24 May 2009

More on Rawls and Justice

In response to this post, JW writes:
Your post on equality and John Rawls disturbed me.

Your usual well researched cause and effect arguments were taken over by populist rhetoric. I’ve forgotten much of what I once knew about Rawls’ philosophy (so I assume I found parts of his philosophy which were not useful or did not survive empirical scrutiny).

My observations are that countries that strive to distribute wealth and material well being most evenly are the countries that have the lowest standards of living and generally the lowest life expectancies. Consider East Germany compared to West Germany, or North Korea compared to South Korea as well designed macro economics experiments.

How did Russia, China and India fall so far behind the United States and Western Europe during the second half of the 20th century since those countries so favored equality? How has Latin America with its enduring populist themes lost so much of its comparative standard of living since World War I?

You mention health outcomes and life expectancy relative to income, but in citing the increasing gap you do not mention whether the gap widened because life expectancy dropped for the poorest 10%, or simply rose less. As a trained economist, you must also know that correlation does not prove causation.

On the other hand, I do understand that people are naturally envious, that relative position is more important to happiness than absolute position, and that societies with very large differences in standards of living between their best off and worst off are less stable than those with smaller differences. (But I do not know any society with a very equal distribution that was stable or that advanced.
This topic is complicated, but it comes up all the time -- and especially in water.

Let me make a few observations:
  • Equal opportunity creates better incentives than equal outcomes. Remember Vonnegut's brilliant "Harrison Bergeron"?
  • With water (a good "owned" by the public), I advocate "some for free" -- recognizing the human right -- and "pay for more" -- recognizing the importance of price rationing to highest and best use.
  • It's well-established that "socialist" countries in Europe are better at reducing inequality [PDF] and that equality is associated with higher life expectancy -- a basic measure of successful social programs.
  • The biggest problem with the command and control systems (e.g., USSR, Cuba, Iran, etc.) is the way that they stifle innovation and economic growth by stepping on entrepreneurs. The prescription, therefore, is to leave business and economics to the competitive sphere and then tax some of the resulting profits/wealth -- for use in universal safety net programs. The Europeans are current champions in this category.
  • The causal measurement of "gaps" requires structural econometric models, which are basically impossible to construct for such complex phenomena. With the alternative (reduced form models), we can measure correlations (but NOT causation). All we are left with, then, is theory, and I find if very plausible that gaps in outcomes can be explained by either the poor falling behind or rising less quickly. I am not sure about whether either outcome is just (in the sense that a politician would say "heck of a job, Brownie!"), but I do know that uninsured people are scared people, and that their fear does not serve our country.
  • Where do people do better than their parents? The US or Canada? Canada! [PDF]
What do you think? Bottom Line: A government of/by/for the people should provide the means to a minimum level of services (health, water, food, shelter) without killing the productive juices that generate the income (taxes) that pay for those services. (Note that I did NOT say the government should provide the service!) Our government is not doing very well on that.


WaterSource/WaterBank said...

Please explain your concept of "some (water) for free" in more detail.

In order to deliver any water,

Sources must be purchased/appropriated, diverted/stored, and/or wells dug, infrastructure installed and treatment/inspection/accounting accomplished. Millions of dollars are often required to deliver even the first drop from any water supply.

If I understand you correctly, you want everyone to receive the benefits of these expensive endeavors for FREE, provided they only want enough for their basic needs ... ?

The reason I ask is that many would like to expand your concept to basic food, shelter, education, & health care ... all for FREE.

Do you invision the word "basic" changing from time to time as the voters want more and more "basic" water/necessities for FREE ?

WaterSource waterrdw@yahoo.com Retired Water Rights Analyst

David Zetland said...

@ Ray -- some for free acknowledges water as a human right, water as property of the public and water as an emotional good. The other goods are not like that, and -- yes -- the basic provision would be subsidized by heavier users.

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