The Joye of Inequality

Christopher Joye is relaxed about income inequality. In a recent article for the Drum Unleashed he writes:

I don’t think there is anything wrong at all with a rise in income inequality if one assumes that: (a) we have equality of opportunity; (b) we are committed to combating extreme poverty; and (c) we are vigilant in protecting those members of the community who are fundamentally and irreversibly disadvantaged through, say, mental or physical disabilities.

It’s an interesting claim but as one commenter at Catallaxy notes: "The issue with Joye’s criticism is that ‘equality of opportunity’ is not much less problematic than equality of outcome. What does equality of opportunity mean?"

One of the intuitions behind the idea is that it’s unfair to compensate people for disadvantages they’ve brought on themselves. For example, why should people who work hard and do the right thing be forced to share their earnings with people who refuse to work and spend their time drinking, gambling and making babies they can’t support? The intuition is that there’s nothing wrong with inequalities of income if they result from people’s own choices.

John Roemer’s definition of inequality of opportunity taps into this intuition:

Whereas the ethic of equality of outcome does not hold individuals responsible for actions that may create inequality of outcomes, equality of opportunity ‘levels the playing field’ so that all have potential to achieve equal outcomes; inequalities of outcome that then transpire are not compensable at the bar of justice. The influences on the outcome a person experiences comprise circumstances (for which he should not be held responsible) and effort (for which he should be). Equal-opportunity policy compensates persons for their disadvantaged circumstances, ensuring that, finally, only effort counts in achieving outcomes.

But Roemer’s definition is far more demanding than what Joye has in mind. For a start, much ability is not the result of effort. A person’s height, physical attractiveness and intelligence all impact on their earning ability but are determined to a large extent by genetics and early childhood experience. Nobody chooses their genes or their parents so, as economist Frank Knight insists: "There is no visible reason why anyone is more or less entitled to the earnings of inherited personal capacities than to those of inherited property in any other form".

Joye claims that we not obliged to do any more than protect "those members of the community who are fundamentally and irreversibly disadvantaged through, say, mental or physical disabilities." But according to Roemer’s definition of equality of opportunity, all members of the community should have a chance to earn their way to success — including those with disabilities. If outcomes depend on effort rather than inherited ability, then surely people with disabilities are entitled to more than protection from extreme poverty.

Another way Roemer’s definition is too strong for Joye is the way it treats luck in the market place. No matter how diligent they are, entrepreneurs often have no way of knowing whether their business idea will succeed or fail. Innovative business ventures are almost always a gamble. Sometimes they’ll make the entrepreneur incredibly rich and sometimes they’ll drag them into bankruptcy. According to Roemer’s concept of equality of opportunity, successful entrepreneurs could legitimately be forced to compensate those who are unsuccessful.

So what does Joye mean by equality of opportunity? In a later post at Aussie Macro Moments, he offered his own definition:

By equality of opportunity, I meant equality of all future possibilities that a member of society could reasonably expect to have a shot at benefiting from: eg, access to similar levels of primary, secondary and tertiary education; health services; public amenity, such as transport and public spaces (eg, parks); utilities; a fair and easy-to-access legal and judicial system; the safety and support afforded, respectively, by law enforcement and emergency agencies; and, as Matt himself argues, access to similar prospects to progress vocationally ¹.

Joye seems to be saying that inequalities that are due to differences in inherited ability are acceptable as are differences due to luck in the market place. He seems to be insisting on equal access to primary education but not on equal access to high quality child care or effective parenting. But why is this the right place to draw the line?

In a comment on an earlier post here at Troppo, Labour Outsider refers to James Heckman’s research on early childhood development. Heckman and others argue that people’s experience in early childhood can have a profound effect on their ability to benefit from subsequent opportunities for education and training. According to Heckman and Flavio Cunha, "ability gaps between individuals and across socioeconomic groups open up at early ages, for both cognitive and noncognitive skills" and that much of the difference can be accounted for by factors like parental education and maternal ability. They go on to argue:

At historically funded levels, public job training programs and adult literacy and educational programs, like the GED, that attempt to remediate years of educational and emotional neglect among disadvantaged individuals have a low economic return and produce meager effects for most persons.

While it’s true that some individuals can thrive despite their deprived childhoods, Heckman’s arguments suggest the odds are stacked against them. There’s no point piling up anecdotes about people you know who’ve succeeded in the face of adversity. The argument here is about whether or not people have equal chances for success — not whether its possible for some individuals to beat the odds.

If Heckman is right and early childhood experience can lay the foundation for later disadvantage, it looks like equality of opportunity demands much more than access to schools and healthcare. Heckman argues that things like persistence, self-discipline and dependability are skills that have to be developed. And if people miss out on developing these skills because of the homes and neighbourhoods they grow up in, it doesn’t make sense to say that they’ve had the same opportunity to succeed as a person who grows up in a more advantaged environment. How does a society guarantee equality of opportunity to people who are now adults — people already scarred by their deprived childhoods? Perhaps Joye is suggesting that we don’t guarantee them anything besides our commitment to combat extreme poverty.

And how commited to equality of opportunity is Joye? If leveling up proves too difficult why doesn’t a serious commitment to equality of opportunity require leveling down? If the bottom can’t be brought level with the top, then everyone’s level of opportunity could be reduced to that of the least advantaged individual. But I’m sure that this is not what supporters of equality of opportunity like Joye have in mind. Perhaps what they mean is that improved opportunities for those at the bottom shouldn’t come at the expense of diminished opportunities for anybody else. And that illustrates the most serious problem with the rhetoric of equality of opportunity — its rarely clear what it means in practice. In many cases I suspect it’s just an attempt to silence people who want more redistribution of income

It seems to me that we should stop focusing so tightly on opportunities to earn money. After all, what really matters is people’s opportunity to live the kinds of lives they have reason to value (as Sen puts it). And the important thing here isn’t that everyone’s level of opportunity is the same. It may be that the only way to achieve that is to reduce everyone’s level of opportunity — including the least advantaged.

The most basic intuition behind calls for equality is that every human being has equal moral value. But what does that imply in practice? I think Paul Krugman is heading in the right direction when he writes:

My vision of economic morality is more or less Rawlsian: we should try to create the society each of us would want if we didn’t know in advance who we’d be.

This vision implies a significant role for redistribution of income — something much stronger than Joye’s commitment to combat extreme poverty. For example, as Adam Smith argued, when people have much less than others they can experience shame when their poverty is highly visible. Redistribution can help give people at the bottom of the income distribution the capability to live without shame by making sure their standard of living does not fall too far below ordinary standards. I think it also requires us to look at the economic system, how it’s shaped by the institutions of government and how it’s regulated.

Too often rhetoric about equality of opportunity is the political equivalent of saccharin. Saccharin tastes sweet but has no value as food. It promises the taste of sugar without the fattening kilojoules. In the same way, the rhetoric equality of opportunity promises to satisfy the political craving for equality while at the same time keeping the state slim and the economy healthy. With equality of opportunity we can have the fairness we crave without the burden of higher taxes or disruptive reform. In fact almost nothing needs to change — a sprinkling of education initiatives here and some welfare to work programs there and the job is done. Like saccharin, the major function of this rhetoric is to make something bland and unappealing seem more palatable.

Other Troppo posts on inequality:

Equality of Opportunity
Fred Argy

Equality of opportunity: is more policy intervention needed?
Fred Argy

Inequality — How much is too much?
Don Arthur

Egalitarians for inequality!
Don Arthur

Acting tough, acting white: the culture of the disadvantaged and the perpetuation of disadvantage?
Nicholas Gruen

Commitment and other fantasies
Nicholas Gruen

1. Joye is referring to this post by Matt Cowgill[↩]