Luck and Desert
Some people are mildly disappointed at the grocery store when they can’t find quite the perfect olive for their martinis (um, yeah, that’s me). Others starve to death at age five. E.D. writes below that “The world is a craps table.”
It seems to me the whole discussion of wealth, poverty, and luck is misconceived, and this is unfortunate, because it’s a very important discussion to get right.
Now, virtually nothing you have is deserved by its being a product of your pure, unaided efforts. Anyone who tells you otherwise is delusional. You almost certainly didn’t grow your own coffee, fry your own donuts, or sew your own shirt from cotton you picked and spun and wove yourself. You sure as hell didn’t make all the components of the device you’re reading this on. Even the things that you do make for yourself aren’t purely your own, because you didn’t invent the language, the numbers, the tools, and all the other prerequisites. Short of pooping and peeing, there’s not a lot that’s merely your own.
So then is everything you have undeserved — in perhaps the same sense that a burglar doesn’t deserve my credit card? Should we feel guilty about being so far removed from subsistence? Are we all thieves?
It seems obvious to me anyway that there are two very different things that go by the name of “desert.” If it were in my power, I wouldn’t even let a burglar starve to death, because I don’t think anyone deserves starvation. But I wouldn’t let him keep my credit card, either. There’s a world of difference between desert as measure-of-merit and desert as came-by-it-honestly.
We need these two categories — measure-of-merit and came-by-it-honestly. But we need other categories, too. Luck of birth is certainly one of them.
But is wealth merely luck of birth? Does it rain down like manna from heaven, created only by God (if even by Him)? I find this assertion almost offensive, because we know perfectly well how societies get wealthy. To say that the world is a craps table is to exonerate every kleptocracy in the world: Guess what? It’s all luck!
It’s to tell the starving — oh well, sorry, better luck next life.
The world’s winners are the beneficiaries of a highly developed system of labor specialization, comparative advantage, and gains from trade. Working alone, I probably couldn’t manage even a Stone Age level of subsistence. I certainly couldn’t enjoy a fine martini or a cigar after dinner. Nor could any of us. Each of these is a specialized product, to say nothing of the dinner itself, and each requires an expertise to make.
And that expertise all by itself? It’s also useless. It only becomes valuable when the people who have one form of expertise are able to find people who have other forms of expertise and trade with them for what they’re good at. And this only happens under certain types of laws and social institutions. Get those laws and institutions even approximately right, and people within that society will generally have more wealth — of the came-by-it-honestly type (not of the mark-of-merit type, because none of us is able to replicate everything in society ourselves!). However you look at it, though, luck has nothing to do with it.
Now, it is not — I repeat, not — fair that only some people benefit from decent laws and institutions to the degree that we in the developed world do. But the system of gains from trade is an understandable and very replicable setup, and there is absolutely no reason why it can’t be extended. This should be our project: Don’t worry about luck. Just change the payoff schedule.
One final digression: At some point shortly after the realization of how important the laws are, there is a strong tendency for the legislator to get an inflated sense of his own self-worth. From the importance of laws and institutions in producing a society’s wealth, it of course follows that those who maintain the laws and institutions are entitled to absolutely everything beyond the bare subsistence that we all might have produced if we were raised by wolves and lived alone. Wealth is created by the law, the argument goes, and it is therefore merely a permission, one that the law may revoke it at any time.
What this line of reasoning forgets, of course, is that legislators who behave this way aren’t providing the sort of institutions that create wealth. They are charging for a service that they are only pretending to offer.