What About Equal Income and Wealth?
Is it possible? If possible, is it desirable? If desirable, would it be fair?
The word “fair” really has no useful meaning in the context of the distribution of income and wealth. The definition for “fair” that makes the most sense to me is this: people who are equal should be treated equally; people who are unequal should be treated differently. Some examples are in order.
Able-bodied people with high IQ and a strong work ethic should earn high income and accumulate high wealth compared to able-bodied people with low IQ and a weak work ethic. Yes, medical doctors should and do earn high income compared to dish washers in restaurants.
People who are not able bodied or have unusually low IQ should receive help from other people. Yes, mentally retarded persons should and do earn low income compared to others without physical impairments. Which other people should help them is a different topic, which I choose not to discuss in this essay. Stay tuned for another essay, if the topic interests you.
The distribution of income and wealth is unequal in the United States precisely because citizens of the Unites States are not equal in most ways. People have vastly different marketable skills, and equally important, people have vastly different wants and desires. Although many people say it is the case, "unequal access to opportunities" is not the cause of income inequality in the USA today, even though it might have been 100 years ago.
Much is made of equal access to opportunity for education and careers. But strictly speaking, equal access for all is impossible. Can I have equal access to being the center linebacker for the Cowboys? In any case, even if equal access were possible, the fact that people are unequal in most ways means that income inequality will not be much affected by equal opportunities. Even if I were given an opportunity to try out for the Cowboys, it would not go well, and I would certainly not thereby be enabled to earn the same income as the center linebacker for the Cowboys.
Would equal income and wealth for all be desirable? And if desirable, would it be possible? And if desirable and possible, would it be fair? I don’t think I’ve ever met anyone who thought a “yes” to these questions makes sense. In any case, equal income and wealth for all is not possible, precisely because people are not clones.
People who are free will not be economically equal. People who are economically equal will not be free, as noted by Jarret B. Wollstein in his article The Idea of Equality. Personally, I'll take freedom and liberty along with the economic inequality that freedom and liberty entail. But that’s just my preference; your preferences may very well be different. But even if people are willing to give up freedom and liberty for economic equality, still there remains the impossibility of achieving economic equality, even with use of the most brutal totalitarian force applied by government operatives.
Attempts by government operatives to equalize the distribution of income and wealth have failed, and they always will fail. Income and wealth cannot and will not be distributed equally in a world populated by humans who are not clones.
As I wrote in Morality and Capitalism, humans are ontologically equal — which means all humans are bound by an obligation to treat other humans morally. But humans are completely unequal in most other ways — which means humans will never have equal income and wealth.
I don't think the market pays anything close to corresponding with marginal product. That said, redistribution is usually a poor solution. My own model is something like as follows: society is divided between competent and Incompetent people. Competent people are on average paid more than the Incompetent and in that sense market outcomes are "fair." However, among the competent, success is highly dependent on luck. Some might consider that outcome "unfair." But most redistribution schemes are too costly to do anything about it. "Efficient redistribution" is possible but not particularly popular and may not do much to address the luck issue regardless. I conclude it often makes sense to live with "unfairness," because alternatives are usually worse.