Inequality and Human Flourishing

Note: This post is part of our League Symposium on inequality. You can read the introductory post for the Symposium here. To see a list of all posts in the Symposium so far, click here.

By Snarky McSnarksnark

Let’s say, straight off, that the word “inequality” is perhaps not the most useful term to use in this series of discussions, because it is so brittle.   Two things are either “equal,” or they are not.   Our experience tells us that humans are not remotely “equal,” in circumstances, income, height, or wit, or a thousand other measures.     So, to re-center the discussion a little, let’s stipulate that what we are actually talking about are severe disparities in power and material circumstance.

So what is the harm in such disparity?    It seems, from the discussions so far that the libertarian response is: “nothing.”   It does not harm me that my neighbor is rich:  I am made no worse off.   It is my contention that this is dead wrong, and is contrary to essential human nature.    The ideologies of capitalism (and libertarianism) embraces disparity, because they understand it as the engine of our economics and culture—the drive to better oneself and one’s material circumstances.

Mankind evolved for millions of years as an essentially tribal creature; only in the last twenty thousand years or so have we lived in “civilizations,” and only in the last five thousand years or so have we lived in nations.   Our bodies and our minds are adapted to the circumstances and scale of tribal living—social and cultural rules work only to the degree that they can bend natural human nature toward the technologies, social conventions, and scope of modern societies.

The emerging fields of evolutionary and moral psychology underline the degree to which we are tribal under the skin.   We are deeply social creatures, and notions of morality, reciprocity, and happiness are inexorably bound to the manner and quality of social exchange in our lives.   And we find from ethnographic and anthropological study that tribal societies are almost universally highly egalitarian.  Resources are shared, first with the family, and then with the tribe.   Tribal alphas do get more food, have more sex, but only a bit more.   Disparities of two to one are almost unheard of.

In modern societies, though, the degree of disparity can grow much, much larger, through the abstract mechanisms of capitalism.   The disparity in assets between a median family and Bill Gates is about one million to one ($77,000 vs $72 Billion).   The rich and the poor live very differently, with different sets of choices, and options, and possible outcomes.

Is this so bad?   The material circumstances of a poor person today are better in almost every way that a middle class person from the 1920s.   In a number of the these postings, the libertarian response seems to be an unqualified “no.”   The pie is larger, everyone’s objective material circumstances are better.   But is that actually the  case?   What do we want from society?

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What are the core principles and objectives of a “good” society?  I’ll go ahead and posit that the primary marker of a good society and healthy culture is that they maximize human flourishing.   By human flourishing, I mean creating social arrangements and mores that nurture the greatest degree of total human health, happiness, achievement and growth.   And there’s not much that is more corrosive to human flourishing than gross disparities of wealth and power.

Part of what has always made America culturally distinctive has been its social (as distinct from financial) egalitarianism—this has been noted from Toquesville onward.  And one of the formative experiences of the “greatest generation” was their military service in WWII, in which rich and poor, Northerner and Southerner, were all thrown into the same soup.   One of the defining characteristics of American culture has been its relative classlessness, particularly compared to the European societies from which it sprung.

But that is less and less the case, today.   The rich and the poor live in different universes.   They attend different schools, shop at different stores, live in different communities, and live very different lives.   As technology and culture fractionate our culture, the things we share—the things which build community are becoming vanishingly small.   Our mutual empathy is diminishing, and we are less and less bound together.

Disparities in wealth and power contribute to poorer physical and psychological health among the less fortunate.   Libertarian philosophy posits the “economic man,” a rational creature who maximizes his own welfare with his very decision.   While this model of behavior may be analytically convenient for economic modeling or game theory, actual humans are vastly more complicated, contradictory, and unconscious.  We spend a very large portion of our income on social signifiers, and things we know to be objectively bad for us (fast food, cigarettes, gambling, logos).

It seems that one of hallmarks of conservative (and much Libertarian) thought, is to equate the functioning of a market economy with a moral order.   Libertarians tend to value the market because it maximizes “liberty” (i.e. free exchange), which they hold as the highest political good.   Conservatives, on the other hand, seem to instinctively equate prosperity with moral karma:   that money comes to those who are more virtuous, hard-working, and self-denying.   In my world view, both of these views are not so much incorrect as beside the point.   I value liberty to the degree that it is instrumental towards human flourishing;  and I recognize that some aspects of “good character” has impact on material prosperity, but consider it to be very far from a cause-and-effect relationship.

So am I advocating massive transfer payments from rich to poor?   No, although I do support the notion of a social safety net.   But I do support a regime in which egalitarianism and the promotion of widespread opportunity are primary objectives of public policy.   FDR quite consciously promoted widespread unionization as a counterweight to corporate economic power, and the result (of that, and other, policies) was fifty years of economic growth in which prosperity was broadly shared.    Regulation of monopolies helped diminish predatory economic exploitation; and workplace and environmental safety regulation helped establish a moral regime in which social rights were not a function only of leverage and economic position.

The virtue of a market economy is that it is dynamic, adaptive; and the most efficient known mechanism for allocating economic resources.   To the degree that these are social goods, it has a moral component.   But those of us who work in the corporate world know that businesses are pretty much indifferent to the social good or ills that they do:   the market is an instrument, not a philosophy.   And to the degree that that instrument achieves moral objectives, and enhances human happiness, it is a social good.

A neoliberal movement arose in the late 60s and early 70s in response to the kind of heavy-handed, rigid regulation promulgated by federal bureaucracies.   I remember when I took my first upper-division policy analysis course in college, the professor gave us each a 12-page or so document that described the OSHA regulations for ladders.   The regulations specified what material they could be made from, how thick the metal must be, what kinds of corrugation the rungs should have, the minimum and maximum allowable distance between rungs, the kinds of welds that should be used.   Compliance was not only difficult, but discouraged innovation, and required teams of lawyers to determine adequate compliance.   The neoliberals looked at all of the perverse outcomes this kind of regulation could create, and suggested working more indirectly, with incentives.   What if, they proposed, you simply fined the manufacturer $500 for each workplace accident that involving a ladder:  compliance would be easier, manufacturers would be better incented to improve safety, and innovation would be promoted instead of deterred.

Ultimately, the neoliberal revolution never came to fruition;  it was beat out historically by the Reagan revolution, and the doctrine of utter deregulation.   Although both the Carter and Clinton administrations promoted some neoliberal policies (e.g. airline deregulation, drug decriminalization, workfare programs), we have never (yet) seen an era in which “light-touch” economic regulation were the norm.   As the fields of evolutionary psychology and behavioral psychology have virtually come into being in the last 40 years, I think we have a much enhanced toolset for creating regulatory approaches that align individual and societal interests.

There is much in the way of public policy that can be done, without massive redistribution, to encourage a more egalitarian distribution of societal resources:

Market promotion:  using tax policy and economic subsidy to encourage substantive competition in different economic sectors.

Promotion of business formation and entrepeneurship

• Business startup assistance (a ‘la SBA)
• Simplified regulatory compliance
• More straightforward liability laws
• Size taxes
• Nationalized health care
• Large estate taxation

Consumer protection

• Regulate predatory business practices
• Incent financially independent rating agencies and boards

Approach

• Structure incentives rather than outright coercion
• Incent outcomes rather than methods
• Make compliance simple, easy and rational,  to the greatest possible extent
• Isolate regulators from financial interests
• Progressive taxes, progressive assistance
• Focus on creating opportunity more than determining outcomes
• Limit the political power of non-human entities.  (Corporations are not people my friend!)

With a policy focus that made broadly-based prosperity a primary goal, the gross disparities we see between the rich and poor (or, the rich and the middle class) can be mitigated without engaging in redistributive programs that are unfair, inefficient, and undermine the moral basis of the economic system.   My recollection is that, before the Reagan era, wealth that came from doing good was admired.    Afterwards, wealth alone was admired.    If a flatter society is a cultural goal, we can achieve it with a minimum of coercion.