July 30, 2004

Equality of Opportunity

Matthew Yglesias and Max Sawicky are masticating the concept of equality of opportunity:

Matthew Yglesias: Self-Made Men: Lately Max Sawicky and I have been disagreeing a lot, but we find common ground in the insight that equality of opportunity and the cult of the self-made man is an utter fraud both empirically and morally. Meritocracy is an appalling ideal. Being born with the inclination and ability to become financially successful is no more morally praiseworthy than being born with the inclination and ability to inherit a large fortune. It's chance all the way down either way. There are reasons to structure incentives so as to encourage a certain amount of hard work so as to increase overall prosperity, but this is a question of pragmatics not desert, and only worth doing if overall prosperity is being managed so as to cause widespread prosperity.

But while Max regards it as a dangerous fraud, I think it's a useful one. The key is that it's also empirically fraudulent. All good leftists ought to read Robert Nozick's attack from the right on equality of opportunity where he points out that this particular slope is a slippery one indeed. Once you realize that the poor are on unequal footing not only because poor people tend to attend ill-funded schools but also because poverty per se is a cause of ill-health and has deleterious consequences on emotional and cognitive development then equality of opportunity becomes a reason to pursue a measure of equality of outcome. What measure? Well, it all just depends how equal you want the opportunities to be. True equality of opportunity will require true equality of outcome. The latter is probably a bad idea and so is the former, but we could stand to go a good way further down the path than we've gone so far, so we may as well set our compasses to reach it for now. Rhetorically, framing all this as a question of opportunities is a useful way of selling the agenda to the public. So don't denounce equality of opportunity, just consistently note how much more needs to be done in terms of substantive equality in order to achieve it.


Max Sawicky: THE SELF-MADE MAN, CONT'D: Without going into a philosophical reel, not my cup of tea, I do put moral weight on effort, initiative, industriousness, and sacrifice of leisure -- actions and faculties that spring from voluntary impulses. In this vein, I have no problem with material reward. I also think there is a moral case for limiting the downside consequences of failure and misfortune. Go ahead and call me a communist. I'm used to it.

There seems to be a prevailing view that success is a bit of a lottery, and that's o.k. Good luck ought not to be penalized since everyone has a shot at it. One sort of luck is the accident of birth to wealthy parents. The implied entitlement also seems to command a perverse degree of public support. Part of this is the interest in vicarious enjoyment of another's riches. I think of Reverend Ike or Donald Trump. Don't tear him down, we want to take pleasure in his conspicuous consumption. If these are American values, boy do they suck.

I think that both Matt and I believe that Max's category of "voluntary impulses" needs to be deconstructed. There are instrumental reasons for praising and promoting and rewarding actions and states of mind that have social utility. But I am not sure that we want to say that the industrious and capable "deserve" to be richer and happier than the rest of us.

Jim Mirrlees covered this in one of the most entertaining public finance lectures I ever listened to: one in which society attained the utilitarian optimum by imposing extremely heavy lump-sum taxes on the capable and industrious that they had to work like dogs to pay off, while everybody else lived the leisurely life of Reilly. For any reasonable social welfare function this tax-and-subsidize scheme was better than a more "traditional" one in which the industrious and capable lived well and the others lived less well.

I think that both Max and I believe that Matt's affection for the idea of "equality of opportunity" comes from a failure to understand it in its proper historical context. What "equality of opportunity" means is not that opportunities should be equal, but rather that opportunities should not be constrained by characteristics external to the human person. Prohibiting you from getting a high government job because you don't have enough quarterings of nobility, or keeping you from getting into the good college because you aren't of the right religion--those are things that violate the principle of equality of opportunity. Actually making people's opportunities as of birth equal--that has never been on the radar screen>,/p> Posted by DeLong at July 30, 2004 02:28 PM | TrackBack | | Other weblogs commenting on this post

Comments

On the topic of luck and equality of opportunity, I recommend Matt Miller's "Two Percent Solution."

The book first came to my attention with Barack Obama mentioned it during one of the primary debates.

It is a good book, and you can but it used for a hell of a lot less than Obama's book.

Posted by: So-Called "Austin Mayor" on July 30, 2004 02:49 PM

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I'm not sure I fully followed the gist of Brad's post, but it seems clear to me that hard work and good thinking should be rewarded. I just want to live in a world where those people who achieve wealth through accidents of birth or luck or whatever will realize when enough is enough, and be happy to live at a certain level, and devote excess wealth to improving the overall human condition. Probably a silly thing to wish for, I know.

Posted by: Scott on July 30, 2004 03:16 PM

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"I am not sure that we want to say that the industrious and capable "deserve" to be richer and happier than the rest of us."

"Happier" I don't know about, but why on Earth shouldn't we wish to say that the industrious and capable deserve (without scare quotes) to be richer? As for the following:

"society attained the utilitarian optimum by imposing extremely heavy lump-sum taxes on the capable and industrious that they had to work like dogs to pay off, while everybody else lived the leisurely life of Reilly"

That just strikes me as a moral abomination. I fail to see how this sort of reasoning is any different from the old "cut up a few for spare organs in order to maximize the happiness of the many" thinking of classical utilitarianism.

Posted by: Abiola Lapite on July 30, 2004 03:32 PM

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"I just want to live in a world where those people who achieve wealth through accidents of birth or luck or whatever will realize when enough is enough, and be happy to live at a certain level, and devote excess wealth to improving the overall human condition"

Scott,

If by some magical means you were ever to get your way, not just those few individuals but you and everyone else would feel the impact in terms of a *severe* drop in standard of living.

It's obvious from what I'm reading here, not just from you, but from Brad DeLong, Max Sawicky and Matthew Yglesias, that the fire of entrapreneurial ambition is alien to all of you. Do you all really imagine that people will be willing to sacrifice the best years of their lives attempting to realize a vision, only to surrender the great bulk of their gains to the state when (or if) they do succeed, solely in order to "maximize the welfare" of the less enterprising, the risk averse and the unimaginative? Do you ever ask yourselves why the likes of Bill Gates, Steve Jobs, Pierre Omidyar, Sergei Brin and Larry Page come from the US and not from the glorious welfare states of Europe? You think all those Silicon Valley types who made this very internet you're using cheap, ubiquitous and easy to use spent weekends on end slaving away in their cubicles so they could spend their lives climbing up middle-management in IBM? Of course not: they did it to get rich, and more power to them!


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Posted by: Abiola Lapite on July 30, 2004 03:43 PM

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I think the problem is identifying (not defining)what exactly is external to the individual. If one can say that nobility is external, when it at one time clearly effected one's education, negotiating skills, and political and moral indepedence, then one might say that any aspect of society is accidental in some fundamental sense. If any form of achievement has any effect on future knowledge or capability which in turn informs the basis of future achievements, what achievement is actually, in a moral or even very wide "value" sense, achievement and not accident? The problem is that there is no benchmark of common humanity that has any objective status, can be measured in any sense. You have to have some sort of objective basis for the determination, or you have to agree on some absolute values, which is diffcult for our society in that we generally hold the individual to be the determiner of value. I mean, I think the problem, while most definitely intellectual, reaches its height of difficulty due to its cultural character.

Economics, with its methodolgy, is probably closest to finding an intellectual solution to this problem by making all values, other than those which support its excercise as a science, express themselves in consumption (as opposed to judgement). Personal judgements are either consumption, or are filtered through economic theory itself by having to appeal to it for legitimacy, to give the judgements an objective character. And the excrcise of judgement in the practice or defense of economics is more methodological than philosophical. Basically, we get back to models of rationality and their expression in society, where the two are basically mirrors of each other. The fundamental problem is how to deal with values at all.

Posted by: William Stafford on July 30, 2004 03:56 PM

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Is it really too much too ask that those who have close to no clue about what Brad is writing about pass on the opportunity to post some irrelevant pieces of garbage? >:-(

Abiola, do you really believe the concept of incentive is alien to economists? Do you have any clue about what a lump-sum tax is? Any idea about what kind of benchmark purposes economists have invented this concept for? There comes a point when feelings of intellectual superiority become a pretty good indicator of intellectual inadequacy (just to remain polite...)

Posted by: Jean-Philippe Stijns on July 30, 2004 03:58 PM

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"There comes a point when feelings of intellectual superiority become a pretty good indicator of intellectual inadequacy (just to remain polite...)"

Yes, your feelings of intellectual superiority are very much unwarranted. I have absolutely *nothing* to learn from the likes of you about economics, your condescension notwithstanding. It's nice to know you've opened an undergraduate textbook or two, but that in itself does *not* make you Robert J. Samuelson, believe it or not.


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Posted by: Abiola Lapite on July 30, 2004 04:17 PM

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Abiola, you are wrong about the entreprenurial spirit.

Many of the people who sacrificed years of their lives for the internet etc did it without a whole lot of thought about residual income. A whole lot of people just get so absorbed in an idea that they're willing to follow it anywhere. It's only an important minority of them that focus on making sure they're the ones who get the monetary rewards. In my experience it's even a minority that focus a whole lot of attention on making sure they get the recognition.

Like, Edison had put a lot of his employees' time into a phonograph and it just wasn't working, so he dropped it. Then he went on vacation. When he got back some of his people had a working phonograph. Edison made a lot of money off it, and I hear he gave the guys responsible some moderate bonuses.

I've known a number of people who did great technical things that made other people a lot of money. I've known only a few of them who made a lot of money themselves. Here's the story one of them told me about how he did it:

He had a partner who was going to handle the finance and marketing while he did the creation. He was working hard every day at the little office his partner had set up for him. Then one day he found out that his partner was having sex with his fiancee during the day while he was working. Also he'd sold their corporation's patents and the corporation was in debt to its gills.

The guy was angry. He dumped the fiancee and the partner. Then he got a new inspiration and worked very hard. He did the finance and marketing himself, with expert advice. He made enough money to pay off the old corporation's debts and his personal debts, and then he kept making money. A large fraction of the 1200 baud modems in the world contained his parts. He attributed his financial success to his anger.

This has been true of each of the (small sample) rich entrepreneurs I've known. They were all habitually angry people. It isn't enough to be enterprising and risk-taking and imaginative. To get financial success as an entrepreneur (as opposed to an investor or a salesman or a scam artist) you must be angry.

Posted by: J Thomas on July 30, 2004 04:27 PM

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Abiola,
I agree, in general with your praise for the ambitious among us. Though I don't think calling those who lack that ambition, "risk averse and unimaginative" is very constructive. In fact I agree with Brad. There should be policies in place to help mitigate the failures and misfortunes that can happen even to those with the "fire".

Posted by: Dick Miller on July 30, 2004 04:27 PM

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Brad writes: What "equality of opportunity" means is not that opportunities should be equal, but rather that opportunities should not be constrained by characteristics external to the human person.

Such as, for example, wealth.

Posted by: a on July 30, 2004 05:01 PM

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"Abiola, you are wrong about the entreprenurial spirit."

How would you know? Have you ever tried to be an entrepreneur yourself? Ever risked everything you had to turn an idea into a real product or service? Do you know what it's like to abandon a career path on which you know you're sure to get rich, even if fairly slowly, for one in which only God knows what the future holds?

I've done all of the above, and I've been around many others who did - yes, during the same Internet era we're talking about - so I think I can speak with some weight of experience behind me on this matter. I'll tell you straight out that I didn't put my entire life's savings and career viability on the line simply so I could be shorn to realize someone else's social-democratic vision of what ought to be, and if I knew that those who actually held the reins of power viewed my efforts in the negative light Messrs. Sawicky and Yglesias seem to perceive it in, I and most of the other strivers I knew sure as hell wouldn't have bothered to try.

The view that financially ambitious people are somehow morally reprehensible individuals, to be tolerated simply for their utility as sources of funding for government programs, is one I find incredibly disgusting. Yes, luck does have something to do with who succeeds and who doesn't, as it does with everything else in the world, but that is no reason to state that those who actually strive to attain the goals they set themselves reach where they do purely or even mostly through luck - as the old saying goes, "The harder you work, the luckier you get." The notion that luck is all has an obvious appeal to those who believe in lessening "inequality" by soaking the rich, but that fatalistic message would prove disastrous to even the poor they claim to seek to help, were it ever to be universally bought into. Americans ought to be *congratulated* for admiring the successful instead of tearing them down like many Europeans prefer to do.


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Posted by: Abiola Lapite on July 30, 2004 05:42 PM

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"I do put moral weight on effort, initiative, industriousness, and sacrifice of leisure -- actions and faculties that spring from voluntary impulses. In this vein, I have no problem with material reward." ---Max Sawicky---

What moral weight should be put on those less intellectually fortunate who work two jobs just to keep their heads above water (demonstrating effort, industriousness and sacrifice of leisure) and for whom material reward will be forever low and financial success forever out of reach regardless of initiative?

And what responsibility do successful entrepeneurs (more intellectually fortunate) have to share some of their riches to better the lives of those who could never realize that possibility due to the intellectual restrictions placed upon them at birth?

Posted by: Dubblblind on July 30, 2004 07:55 PM

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Abiola> You think all those Silicon Valley types who made this very internet you're using cheap, ubiquitous and easy to use spent weekends on end slaving away in their cubicles so they could spend their lives climbing up middle-management in IBM? Of course not: they did it to get rich, and more power to them!

Actually, I *am* one of those people. And I certainly didn't do it to get rich, and nobody else I know who actually did the cubicle time did it to get rich. And no, we're not rich. We're middle-class working people.

You should meet some of them sometime. You might like them. (And in the process, you might discover why we keep working to make it cheaper, more ubiquitous and easy to use. Hint: it isn't because we expect to get rich from it.)

Posted by: s9 on July 30, 2004 08:48 PM

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I am an inventor. I'm not doing it for the money for myself, and I'm damn sure not doing it for the money for my boss, if I had one.
I don't tax poor people on the time they spend watching TV so why should they tax me on the time I spend working on my inventions? They do what they want to do and I do what I want to do. Complaining that I don't need to have all that money when the poor don't have any is completely wrong. That's like me complaining about all the leisure time I don't have because the poor people are hogging it. If I want goof off time all I have to do is take it. If you want money, all you have to do is work harder, learn more, find out what your manager's manager wants in a manager and go do that.
It's not like you can't work your way 99% of the way up even if you are black and a women. Sure, the top jobs are reserved for white males, but so what? You can still have a decent life even at only middle class income and that isn't hard to do in this country.
Now third world countries have a different problem. In those countries if you work harder you get your money stolen by the government of your village, or appropriated by your relatives, or there just isn't an opportunity to make money at all. It's not like that here.
Granted, if I ever do get rich I'm dumping the money on charity, but that's only because I can't reasonably spend it on myself. If I could, I would. And that charity is going to people who don't have the opportunities that I had, not those who pissed them away.
But how much Pepsi can you drink? How big a house can you own before you spend all your time worrying about the servants? What would I do with a 300 foot yacht? Maybe a 300 foot blimp would be nice, cruising over the landscape...
Nah, too much work setting up a blimp company.

Posted by: walter willis on July 31, 2004 01:08 AM

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Actually, J-P Stijns, could you explicate, for those of us who are insufficiently pedantic or lacking in access to formal academic instruction in economics, what the "lump sum" conception amounts to?

Posted by: john c. halasz on July 31, 2004 04:23 AM

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Abiola, I get the strong impression you read only the first line of my post.

I'll say that yes, I've put everything I had into projects without having any clear plan for getting rich from them, and sure enough I didn't get rich.

I've known a lot of people who did innovative technology and almost all of them were more like me than like you. And they didn't get rich either.

It takes a special person to go beyond the project itsel to making sure he's the one who gets rich from it. All the ones I've known like that were angry. The cause they attributed the anger to varied. They tend to get angry about the government taking things from them just like they get angry about inocompetent employees and fraudulent suppliers and thieving distributors and fickle customers etc.

Posted by: J Thomas on July 31, 2004 09:19 AM

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My experience of self made rich people (I've known a few) is that the qualities that make you rich are orthoganal to those which improve the world - particularly so for the mega-rich. The few exceptions I have known, who did became rich as a by product of pursuing what they loved - probably wouldn't have minded giving up a lot of the money in taxes. The money was never really the point to them. The people we should praise in Sillicon Valley are not the Bill Gates and Larry Elliots - but the engineers who made things like UNIX, TCP stacks and the like. And few of them ended up rich - though others did on the back of their work.

Posted by: Cian on July 31, 2004 09:52 AM

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As usual with Prof. Delong, he seems to forget the fact that the "internal" characteristics are often inherited or dependent on family (wealth, education, etc.) and is that fact precisely which makes "external" characteristics useful substitutes for evaluation. Nobility or religion, which Prof. Delong seems to despise were in effect, excellent indicators of education, social class and wealth. What Prof. Delong seems to advocate is simply to forbid legal discrimination. A nice thought, but I doubt that's all there is to "equality of opportunity".

Posted by: Carlos on July 31, 2004 04:18 PM

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Prof. DeLong in other threads as well it seems, keeps approaching, from various aspects, the theme: Market Transactions VS. Coasian Institutions (individuals, firms, and government): why they need each other, what their changing boundaries are, and how to manage each side’s types of failure.

Posted by: Lee A. on July 31, 2004 08:12 PM

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