Ryan Enage

POT 4066

Deepening economic inequality is not morally neutral or politically acceptable

Introduction

According to Steven Rattner, the United States ranks highest in income
inequality when the effects of government programs are calculated (Rattner,
2014). However, the Gini coefficient that Rattner cited is a flawed measure of
inequality, and upon closer examination, inequality in the U.S. was less than in
Turkey, Mexico, or Chile (Stoll, 2014). Still, inequality in the U.S. has grown to
the extent that an American worker works, on average, 4.6 percent more hours
than a Canadian worker, 21 percent more hours than a French worker, and 28
percent more hours than a German worker (Kristof, 2014).
Deepening economic inequality is not morally neutral or politically
acceptable. It allows arbitrary values, such as abilities and talents that a society
may value at any particular time, to determine an individuals social and
economic life prospects from birth. Deepening economic inequality also
magnifies the differences between citizens of various socioeconomic
backgrounds, eroding the dialogue necessary for the political participation that
U.S. democratic institutions require to function.

Robert Nozicks entitlement theory

The free market and its associated economic inequality are justified using
libertarianism and utilitarianism. Robert Nozick was a proponent of libertarianism,
stating that a government with anything more than the most minimal role in
economics would violate individual rights (Nozick, 1974). Taxation of earnings
from labor is equivalent to forced labor, because government intervenes to force
an individual to either pay taxes, or earn only enough to cover his basic needs
(Nozick, 1974). If a tax system that forces one to work to help the poor violates
individual rights, then a tax system that seizes an individuals resources to help
the poor also violates individual rights (Nozick, 1974).
There are three principles in Nozicks entitlement theory of justice. A person
who obtains a holding by using resources they legitimately came into possession
of, in accordance with the principle of justice in acquisition, is entitled or
deserving of that holding (Nozick, 1974). Someone who receives a holding in
accordance with the principle of justice in transfer receives a holding from
someone else entitled to the holding via voluntary exchange, gift giving, or
divestment is likewise entitled to the holding (Nozick, 1974).
Some individuals have obtained means not permitted by the principle of
justice in acquisition, while others steal, defraud, or enslave others, violating the
principle of justice in transfer (Nozick, 1974). If past injustices have shaped
present holdings in various forms, then the principle of rectification of injustice
would have historical information used to estimate what would have occurred
without the injustice (Nozick, 1974). If present holdings do not coincide with the

Ryan Enage
POT 4066
information submitted from the principle of rectification of injustice, then action
must be taken to correct the situation accordingly (Nozick, 1974).
However, Nozick concedes that there is no theoretical method to determine
such historical information to the extent necessary for the principle of rectification
of injustice (Nozick, 1974). Entitlement principles of justice are historical, positing
that the justice of a distribution depends on how it came into existence (Nozick,
1974). End-state principles of justice hold that a distribution is just if resources
are distributed according to structural principles, such as in welfare economics,
which, in his view, considers only present and not historical distributions (Nozick,
1974).
A principle of distribution is patterned if it varies according to a natural
dimension, including end-state principles, which would distribute to each
according to their needs (Nozick, 1974). Patterned principles of justice treat
objects as if they appeared out of nothing, but under entitlement principles of
justice, an individual who bought or contracted resources used to make
something, transferring legitimately owned holdings in the process, is entitled to it
(Nozick, 1974). Free exchanges in the marketplace would alter any pattern or
end-state, which could then only be maintained by preventing individuals from
transferring resources as they wish, or periodically taking resources from some to
redistribute to others (Nozick, 1974).
When present in a societys legal structure, patterned principles of justice
give each citizen an enforceable claim to a portion of resources, produced by
individuals using means of production created by others (Nozick, 1974). Instead
of the classical liberal idea of self-ownership, patterned principles install partial
ownership of others, the idea of property rights in other people, their activities,
and products (Nozick, 1974). The goals of patterned principles, presenting an
end-state or pattern that should be realized, may inevitably conflict with moral
considerations of how individuals may be treated (Nozick, 1974).

Libertarianism, utilitarianism

Libertarians support the free market and oppose government regulation
because they believe that we have a fundamental right to do what we desire with
what we own, as long as we respect other peoples right to do the same (Sandel,
2009, p. 60). Libertarianism considers any requirement to help others, including
taxation to redistribute wealth, as being coercive to the point of theft (Sandel,
2009, p. 61). Milton Friedman opposed laws against employment discrimination,
because they interfere with individuals entering voluntary contracts with one
another (Sandel, 2009, p. 62).
Friedman recognized that individuals who have well-off families and attend
high-quality schools have an unfair advantage over those from more modest
backgrounds (Sandel, 2009, p. 165). He also understood that people who have
certain abilities and talents have an unfair advantage that they cannot be credited
for (Sandel, 2009, p. 165). However, Friedman emphasized the benefits of
existing unfairness, such as income inequalities incentivizing gifted individuals to
perform, rather than attempts to reduce inequality (Sandel, 2009, p. 165).

Ryan Enage
POT 4066
Jeremy Benthams utilitarianism would have individuals aggregate the
benefits of something, such as a free exchange in a market economy, subtract
the costs, and determine if it produces more happiness than an alternative
(Sandel, 2009, p. 34). John Stuart Mills utilitarianism holds that individuals
should be free to do what they desire, as long as it does not harm others
(Sandel, 2009, p. 49). He appealed beyond the utilitarian principle of maximizing
pleasure and minimizing pain, to the morals of character and individuality, in
order to foster human development (Sandel, 2009, p. 51).
The utilitarian argument for free markets is that they promote the welfare of
society, because when two people make a deal, both gain something (Sandel,
2009, p. 75). As long as the deal makes them better off without hurting others,
utility is increased (Sandel, 2009, p. 75). Markets provide incentives for people to
work and supply the goods that others desire (Sandel, 2009, p. 6).
Utilitarianism could be construed to support redistribution of wealth. A million
dollars from a billionaire could be distributed among a hundred needy recipients,
and the billionaire would not be harmed much, whereas the recipients would
greatly benefit (Sandel, 2009, p. 59). Money could be transferred from the rich to
the poor, until the last dollar taken from the billionaire hurts him as much as it
helps the recipient (Sandel, 2009, p. 59).
However, a utilitarian response to this argument would be concern that high
tax rates, particularly on income, could reduce the motivation to work and thus
reduce productivity (Sandel, 2009, p. 59). If economic income or revenue shrinks,
leaving less to redistribute, then the overall level of utility may also decrease
(Sandel, 2009, p. 59).

Inequality is immoral

An agreement between two individuals is not morally justified in and of itself,
because the fairness of the agreement is not guaranteed. Even creating a
constitution cannot ensure fair terms of social cooperation, because any one
entity can be better at negotiation, have a better bargaining position, or know
more about the value of what is being exchanged (Sandel, 2009, p. 143).
Contracts are self-imposed, but the obligation to fulfill them arises from the
obligation to repay others for the benefits they provide us (Sandel, 2009, p. 145).
Nozick contended that, if there is no moral reason for inequality, it does not
necessarily follow that the holdings of individuals should be equal (Nozick, 1974).
It is unnecessary to remedy or compensate for economic inequality, if individuals
can make free exchanges in the marketplace (Nozick, 1974). However, the
abilities and talents that a society values at any particular time are morally
arbitrary, because they depend on the circumstances of supply and demand, or
what a society happens to prize (Sandel, 2009, p. 162). That a society values
any particular talent is not creditable to any individual (Sandel, 2009, p. 163).
Gifted individuals do not deserve a society that happens to value their abilities
and talents (Sandel, 2009, p. 163). Because the circumstances of ones birth are
not ones own doing, it would be unjust to determine ones life prospects based
on such arbitrary facts (Sandel, 2009, p. 153).

Ryan Enage
POT 4066
The distribution of wealth in a libertarian free market is unjust because
arbitrary factors, such as economically well-off families and high-quality
schooling, give disproportionate advantages to some individuals over others
(Sandel, 2009, p. 153). Using centuries of statistics on wealth accumulation and
economic growth in developed countries, Thomas Piketty found that the rate of
growth of income from capital is several times larger than the rate of economic
growth, and economic inequality increases when population and the economy
grow slowly (Erlanger, 2014).
Furthermore, Piketty stated that the rate of income from capital could be
larger than economic growth forever, contradicting the claim that wealth raises
all boats, because wealth is progressively concentrating in the hands of the
affluent (Erlanger, 2014). Many of his statistics from earlier time periods are
limited samples of estate tax records and other extrapolations (Shuchman,
2014), but his work continues to contest the assertion that the U.S. is a
meritocracy, in which wealth is earned and deserved (Krugman, 2014). Even the
wealth distribution from a meritocracy with equal educational opportunities is
unjust, because it is determined by the natural lottery of abilities and talents,
another arbitrary factor (Sandel, 2009, p. 154).

John Rawlss theory of justice

John Rawlss variant of the social contract proposes a veil of ignorance,
behind which individuals could agree on principles without knowing anything
about themselves, agreeing to just conditions in an original position of equality
(Sandel, 2009, p. 141). Nozick questioned why individuals in the original position
should not know of their own natural endowments, claiming that this necessarily
would also prevent them from knowing anything about themselves (Nozick,
1974). He also accused Rawls of designing the original position to affirm Rawlss
negative evaluation of entitlement principles of justice, which support
libertarianism (Nozick, 1974).
In Rawlss theory of justice, the original position of equality is equivalent to
the hypothetical state of nature in the traditional theory of the social contract
(Rawls, 1971). The original position is one in which individuals do not know their
social status, natural abilities such as intelligence or strength, their own particular
conceptions of the good, or psychological behaviors (Rawls, 1971). Since all are
similarly situated and unable to design principles to favor their particular
condition, the principles they would agree to would be the result of a fair
agreement (Rawls, 1971).
The correctness of the original position can be determined by whether the
principles it produces fit the convictions of individuals and provide guidance to
them (Rawls, 1971). If the original position is unable to yield these principles,
then the original position can be altered, or individuals can revise their own
existing judgments (Rawls, 1971). By the process of reflective equilibrium,
sometimes altering the original position, and other times adjusting convictions to
the principles the original position produces, individuals can work towards finding
a reasonable description of the original position (Rawls, 1971).

Ryan Enage
POT 4066
Individuals behind the veil would not agree with a libertarian principle, giving
people the right to keep all the money made in a market economy, because of
the risk that they themselves could be poor and without help (Sandel, 2009, p.
142). They would not choose utilitarianism either, because the utilitarian principle
of maximizing the general welfare could lead to oppression that gives pleasure to
the majority at their expense (Sandel, 2009, p. 151). Since individuals want to
protect their own interests, furthering their conceptions of the good, no one has a
reason to accept an enduring loss for themselves in order to achieve a greater
net balance of happiness (Rawls, 1971).
Instead, individuals would agree to the principle of democratic equality, by
which each person has an equal right to the most extensive basic liberty
compatible with a similar liberty for others, such as rights of voting, speech,
conscience, personal property, and freedom from arbitrary arrest (Rawls, 1971).
Individuals would also agree to the difference principle, which holds that social
and economic inequalities should be arranged to be reasonably expected to be
to everyones advantage, and attached to positions and offices, open to all
(Rawls, 1971). A deviation from the institutions of democratic equality cannot be
justified by, or compensated for, by greater social and economic advantages
(Rawls, 1971).
The difference principle allows for certain inequalities, such as higher pay for
doctors, if it would, for instance, result in better medical care in impoverished
rural areas (Sandel, 2009, p. 152). An individuals wealth would be justified via
the difference principle if it was acquired in a system that, as a whole, works to
the benefit of the poor (Rawls, 1971). The difference principle holds that
individuals gifted with abilities and talents should be fostered and uninhibited, but
also understand that the rewards their abilities garner should be shared with
those who lack similar abilities (Sandel, 2009, p. 156).
Individuals gifted with abilities and talents can develop their skills and work,
knowing they are part of a system that helps the least advantaged. Nozick
argued that individual decision-making is devalued by attributing everything
notable about someone to external factors (Nozick, 1974). However, even the
character of a hard-working individual developing their talents may be owed to
beneficial family and social circumstances, or natural talent, neither of which they
can claim credit for (Rawls, 1971).
A just distribution of wealth is not based on rewarding those who deserve it.
Individuals must first agree on terms of social cooperation, using the principle of
democratic equality and the difference principle. Subsequently, when just
economic arrangements exist, the claims of individuals can be properly settled
under relevant and previously agreed-on rules (Rawls, 1971). If those rules
include taxation of a portion of their income to help the disadvantaged, then
individuals can understand that they do not morally deserve that portion (Sandel,
2009, p. 161).

Ryan Enage
POT 4066
Inequality is politically unacceptable

Joseph Stiglitz believed that the United States became the developed
country with the most economic inequality because of political reasons (Stiglitz,
2014). After the end of the Cold War, there was no longer a competitor to the
U.S. economic model, so there was no more need to demonstrate what the U.S.
economy could do for most citizens (Stiglitz, 2014). With deepening economic
inequality, U.S. democratic institutions are threatened, because that inequality is
reflected in political influence and the production of knowledge and information
(Erlanger, 2014).
A large gap between rich and poor causes solidarity between citizens to
degenerate. As economic inequality deepens, children of the wealthy attend
private schools or public schools in wealthy neighborhoods, while children of
lesser-advantaged families attend deteriorating public schools (Sandel, 2009, p.
266). Well-off residential communities hire private security companies instead of
relying on police protection, and another family vehicle removes the need to use
public transportation (Sandel, 2009, p. 266).
Because the wealthy will have no need to use public services, they will be
less willing to support infrastructure like schools or recreation centers with their
taxes, resulting in deteriorating public facilities and services (Sandel, 2009, p.
267). These same public places will also no longer be where citizens of different
socioeconomic backgrounds interact with one another, making it more difficult for
citizens of different circumstances to relate to one another (Sandel, 2009, p.
267). Modern wealthy individuals are so removed from ordinary peoples lives
that no one sees, for instance, private equity managers commuting by helicopter
to their mansions (Krugman, 2014).

Conclusion

Deepening economic inequality is not morally neutral or politically
acceptable. Rawls rejected the idea that institutions will always be imperfect
because of the unjust distribution of abilities and social circumstances (Rawls,
1971). Instead of being unjust, the distribution of abilities and social
circumstances is only a natural fact; What is just and unjust is the way that
institutions deal with these facts (Rawls, 1971).
Instead of redistributing wealth to increase the private consumption of goods,
the financially affluent can be taxed to repair and recreate public facilities and
services, so that both rich and poor will want to use them (Sandel, 2009, p. 267).
After World War II, the massive investment in the federal highway program
resulted in unprecedented individual mobility, while also accelerating suburban
sprawl and environmental pollution (Sandel, 2009, p. 267). This generation can
invest in public schools, transportation systems, clinics, playgrounds, parks,
recreation centers, libraries, and museums that can bring people into common
spaces, building a shared sense of democratic citizenship (Sandel, 2009, p. 267).

Ryan Enage
POT 4066
References

Erlanger, S. (2014, April 19). Taking On Adam Smith (and Karl Marx). The New
York Times. Retrieved from
http://www.nytimes.com/2014/04/20/business/international/taking-on-adam-
smith-and-karl-marx.html
Kristof, N. (2014, May 14). Its Now the Canadian Dream. The New York Times.
Retrieved from http://www.nytimes.com/2014/05/15/opinion/kristof-its-now-
the-canadian-dream.html
Krugman, P. (2014, April 14). The Piketty Panic. The New York Times. Retrieved
from http://www.nytimes.com/2014/04/25/opinion/krugman-the-piketty-
panic.html
Krugman, P. (2014, September 28). Our Invisible Rich. The New York Times.
Retrieved from http://www.nytimes.com/2014/09/29/opinion/paul-krugman-
our-invisible-rich.html
Nozick, R. (1974) Anarchy, State, and Utopia. New York: Basic Books.
Rattner, S. (2014, November 16). Inequality, Unbelievably, Gets Worse. The
New York Times. Retrieved from
http://www.nytimes.com/2014/11/17/opinion/inequality-unbelievably-gets-
worse.html
Rawls, J. (1971) A Theory of Justice. Cambridge, MA: Belknap Press.
Sandel, M. J. (2009) Justice: Whats the Right Thing to Do? New York: Farrar,
Straus and Giroux.
Shuchman, D. (2014, April 21). Thomas Piketty Revives Marx for the 21st
Century. The Wall Street Journal. Retrieved from
http://online.wsj.com/news/articles/SB1000142405270230382560457951545
2952131592
Stiglitz, J.E. (2014, June 27). Inequality Is Not Inevitable. The New York Times.
Retrieved from http://opinionator.blogs.nytimes.com/2014/06/27/inequality-is-
not-inevitable
Stoll, I. (2014, November 17). The Latest Liberal Nonsense About Economic
Inequality. Reason. Retrieved from
http://reason.com/archives/2014/11/17/the-lefts-economic-nonsense-about-
inequa