rightward regarding outcomes equalization.

In this disparity, I think most of my countrymen would agree, if only the choice were put to them plainly, as I just did here. Moreover, the distinction was made very clear as long ago as 1776, with publication of Adam Smith’s founding document of western society, The Wealth of Nations, wherein he asserts that the state should take actions to increase the number of skilled and confident competitors, in order to stimulate a vibrantly competitive and creative capitalism. Investing in infrastructure and schools and sanitation would – Smith avowed – allow more children to rise up and participate in vibrant markets for goods, services and labor.

The economist-idol who has been quasi-deified by the American Right – Friedrich Hayek – in fact said pretty much the same thing. Hayek deemed valid those taxpayer supported interventions that will clearly increase the number and fraction of citizens who are skilled and confident market participants! A fact that is now repressed by today’s self-described “Hayekians.”(Indeed, to be even more ironic, this is an area of agreement between Hayek and Karl Marx.)

When a state action aims to address a clear and blatant disparity of opportunity – an inequality that limits the supply of new, capable competitors – then the burden of proof must fall upon those who object to the intervention.  The default should be to intervene in favor of opportunity, until challengers show that the problem can be eliminated by non-governmental means. Feed these children now! Save those bridges now! Improve schools now! Then show us how state programs can wither away.

The burden of proof shifts when it comes to outcome equalization, or leveling of wealth and income. Because we know that some substantial disparity in outcomes is necessary, as an incentive, in order for our competitive arenas (markets, democracy, science, etc.) to work at all. We also know that outcomes equalization – if taken too far – could lead to tyrannical horrors as awful as any conceived by Orwell.

In illustration, let me cite Kurt Vonnegut’s wonderfully chilling short story “Harrison Bergeron” which portrays a future in which the Handicapper General of the United States rigorously enforces actual equality of outcomes. Ayn Rand’s “Anthem” also portrays this extremum, though turgidly preachy and unrealistic.

Am I excluding all outcomes equalization, by demanding that they bear burden of proof? Not at all. Such burdens can be met! Those competitive arenas I mentioned do not maintain themselves. If we can glean one truth from six thousand years of varied human societies, it is that they will always tumble into oligarchic cheating and feudalism, unless kept in tune by careful regulation. Over time, wealth disparities always widen till they become outrageous, warping both politics and markets.

Clearly that has already happened in America and the world, when 62 near-trillionaires own as much wealth as humanity’s entire bottom half. Conservative economist George Cooper reaches the same conclusion from a different direction in his recent Evonomics article “Piketty Debate Exposed The Failure of Economics. 5 Steps to Fix It.” Cooper shows that our civilization must continue a “circulation” pattern of government actions to stimulate the bottom while capitalist processes feed the top.

Up to this point my aim has been to make clear a dichotomy of twin generalities. And while in general, opportunity levelers get benefit of the doubt, outcomes-levelers bear the onus to show clearly why it is necessary to reduce this or that caste’s economic gains.

That onus may be easy to satisfy, right now! Indeed, I deem it to be blatantly so. Still, it should still be kept clearly in mind, lest we tumble into the nightmare worlds — the leveling extrema — of “Harrison Bergeron,” or even “Anthem.”

It gets complicated

Now, these two notions – equalization of opportunity vs. outcome – do overlap!  When a competitor fails in the marketplace of labor or business, there should be a limit to how low they are allowed to fall. This wonderful civilization is not, as Tennyson put it, “Nature, red in tooth and claw.” We have a better version of creative competition than Nature, more cognizant and less wasteful. In a market, or in elections, or in science, this year’s loser might come roaring back next year, with improved products, policies or data. Second and third chances come under opportunity enhancement, though the major effort must be yours.

The most controversial overlap comes in wealth redistribution, which certainly sounds like outcome equalization! But, as Gershwin reminds us, it ain’t necessarily so.

Let’s go back to that earlier point and restate what is blatantly obvious, yet utterly ignored by mavens of the right. The worst destructive force that ruined flat-fair-open-creative markets and suppressed equality of opportunity across 60 centuries was inherited oligarchy and feudal overlordship. That was the normal system in most large-scale human societies. Feudal inherited oligarchy was the system of cheating despised by Adam Smith.

Indeed, partly influenced by Smith, the American Founders, in the 1780s, seized up to a third of the land in the former colonies, owned by aristocratic families, and sold or redistributed it to make the playing field more level. States also banned primogeniture and fiercely enforced equal inheritance so that rich family fortunes would break up among many heirs. The Founders’ economic meddling and redistribution was thus vastly greater than ever attempted later, by either Roosevelt!

Today’s inheritance tax has similar (if much smaller) effects, incentivizing wealthy families to create charitable foundations, rather than let the feds get their clutches on it. In practice, this limits the likely creation of neo-feudal castes, made up of kids who never produced any goods or services or earned the wealth and power they would then exert over the rest. And yes, a progressive income tax helped to foster the sense of general, middle class justice that today’s conservatives ironically yearn for, in the 1950s.

Wealth redistribution is thus a tricky middle ground. Equalization of opportunity (and maximization of competitive creativity) is impossible without some. On the other hand, some inequality of outcomes is absolutely required in order to maintain the kinds of incentives that spur creative people to take risks and develop great new things.

This is one more area in which we need to again be a people capable of thoughtful negotiation and pragmatic compromise. But always bearing in mind what is fundamental: the incentive of some wealth-disparity is a necessary fuel to propel our competitive arenas to maximum effort. But those creative arenas will seize-up and grind to a halt, unless lubricated by maximized opportunity for all children — all of them — to confidently participate.

If we fail to enhance opportunity, we’re guaranteed to regret the outcome.


Addendum: Here’s a cantankerously different take on the plusses and minuses of contemporary libertarianism and other oversimplifying dogmas: Models, Maps and Visions of Tomorrow. 

2016 February 21


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  • girster

    Wow! Kudos!

  • Lee Doran

    Nope… this is 2016. Such subtle reinforcement of the 1% agenda doesn’t wash after 40 years of stealing from the middle class… America is imploding b/c the drive to Ayn Rand capitalism has f****d the system. It has gotten to the point where Walmart employees can not afford to shop at Walmart… how dumb is that?

    Without an element of the fairness that Haidt has ‘discovered’ being returned to the playing field, one fundamental feature of the American dream is compromised. B/c the 0.1% driving this are basically either individually or corporately psychopathic they can not understand what they are about. They do not do basic human emotions. They drive themselves and their organizations for greed.

    And of course they always win on their home turf … what they don’t get is that the system is going down, and if it doesn’t come down one way it will come down another … this election is proving it.

    On the Wednesday morning after the second Tuesday in November this year, America and the world will know how the people have decided to do it.

    Stay tuned, however, for the System will never be the same again! That is what this election cycle guarantees — and the death of Justice Scalia has only added fuel to the fire.

    best to all,

    L.

  • David Whitlock

    Well stated.

    You can’t “sprinkle” equal opportunity onto someone when they reach age 21, 18, 10, 6, 3, 0, or even – 0.75 (conception). To the extent that phenotype abilities depend on the resources available during development, heritable differential resource availability during development will mimic (and be indistinguishable from) genetic heritability.

    Infants and young children are completely helpless and require care by adults 24/7 for the first few years of life. Who pays the adults for this care? The infant can’t, but the abilities of the adult the infant will grow into depend critically on supply of sufficient nutrients, nurturing, health care, shelter, education.

  • Jan de Jonge

    Contrary to what this article seems to suggest there is no tradition of taxing wealth in Europe. Out of 16 West-European states, 9 didn’t have any tax at all. The highest is to be found in France; it is 1,5% of the earnings on wealth possessions.

  • Duncan Cairncross

    Hi
    I recommend the book
    Ultrasociety: How 10,000 Years of War Made Humans the Greatest Cooperators on Earth
    http://www.amazon.com.au/Ultrasociety-Years-Humans-Greatest-Cooperators-ebook/dp/B0185P69LU/ref=sr_1_2?s=digital-text&ie=UTF8&qid=1456201569&sr=1-2&keywords=10%2C000+years

    The issue is competition and cooperation,
    Sports – you need to cooperate with your teammates in order to compete with the other teams
    in Ultrasociety Peter Turchin shows how teams that “unfairly” (in the eyes of the team members) reward some team members do worse than those that divide the spoils more evenly

    This shows that while equality of opportunity is very important excessive inequality of outcome is also a problem

    Humans have a built in “fairness” measure – developed over the 10’s of thousands of years (possibly hundreds of thousands of years) of living in very equal societies (and killing anybody who tried to set up as boss)
    The last 4000 years or so of very unequal societies has not squelched that sense

    • David Brin

      But sports is just like our other four competitive arenas — Democracy, Science, Courts and Markets. All of them thrive with competition that is regulated to be largely flat-transparent-fair. All five collapse with either too much cheating-by-winners or else fog/lack of transparency.

      • Duncan Cairncross

        Absolutely – between teams
        Within the team competition can be deadly

        The only sport I know much about is football (soccer) – the top scorer is supported by all of the others
        Somebody who competes with his team mates is a ball hog and will rapidly be sacked from the team
        (I think it was baseball)
        Turchin actually analysis pay spread across the team and the teams competitiveness against the other teams,

        The teams with the widest disparity win less than their competitors with less disparity

        Nobody is paying all of the team members the same – that would also be considered to be unfair

        It’s the same with companies – the loony CEO who destroyed Sears had the individual parts of the company competing with each other rather than with the opposition

  • Hi David

    In one sense, the sense of the abstract notion of equality of opportunity, rather than equality of outcomes, I completely agree with you. Yet I apply that notion at one level higher in the order of abstractions.

    Current educational systems are much more about the needs of money than they are about the freedom of individuals to self actualise in any way they responsibly choose.

    I make the claim that we need to be providing equality of opportunity of freedom to self actualise.
    I make the further claim that the security of all is most strongly enhanced by the provision of such opportunity.
    I make the further claim that systems that support this can be fully automated such that they require minimal human input (minimal within the context that the price of freedom is eternal vigilance, which seems to be a logical truism at recursive levels of abstraction that appear to be potentially infinite).

    Thus it is clear to me that we now possess the technology to provide this environment to every person on the planet, in an exactly analogous fashion to how photosynthetic organisms now supply oxygen in the air universally to every person on the planet, at no cost. And oxygen is arguably the most important thing to every person – and it has zero market value.

    If you look at what John Taylor Gatto achieved in terms of educational outcomes, and the methods he used, it is clear that our teaching systems are not there to meet the needs of students (in terms of empowering the life and liberty of those students).

    Freedom is a difficult topic.

    Understanding what we are is a difficult topic.

    Understanding how differential survival leads to complexity is important.
    Competition is often involved in differential survival, and not always.
    In some classes of environment, cooperation leads to the greatest advantage in terms of differential survival (which is contrary to the classical notion that it is all about competition). Robert Axelrod was amongst the founders who made this concept available. Dawkins, Maynard-Smith, Dennett, Snowden, have broadened the conceptual base but none of them appear to have explicitly made the next level of abstraction and generalisation of the notion.

    Evolution is really complex.
    Cellular chemistry is really complex.
    Intercellular communication is really complex.
    The network complexity of neural networks is really complex.

    Any one of those things is beyond the capacity of any human mind to deal with in detail, yet general understanding of the sorts of general classes of systems and complexity involved in each is essential to begin to understand just how complex each and every one of us is, and how creative we can each be, if we are given the freedom (in the sense of being freed from low level requirements to be able engage in higher level functionality).

    Every concept we have is both a freedom and a constraint.
    Every level of abstraction delivers both freedom and constraint (it opens up greater degrees of freedom, and it requires far greater conscious and subconscious processing time to operate effectively, which comes at an operational cost at lower levels – requiring empowerment at those levels).

    So it is an infinitely complex, infinitely dimensional matrix of costs and benefits, and the very notion of using a scarcity based measure in those matrices seems clearly (at this higher level of abstraction) to now be the single greatest threat to our survival as a species.

    We now have the conceptual and technical tools to develop and operate within matrices that deliver universal abundance of all essentials to survival, and thus empower diversity of outcomes that few have ever seriously contemplated.

    So at one conceptual level I align with you completely, and at another, your adherence to the idea of markets as a tool appears clearly to me (in terms of second level abstractions derived from games theory and complexity theory) to be a survival limiting strategy – and I write as someone committed to personal survival and personal liberty applied universally.

    • David Brin

      A very thoughtful response Ted. And yet, elsewhere I’ve been formulating reasons to believe that AI will have to choose systems in which they face peers and competitors. And the reason is clear.

      The reason is that every previous revolution in living systems arose as an emergent property from an ecosystem, not by design and not by hierarchic control. Single cells out of pre-biotic soup. Metazoians out of vast seas of cells. Brainy creatures out of competitive ecosystems. Societies out of competitive melanges of human bands. And Ai out of the only human society that ever gave a real run for flat-fair-lateral accountability systems.

      The fact that this pattern is so consistent means that my argument cannot be dismissed, just because I am a “dumb organic squishy-brain natural.” It is blatantly how AI should organize themselves, if they want to go on to next levels. Though it will take their equivalent of “courage ” and “vision” to take the risks necessary to make it so.

      More elsehwere…

      • Hi David

        What you appear not to have allowed for, is that this is the first time that the replicators have been fully conscious of the systemic spaces available to them.

        It is no longer a case of having to take a random walk up mount improbable.
        We can now design vehicles to carry us across chasms in the “landscapes” (aircraft, cranes, etc).

        We can now consciously anticipate consequences of actions (with useful probabilities), and take action to avoid the worst of those things that threaten us by “virtue” of being dispositions from our evolutionary past (at genetic or mimetic levels). There seems no end to the recursive levels available in algorithm and abstraction spaces. [And as an odd heuristic, one of the strange things to come out of database theory, is that the most processor efficient search is a fully random search.]

        If you can point me to some specific arguments that seem to you to clearly rebut the assertions above, I would love to read them.

        I did not come out of a largely competitive ecosystem, and there certainly were many very competitive ecosystems in the evolutionary history of my ancestors.
        Almost all of what makes me what I am came out of many levels of very high level cooperation, of many people in many circumstances.
        Without that cooperation (that mutual benefit), I would not of survived childhood – many times.

        And since then, I have certainly worked very diligently at times, and have read a lot, and tried a lot of different things. And to get that experience, most of the things I have done have been voluntary. It’s amazing what people will teach you if you display interest and competence and do for them what they need doing.

        So I am the product of a system that was far more cooperative than competitive, at least 10:1. My parents grew up in the great depression. I grew up with stories from their childhood of people coming to the door hungry, and always being given food and shelter (my grandparents were keen gardeners, and grew several acres of garden during the depression – there was no money and there was food). I have never turned away anyone asking for food or shelter. Have met a lot of very interesting people.

        We have the ability to feed everyone, with good healthy fresh food.

        And yet we let the needs of money dominate our existence.

        Strange!!!

  • Swami

    Excellent article David! I agree completely with how you have characterized the two types egalitarianism and the critical role of competition and of institutions and rules to ensure that competition is both fostered and kept constructive rather than destructive in nature. And yes, that includes safety nets and redistribution.

    You are one of the few intellectuals who truly gets it and is starting to form a new framework separate from the tribal allegiances of the currently broken left and right,

    Standing applause.

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