Equivalence of Outcomes and Opportunity

…[there is an] important difference between Teddy Roosevelt and Barack Obama. Roosevelt believed that government should level the playing field to create equal opportunities. President Obama believes that government should create equal outcomes.

 In an entitlement society, everyone receives the same or similar rewards, regardless of education, effort, and willingness to take risk. That which is earned by some is redistributed to the others. -Mitt Romney, public speech (quote paraphrased) on Dec. 20th, 2011

President Obama is all about equality of result. I’m about equality of opportunity. …There is income inequality in America. There always has been and hopefully, and I do say that, there always will be. Why? Because people rise to different levels of success based on what they contribute to society and to the marketplace and that’s as it should be. -Rick Santorum, speech at the Detroit Economic Club, Feb. 16th, 2012

Society must be made to operate in such a way that it eradicates once and for all the desire of a man to become richer, or wiser, or more powerful than others. -François-Noël Babeuf, leader of the Society of Equals, at his trial for insurrectionary conspiracy against the First French Republic, Feb. 20th, 1797

…the basic American promise [is] that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement.

 The defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules. -Barack Obama, State of the Union Address, Jan. 24th, 2012

I keep seeing a strange thing happen: somehow, the most tepid liberalism gets turned into a radical socialist plot. All this transformation seems to require is the application of the right sound bites. For example, here’s a pretty popular one: “Equality of opportunity, not of outcomes.”

So much is bundled up in a phrase like that. In its brevity and simplicity, it’s a masterpiece of sloganeering. What we learn from this is that there are some people who are concerned about the less fortunate and would like to see them given the means to compete in the market and go as far as their talents and virtues will take them, and others who would destroy the justice of market competition by ensuring that everyone is equally rewarded regardless of virtue. Somehow, the former, a basic tenet of American liberalism, is taken up by conservatives, and the latter, an encapsulation of the most radical communism which the world has rarely seen in reality, becomes the ideology of Democratic Party.

This is a common general tactic. It involves taking ownership of a popular virtue in order to seem mainstream and moderate, so that any party in opposition is implied to lack or attack that virtue. You can see it in market conservative rhetoric about economic regulations: marketeers are always in favor of “good” or “smart” regulation. We never learn what this means and what actual regulations they oppose, because we are not meant to; we are only meant to accept the wisdom of their regulatory policy and assume that leftists support “bad” or “dumb” regulations. It’s a favorite in pseudoscience circles, too: proponents of anti-vaccination snake oil present themselves as skeptics of corporate power, as if acknowledging the health benefits of vaccination were equivalent to being a corporate stooge. This tactic is an implied straw man by which whoever uses it switches his opponents’ actual motivation with his opinion of their ideas. In doing this, he ignores the need for the balance of competing interests. We should be skeptical of the intentions of big corporations, but does this really mean abandoning any medicine made by pharmaceutical companies? Regulations may have adverse effects, but are those who propose or support a regulation either unconcerned about these side-effects or maliciously inflicting them? Or do they see these downsides as balanced by some benefit?

When it comes to discussing the equality of opportunity vs. outcomes, the implication is both subtle and complex. It essentially compares a phantom social welfare program (an implicit and unelaborated ideal policy of equalizing opportunity) to a real social welfare program, implying that the possible effects or necessary methods of that program (redistribution of wealth) are the actual goals. Broken down like this, it’s very clear how hollow this rhetorical trick really is, so how can it work so well?

Simply put: because there is no difference between a program or resource and equalizes outcomes and one that equalizes opportunity. Any of them could be framed either way. For example:

Education

Opportunity: Every citizen needs the chance to participate in a dynamic and high-tech economy that is more and more based on knowledge. Additionally, meaningful participation in the democratic process requires knowledge and critical thinking skills.

Outcomes: Parents work hard to provide for their children, including efforts to enrich their lives with knowledge and culture. But some would seek to make sure that regardless of their talent or hard work or how much they care for their children, all parents will be able to educate their children, from kindergarten to college. Worse, those who, by their hard work and productivity, could otherwise afford to do better for their children by paying for higher quality private schools, have their just rewards taken from them and given to parents who have not done as much to provide for their children.

Healthcare

Opportunity: Sickness and injury are risks we all face, and accessing medical care is a great expense. Those of meager means may become economically trapped, unable to try and change careers or take the risk of starting their own business for fear of not being able to afford medical care in the event of an injury or sickness. Worse, people with “preexisting conditions” may be unable to obtain any medical insurance besides what is provided as a benefit of employment, drastically reducing their options. Ensuring that everyone has access to healthcare enables people to take risks and improve their prosperity.

Outcomes: Medical care is a precious resource, a repository of amazing talent, skill, and technology. Equalizing access to healthcare not only removes an important incentive to work hard, it cheapens the nature and value of the profession. Why should doctors be forced to care for anyone at some state-mandated rate, and why should the prosperous and successful provide the luxury of medical care for the lazy and unproductive?

Welfare (Food Stamps, Unemployment Insurance, etc.)

Opportunity: While everyone should work to secure their own prosperity, no one is free from the economic risk of unemployment. By providing a basic stipend and subsidizing food purchases for those who are looking for a good job, we ensure that no one need fear absolute destitution and everyone has the chance to get back “in the game” without settling for less.

Outcomes: Competition in the market gives everyone a chance to rise to the limit of their talents and earn rewards for their efforts. Distributionist policies undermine this principle. When everyone is given enough to get by regardless of their efforts, paid for by those who do have the work ethic and creativity to succeed, the incentive to be productive disappears.

There’s no trick here, in fact. The reality is that every economic outcome is an opportunity, and economic opportunities are based on outcomes. After all, you have to “spend money to make money,” and once you’ve made that money, you re-invest it into making even more. This is the basic progression of growing wealth, and the “opportunity” for the next step is the “outcome” of the last. With that in mind, let’s take a look at an element of our economy that isn’t a social welfare program:

Capital

Opportunity: Money pays for the investments that grow one’s prosperity. Additionally, the more money you can rely on, the more freedom of action, unconstrained by economic means, you have.

Outcomes: Clearly, riches and luxury are the reward of hard work, creativity, and ambition.

Neither stance is really wrong, for the simple reason that it’s not possible to improve opportunity without the resources provided by outcomes, and anyone who takes advantage of a provided opportunity will likely get better outcomes. Every government program, therefore, which attempts to equalize economic opportunity will require funds taken from citizens’ economic outcomes as tax revenue. The end effect of making these opportunities available is to empower more people to improve their prosperity, thus moving the distribution outcomes closer to equality. Thus, when a pundit or politician claims to support equality of opportunity while opposing equality of outcomes, she is taking up the mantle of social conscience and compassion while damning its necessary methods. This gives her license to attack any real program for equalizing opportunity while looking like a champion of fair policy.

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Class Mobility and Socioeconomic Inequality

The recent popularity of “I am the 99%” identifications, and its counter-movement, “I am the 53%,” have publicized a number of common arguments over wealth inequality in America. Most “53%” posts are expressions of a popular defense of inequality: that one’s prosperity is one’s own responsibility, and that one’s socioeconomic class is largely a result of one’s individual choices. This is a more adversarial expression of the general idea that the possibility of class mobility justifies wealth disparity between classes, and those who are capable earn the just rewards of achievement. This is the American Dream: with hard work and a willingness to take risks, anyone can succeed. Therefore, programs designed to level the playing field are basically unjust interference in a fair Darwinian sorting system.

I have always been suspicious of the underlying premises of this justification, and it seems to me that those concerned about the negative effects of wealth inequality too often grant them: certainly, class mobility would justify it, but there are barriers to success, and it’s very harsh for those who can’t reach the top, etc. It’s a fair argument, given those premises, but it’s not even necessary to grant them at all. Class mobility does not justify wealth inequality, and it could not, ever.

Let’s consider a very basic question: does it really follow that the possibility of becoming the boss justifies the privilege of bosses? Or: does manumission justify slavery, and ennoblement justify serfdom? If some class distinction is inevitable, then we need to determine whether the relationship between the upper and lower class is just in itself, rather than how easily one could join an upper class with a dubious claim to legitimacy. One might claim that this is a matter of degree: certainly, market meritocracy is more just than slavery or serfdom since (among other reasons) class mobility is greater under it. Since this debate is so often intersects with a discussion of welfare programs, one would have to contend with the evidence that stronger social safety nets tend to promote class mobility. Risk-taking becomes easier as the price of failure declines. If we measure the justice of a political economy by the ease of changing one’s station within it, those closer to welfare states are factually more just than those closer to propertarian minarchy. As public health researcher Richard Wilkinson put it: “If you want to live the American Dream, move to Denmark.”

But of course, it might be the case that the market really is a meritocracy, and so positions at the top are entirely justified by the greater virtue of those who occupy them. It’s an unnecessary detour to discuss whether any particular wealthy person really earned their fortune. What matters is what “merit” even means in this context, and how success relates to it. If merit is wholly a matter of one’s personal strengths, success is the result of a fair competition. However, if the relationship between success and merit requires that only a minority of people ever reach the top, the case is less clear. In that case, the existence of a majority of “losers” is responsible for the rewards of the “winners.” As it turns out, the very nature of a market economy requires exactly this.

One definition of merit revolves around entrepreneurial initiative. Anyone in America has the freedom to start their own business and be the boss and make the big money, after all. It’s worth noting that the position of the employer is not just one of (potential or actual) wealth, but of power: the owners of property set the terms for others’ use of it, so ownership of a business allows one to set the terms for those who work at it. We are right back to the above noted cause for doubt about mobility justifying inequity: being able to move into a position of power does not in itself justify that form of power. There is a very basic reason to doubt this justification when it comes to employment, as a principle of legitimate power we recognize is the necessity of the consent of, and accountability to, those over whom power is exercised.

Most people are simply not going to become successful entrepreneurs, even if everyone tried. The high failure rate of new businesses attests to that. Looked at from a high enough macroeconomic perspective, the accretion of large firms with many employees out of an economy of small firms is a long-run outcome of market competition and the elimination of inefficiency from redundancy. Functional economies don’t have more chiefs than braves. However, the injustice of inequity here has less to do with enjoyment of wealth or the sufferings of those who are out-competed than a lack of independent agency: most people will need to work for someone else in order to get by, and so the consent of an employment contract is inherently tainted by dependency. Being able to choose some other patron is a poor guarantee of the accountability and fairness of employers when there are always going to be many more potential employees than employers, in general, need. Unless you think that running a business which is able to sell more goods and services than other businesses imparts the legitimacy to rule over others, this is an undesirable outcome.

Putting the facts of comparative class mobility in this context reveals something disturbing about this necessary minority of employers. Since welfare programs give employees more flexibility by enabling them to securely take the risks needed to better their station, they off-set the dependency of employees. Greater independence of employees, enabled by welfare programs, requires employers to offer better compensation to attract employees, and may cause them to face more competition from aspiring entrepreneurs. It follows that, whether any particular employer is exploitative or fair, the more dependent employees generally are on employers, the less employers have to pay to retain employees, lowering costs and raising profits. The power to set the terms of employment thus goes hand-in-hand with prosperity: the success (in terms of wealth) of employers correlates with the desperation of employees. By simple supply and demand, a glut in the labor market can cause this desperation as much as the shredding of welfare programs. The more people looking for work, the lower wages can go; or in other words, the more “losers” there are, the better the “winners” do. This is the point where the meaning of merit as a personal virtue becomes muddy, since individual initiative and business acumen gets an entrepreneur much farther the more people are desperate for work.

Another form of merit does not seem to raise this question of power because it is available to both employers and employees: if you work hard at developing a trade or cultivating specialist knowledge, you can get a better job. Skill, here, is merit. It’s possible to make the right choices in education and training to be highly employable by virtue of one’s skill. Arguably, entrepreneurial initiative and business acumen are subsets of this definition of merit, but possessing the merit of a “marketable skill” seems to even the odds between employers and employees. If your skillset is in demand, then employers will need to offer better compensation to retain you. Thus, it is up to the individual to make sure they have made the right choice of vocation.

I can think of only one skill which would absolutely guarantee the security of this path: precognition. If you can learn to see into the future, you can be forewarned of any changes in technology or the labor market which would render a skill obsolete, and retrain accordingly. After all, what is “marketable” or “highly employable” is not even easy to figure out in the present, much less for the future. You can excel at a great number of skills and have a hard time finding employment if no one wants to retain them. It is more correct to place the emphasis on “marketable” than “skill” in this definition of merit, then: skilled employees have the same merit as a well-made car, or alternately, a well-made buggy-whip. No wonder, then, that arguments in this line so often devolve into reverse-prognostication about what someone should have studied in school, or what jobs someone should have taken, easy calls to make given the acuity of hindsight.

In the end, then, this definition does not sidestep the issue of power nearly so well as it originally seems. It implicitly relies on the existence of a “seller’s market” for skills. Customers rarely like the prices this involves: it is never in the interests of employers to have to pay more to retain an employee. The trend, then, is always to either make some skill obsolete through technology, or to make it incredibly common. Merit, here, obliges one to tailor one’s whole life towards making oneself a more desirable product for another’s consumption, and hoping that they still have a taste for you when you’re done. We don’t even need to think about the Red Queen’s treadmill of the employment market to see problems with this. Just think about what it would be like everyone did (presupposing that everyone could) make the “right” vocational choices. How much could, say, bioengineering majors expect to make after graduation if there were ten times as many people in their graduating class with their degree? How easy would it be to find employment? All else being equal, the economic security and prosperity that comes to those who have a skill increases the fewer other people have it. Merit, here, explicitly requires that not everyone make “the right choices,” since the right choices are those few others are making. This makes it hard to justify the rewards of the employable few, since again, the fewer “winners” there are, the greater the prizes. A marketable skill is a rare skill, and rarity requires that few people have such skills.

What is it that we are ultimately trying to justify with these kinds of arguments? Generally, those who forward them focus on the rewards of the victors rather than the suffering of the rest, which is the general concern of those uncomfortable with great wealth disparity. I don’t think that concern for the have-nots necessitates hatred of the haves. I don’t begrudge the prosperity of those who have worked hard, who have mastered a useful skill, who provide a good service, etc. I simply doubt that the appropriate price of failure, in this contest, is abject destitution. If the prosperity of the “winners” is actually based on their being out-numbered by the “losers,” as seems to be the case, then why should we accept that the necessary majority of people who haven’t made the “right choices” should labor longer, earn and afford less, suffer worse health, and worry more about their future? If “the world needs ditch-diggers,” why should a “ditch-digger’s” life be marginal and insecure? What justifies that?

This is part of a new category of shorter posts than I usually publish. I usually feel the need to write longer posts, and this makes writing seem like a daunting task. By creating a new classification of short posts, I can compartmentalize this completely irrational stumbling block and get writing more often!