Friday, September 12, 2014

Why equalizing income conflicts with rewarding good behavior



posted earlier that one of the most sacred tenets of liberalism is the goal of equality of condition: the idea that there should be no rich or poor, but that all should have the same amount of income and wealth, and that no one should possess any more than any other.


Bill Gates

In this previous post, I offered several arguments against equality of condition; but refrained from using the critical argument based on rewards. This is because too many liberals have prejudice against it to lead off with it, in a post about this subject. In liberals' minds, rewarding anyone for being productive is tasteless and vulgar; because it would mean that they would have more money than someone else. It's "vulgar" to reward Bill Gates for providing me with a nice computer, because it would mean that he would become even richer than he is now, and would thus have more money than the lazy bum on the street who refuses to work. Arguments based on people's earning the money fall on deaf ears, because liberals believe no one earns money without exploiting others, and they are thus blind to arguments based on wealth being earned.


Yet even they can see the flaws in their argument when it is applied to criminal punishment. They are perfectly okay with discriminating against criminals, for example, when they commit a violent crime like murder. The equality-of-condition argument, when taken to this extreme, would say that the criminal cannot be put in prison; because then we would be treating him worse than someone else. His treatment would be unequal to the freedom that we respect in the law-abiding members of society. Yet even liberals abandon this argument here, because even they can see clearly that the law-abiding citizens have done nothing to merit losing their freedom, while the criminal has. Equality of condition is cast aside in favor of a theory of justice based on rewards, and good citizenship is made a requirement for the otherwise-inalienable right to freedom.


Microsoft Windows



So the question for the liberal who makes this concession is: If it's all right to reward people for treating neighbors nonviolently, then why is it not all right to reward people for producing goods and services? We all depend on the goods and services of others - we all need food, water, shelter, and quality medical care. So why not reward their being produced? If you say that it's vulgar to give Bill Gates unequal wealth for providing me with a nice computer, you are objecting based on equality-of-condition grounds - which if applied to criminals, would mean that we'd have to release every last one of them onto the streets. (Or throw all the rest of us in prison with them - anything but have their condition be unequal to ours.) And if you say that the criminals should be thrown in prison while the law-abiding citizens should go free, you are admitting that equality of condition is a faulty goal, and that good behavior that helps others should be rewarded - undermining the argument that unequal wealth is vulgar.


Many liberals would try to get out of this dilemma by saying that people only get rich by exploiting others - the "Wal-Mart exploits the poor" argument. Yet name me one case of a Wal-Mart customer who was forced to buy anything from their stores. Name me one Wal-Mart customer whose alleged "exploitation" was anything but voluntary, and then explain to me why the customer taking Wal-Mart's goods and services isn't "exploiting" them in return. If taking a customer's money when they voluntarily buy your goods is exploitation, then why isn't taking the seller's goods when they voluntarily sell them for your money not "exploitation" as well?

Most liberals will fall back on the original equality-of-condition argument at this point; saying that the very idea that Wal-Mart is so rich when its average customer is so poor is vulgar, and that the exchange is one-way exploitation because of the unfairness of Wal-Mart remaining rich while its average customer remains poor. But if that's really so compelling, let's hear an explanation of why it wouldn't likewise be unfair that the criminal stays in prison while the law-abiding citizen goes free. Equality of condition is a flawed goal, and no amount of emotional nonsense about exploitation can change that. Just ask anyone who's ever been attacked by a violent prisoner paroled onto the streets - the criminal should be punished, and the law-abiding citizen should be rewarded with freedom. It just makes sense morally.


Milton Friedman

In the words of the economist Milton Friedman, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." If the exchange is really a one-way exploitation, why does the party that is allegedly being exploited agree to it in the first place? The answer is because they know it's in their interest, and they enter the exchange of their own free will for that reason.

Many liberals will say that the poor had no alternative but to take this exchange, because they cannot afford anything but what Wal-Mart sells. But besides being wrong about there being no alternative - they could have bought the goods somewhere else, and many do - why not give Wal-Mart credit for providing the poor with the "only" goods cheap enough for them to afford? The poor benefit from this supposed "exploitation" by getting something cheap, so if they really can't afford to shop anywhere else as the "no alternative" argument states, that would strengthen the argument that Wal-Mart is helping them, by being the only business able and willing to provide them with goods so cheaply. They would never have done it without the reward of profit, so capitalism has given businesses an incentive to meet their needs. Thus, the loaded word of "exploitation" would seem to be inappropriate here. It might make one feel righteous to say it, but it is without basis in fact, and it is - quite simply - a faulty argument.


Milton Friedman

In another great quote from the economist Milton Friedman, "Underlying most arguments against the free market is a lack of belief in freedom itself." No matter how appealing equality of condition might seem to be, there's no way it can be instituted without a destruction of the freedom to reward others for helping us, and to be rewarded by others for helping them in return. To reward them would be to treat them unequally, just like it would be unequal to allow the law-abiding to go free while the convicted criminal goes to prison; so the freedom to reward cannot exist under equality of condition.

Thus, any society that puts equality of condition front-and-center will see antisocial behavior spiral out of control - whether it be extreme examples like violence and mayhem, or something more commonplace like being lazy and refusing to work - with nothing getting produced as a consequence.


Long line for cooking oil - Romania, 1986 (then controlled by communist Russia)

That is the problem with equality of condition. And that is why systems like socialism and communism inevitably fail to work as intended. I'm all for equality of opportunity, but equality of condition is a flawed standard for society; which will inevitably get in the way of progress and prosperity. And that is why we should abandon it at the first opportunity.

If you liked this post, you might also like:

Why equalizing income is a bad goal

In defense of John Locke: The need for private property

Empirical evidence that communism causes poverty

Part of a series about
Communism

Communism in theory: Why Marxism can never work

The "Communist Manifesto" (and how Marxism got started)
Marx's "labor theory of value" (and why it doesn't work)
Problems with equalizing income (even in theory)
Problems with rewarding good behavior (under communism)
In defense of John Locke: The need for private property

Communism in practice: The results of the experiments

Revolution in Russia: How the madness got started
History's horror stories: The "grand experiments" with communism
Germany and Korea: The experiments that neither side wanted
Civil war in China: How China was divided
Actually, communism has been tried (and it doesn't work)


4 comments:

  1. I agree with most of this, but what do you say about the homeless that do work, and were evicted when they could not pay rent due to medical bills? You work harder than most people, yet you are not rich...where does the balance lie?

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    1. I believe that the homeless that do work should be rewarded for their labor at the market equilibrium price, where the demand for their labor is enough to purchase their supply. I’m not against all uses of government money to help poor people, so I’m all right with using government money to help them pay rent, when their medical bills interfere with their doing so. What I am against is the welfare state – as Ronald Reagan said, “Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence.” The welfare state fosters dependence, and creates more and more need for the welfare assistance it gives. It is most often characterized by failed attempts at equality of condition, which I oppose. Helping the poor to get by is one thing; trying to make sure they have the same amount of money as someone else is another.

      I also don't think that quantifying how hard one works, by itself, is a good way of judging how much money someone should make. Perhaps they've invented a magic Work-O-Meter that quantifies how hard I've worked, for purposes of comparison to other people; which could thus be used in some formula to determine the income I should have. But if so, I've never heard of it; and I don't know that using it would be all that helpful anyway. You're not gonna find many doctors willing to give the poor medical care for free, or landlords willing to provide them living space without charging rent for it. Thus, if you say that I should make just as much money as they do; the likelihood that they will actually provide these things will go down – less living space, less medical care – and I don't know that that's the best way to help the poor. If we really want to provide people (including the poor) with medical care or livable homes, we need to reward their being provided. Without it, not much will be provided.

      It also seems to me to be worth saying that governments and charitable organizations cannot provide money to help the poor, and cannot be generous to the poor, UNLESS tax revenues and profits are up. The best thing for poor people is a robust economy where people produce things that they can use, and that is simply not possible under attempts at equality of condition.

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  2. Although I agree with you generally, and don't believe in a forced equality. I believe there are definite moral obligations that the uber-rich have, beyond what we all have. I have always felt that being a billionaire for very long was immoral. They should be giving it away too fast to become billionaires. Where they give is their ethical dilemma; far be it from me to tell them where. However, there are so many opportunities to do good through established organizations that pass the legitimacy tests to ignore this part of social obligation. Does that make me a socialist or liberal? I always consider myself a moral conservative.

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    1. So long as you're willing to make a distinction between moral obligations and legal obligations, I'll probably generally agree with you. Saying they should be generous is one thing; saying they should be forced to be generous is something else.

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