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Karl Smith on the "I've Got Mine!" Theory of Distribution

I have never thought that the "Just Deserts" theories of just distribution made a lot of sense--and they make no sense at all in the absence of equality of opportunity.

Over to Karl Smith:

Markets and Morality: Greg Mankiw has an essay on economic morality that essentially outlines a Just Deserts Theory.... [T]here is nothing wrong with people getting fabulously wealthy, its only bad when people cheat their way to the top. Greg also brings up an argument that... charity is a public good... and as a public good is rightfully financed by government spending.

I’ve moved away from this view. Greg is right that it reflects common intuition. The problem is that this intuition does not survive introspection. It works so long as you don’t think too much about it....

Imagine for example the case of wounded vets.... We lean, as Greg does it parts of his essay, on the notion that without public support there wouldn’t be enough private charity... people – people who like us care about wounded vets – would not give because they hoped that someone else would give in their place. People would free ride on helping vets.... [But] this is only a moral problem if we are concerned about the actual amount of care that vets end up with. That is, in order to justify publicly-funding wounded veterans, we must care about the consequences of our public policy choices, not just about fairness of the process. 

Once you opened the door to caring about the consequences of public policy choices, that door is hard to shut....

[T]he question then switched to “how do we evaluate when consequences are good or bad/” This leads me into... Rawlsian... [notions] that society should function so as to help out the least advantaged.... [T]he middle ground is not stable. The middle ground only works we you don’t spend too much time thinking about what you are endorsing.... This leads me to a social view similar to Krugman where he states

The point is that you don’t, in fact, have to be that radical once you drop the rigidity of the conservative position. If you admit that life is unfair, and that there’s only so much you can do about that at the starting line, then you can try to ameliorate the consequences of that unfairness.

Importantly, this unfairness need not, and in general is not, man-made.... The primary source of unfairness is the fact that nature simply has no inherent justice.... [C]hildren are born with horrible genetic diseases. This is certainly not a punishment for offenses in a previous life. However, it’s not a lesson or a test from which better things will come either. They are just screwed. Life is just unfair.. Unless other human beings take action no entity is coming to help and things will not get better....

The question before us, is that given that we were all born into this world – which is neither friendly nor hospitable nor ultimately even survivable – what can we do about it? What we can do is build a society that alleviates as much pain as we can and provides some people with the opportunity for genuine happiness. To do this its helpful to redistribute some wealth. We can’t make everything better through redistribution and too much redistribution will actually make things worse. However, we can make things a little less painful....

[W]e don’t redistribute because the people who have wealth have done anything wrong. Indeed, they have done good. We are glad to have them. We can, do and should honor them....  Ultimately, it’s a balancing act. We can and should debate where the correct balance is.

What we should not do is pretend that there is some inherent justice in the market system. The market, when it is working well, reflects the actual costs and benefits of action in the real world, but the real world is deeply, deeply unjust.

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