Trapped ?

by John Quiggin on March 8, 2004

Brad de Long picks up my post on opportunities and outcomes (see also this crossposting with further discussion), in which I argued that the achievement of meaningful equality of opportunity in a society with highly unequal outcomes would require extensive government intervention to prevent the development of inherited inequality, and says that I’m falling into Irving Kristol’s trap, which he describes, accurately enough, as

an ideological police action designed to erase the distinction between Arthur Okun and Mao Zedong, and delegitimize the American left.
I agree that many people, particularly critics of social democracy like Kristol ,use the outcome/opportunity distinction in a dishonest way. This is particularly true in the American context, since anyone honestly concerned with the issue would have to begin with the observation that the United States performs just as badly on equality of opportunity (as measured by things like social mobility) as it does on equality of outcome (see the book by Goodin et al, reviewed here for one of many demonstrations of this). So if Kristol were genuinely concerned about equality of opportunity he’d be calling for at least as much intervention as the liberals and progressives he’s criticising.

On the other hand, there is a genuine debate within the social democratic/socialist movement[1] which I was addressing. On the basis of fairly limited knowledge, I identified Blair and Brown as proponents of equality of opportunity and outcomes respectively. In a long comments thread, no-one picked me up on this point, so maybe my judgement on this was accurate. My comments were addressed to the fairly large group of social democrats who genuinely think that, as long as you equalise opportunity, for example by providing good-quality schools for all, it’s not a problem if income inequality increases. To restate my point, that might be true for one generation, but in the second generation the rich parents will be looking to buy a headstart for their less-able children, for example by sending them to private schools where they will be coached in examination skills and equipped with an old school tie. Given highly unequal outcomes in the previous generation, it’s much harder to prevent the inheritance of inequality, and the achievement of equality of opportunity requires more, and more drastic, intervention rather than less.

In the real world, no-one advocates either perfect equality of outcomes or perfect equality of opportunity. My point is that, in the same real world, these two are complements, not substitutes. The more progress you make on equalising outcomes in one generation, the easier it is to equalise opportunities in the next. I don’t expect Irving Kristol to embrace this insight with hosannas, but then it’s a long time since I expected anything positive from Irving Kristol.

fn1. I’ll post more on this distinction soon, I hope.

{ 22 comments }

1

Chirag Kasbekar 03.08.04 at 10:13 am

This is why I differ with people to the left of me. Why this obsession with ‘equality’ (which, of course, no one wants to achieve)?

I favour a substantial social welfare net that guarantees everyone a very decent life and reduces inequality to the extent it comes in the way of everyone achieving this decent life — including in terms of drastically skewing political power.

But, to my mind that doesn’t mean looking forward to some future in which there is some nebulously defined equality of opportunity or equality of outcomes.

2

Chirag Kasbekar 03.08.04 at 11:28 am

Of course, perhaps I should say that I do look forward to greater social mobility, which IMO isn’t the same as equality of opportunity.

After all, even affirmative action schemes don’t necessarily promote equality of opportunity in Rawlsian terms.

3

dsquared 03.08.04 at 11:46 am

Of course, perhaps I should say that I do look forward to greater social mobility, which IMO isn’t the same as equality of opportunity.

Why?

Or to put it another way, what intrinsic good do you see in social mobility whcih is distinct from the good that others see in inequality?

My point of view is that status comparison is a negative-sum game that human beings play with one another, and so there is a gain (in my view, a very substantial gain) available from committing not to play it.

4

Andrew Boucher 03.08.04 at 12:38 pm

“My point is that, in the same real world, these two are complements, not substitutes. The more progress you make on equalising outcomes in one generation, the easier it is to equalise opportunities in the next.”

But this isn’t saying much, is it? If all outcomes were equal, then of course opportunities for the next generation would all be equal as well. I guess I must be missing something…

I guess I just don’t understand where your point gets us (because I don’t understand the point?). Is someone who believes in equality of opportunity but not in equality of results, inconsistent? Deluded? Naive?

5

Chirag Kasbekar 03.08.04 at 2:25 pm

Daniel,

A small part of my reaction is because of an allergy to talk of ‘equality’ of something when equality is not being talked about. But that is obviously a minor point.

I share the left’s concern for distribution — for the kind of reasons I spelt out — badly skewed political power, reduced efficiency, increased disaffection, poverty, etc.

And I also share a dislike of entrenched/durable inequalities that operate similar to caste systems. Social mobility is important for, among others, Hayekian reasons: poor people with bright ideas should be able to try out their ideas, barriers to entry in various socio-econonmic spheres should be lowered, etc.

But I think the ills of wealth concentration can be remedied to a large extent without trying to equalise opportunities.

I have an allergy for equality of anything (for example, even something like education) because I fear about it turning into a _uniformity_ of the bloody thing.

But perhaps you have something that will clear these allergies of mine. ;-)

Let me ask you: I dispute the idea that status comparisons are necessarily negative-sum (esp. given their pervasiveness in everyday life), but what gains from committing to not playing that game are you looking for over and above the kind of considerations I was trying to wave away with my social welfare net?

6

harry 03.08.04 at 2:28 pm

John, I completely missed your original post, so went back to it with pleasure. I agree completely, but I think there’s something misleading about the way you set up the discussion (this is not a criticism, but an explanation, perhaps, of some people talking at cross purposes). In Rawls’s theory the principle of fair eqaulity of opportunity is subordinate to the Liberty Principle. This means that (as most of us think) measures designed to achieve fair equality of opportunity are legitimate only in so far as they do not violate (or render insecure) the basic liberties. My guess is that a lot of disagreement about the legitimate extent of equality of opportunity is explained by people disagreeing about what, precisely, the basic liberties protect in parent/child interactions. Do they protect inheritance? Expensive private schooling?..

Of course, in ideal theory, as it were, it is true that we would want equal rewards, roughly, to make it more difficult for parents to transmit advanatges and disadvantages to their children, which is your point. But in our, non-ideal, world, any measures designed to move us closer to equality of outcome or equality of opportunity are going to require limits on parents doing some things they want for their children. And for people who confuse ‘what I want’ with ‘what I have a liberty-based right to do’ this will seem like a restriction of a basic liberty.

There is a different justification of inequality of outcome, which is that it makes the least advantaged better off. Rawls, interestingly, because he subordinates the difference principle to the principle of fair equality of opportunity, gives very little scope to this justification of inequality (both the prior principles in fact play an egalitarian role in his theory, because the difference principle is an *inequality-licensing* principle). But Rawls doesn’t have much of an argument for giving fair equality of opportunity priority over the difference principle, and in *Justice as Fairness* he even admits this. If we simply saw ‘benefit to the least advantaged’ (understood in terms of income and wealth) as urgent a great deal of inequality of outcome and opportunity could, in principle, be justified. Of course, it would look quite unlike the inequality of opportunity and outcome in our world.
Final thing, though — the metric is crucial here: Rawls’s argument for the difference principle is all couched in terms of justifying inequalities of income and wealth. If Daniel is right about status (which I think he is), and status matters a lot for wellbeing, then maximin of ‘all things considered wellbeing’ would not justify much inequality.

7

Chirag Kasbekar 03.08.04 at 3:07 pm

I must say that wrt education, Harry had some things to say earlier that I found interesting and worth looking into (though I wasn’t convinced). The fact that I haven’t looked into his work yet is more a function of my complete lack of time in the intevening period than a lack of interest.

Will read as soon as I can.

8

Steve Carr 03.08.04 at 6:10 pm

I don’t fully understand the argument here about status. It seems fairly uncontroversial (of course, I would say that) that status comparisons are an ineradicable part of any society, however it’s organized economically. At least there’s no other primate society in which status comparisons are absent — although the importance of such comparisons clearly varies sharply from species to species –and we are most certainly primates. Committing to not playing the status-comparison game sounds nice, and may be possible on an individual level (that is, an individual can consciously decide to overcome his or her hardwired impulses) but on a social level it seems to me roughly impossible (or else it would require re-education of the worst sort).

That doesn’t mean status comparisons have to be framed in economic terms, though, and clearly in a socialist society they would take a different form. The real question, then, is whether there’s something especially nefarious or destructive about status being defined economically. If economic “status” translates into civic or political power, then I think clearly it is destructive. But if it doesn’t, then I think there’s an argument that it’s not a bad thing for society that getting rich confers status, insofar as it provides an incentive for entrepreneurship, hard work, and all those other things that help fuel economic growth.

I am, though, making a distinction here that may not be able to be sustained over time, which is the distinction between earned wealth and inherited wealth. I see little wrong and much right with a society in which the first confers status — assuming, as I have, that status comparisons are inevitable. I see much wrong with a society in which the second (inherited wealth) confers it. Having people get rich is a good thing for any society. Having people be rich isn’t.

9

BF 03.08.04 at 10:42 pm

How valid a comparison is the Netherlands vs the United States?

The analysis in the link elides major differences in history, cultural composition, and obligation. If the United States could take the difference in percent GDP expended on defense (indeed on defense of the Europe and Netherlands) and divert the cash to social welfare, this would amount to 300-400 billion dollars per year. How then might the analysis shift?

Of course, if the United States had maintained a defense establishment which was the proportionate equivalent of the Netherland’s armed forces, the distinction between ‘liberal’, ‘corporatist’ and ‘social democratic’ forms of capitalism would be moot – as the latter two states would likely now be communist.

10

John Quiggin 03.08.04 at 11:03 pm

Prior to the Iraq war, the US was spending about 3.5 per cent of GDP on defense, compared to about 2 per cent for most European countries. The gap is equivalent to about $150 million per year.

If the US cut spending to European levels, and spent the proceeds entirely on the poor, it would certainly make a difference. But the second part is pretty implausible. There were big cuts in defense spending in the 90s and that didn’t make much difference to poverty rates in the US.

11

BF 03.09.04 at 2:01 am

“There were big cuts in defense spending in the 90s and that didn’t make much difference to poverty rates in the US.”

The cuts in defense were not very large. The defense budget languished without inflationary increases, creating many of the effective “cuts”. The apparent cuts were in relation to markedly expanding GDP in the 90’s and all of it did not go to social programs – so one could not expect much of an effect on poverty in a mere decade. The supposition of using ALL the savings for the poor is indeed implausible, but that was your supposition, not mine.

Historically, US defense spending has been 4-6 percent of GDP . The 1990’s saw the greatest flux of immigrants INTO the US since the turn of the 19th century – this would also skew your 1990’s poverty argument.

BTW, why would these millions have chosen US immigration if economic opportunity was indeed greater in the social democratic nations of Western Europe? Just wondering…

The last time the Netherlands worried about national defense was 1940, so let me put the argument this way:

If Western Europe did not have its collective military derriere covered by the United States these last six decades, how much of their social welfare state would they have been able to afford? A corollary issue is whether the United States could or would have developed a more social-democratic policy over this time had it not been the lynch pin of Western defense.

As a US liberal democrat I certainly would have liked to see this occur. And as a US taxpayer, I would be relieved to be unburdened of European defense.

I would posit that the form of capitalism enjoyed by Western Europe, and the US form decried by social democrats, are linked causally – through the accrued benefits and disadvantages conferred by the saving vs the expense of trillions of dollars.

12

Steve Carr 03.09.04 at 4:05 am

The U.S. poverty rate was 15.1% in 1993 and it was 11.3% in 2000. That seems like a significant improvement, though I think it was only connected to the cuts in defense spending insofar as those contributed to the boom of the late 1990s.

13

dsquared 03.09.04 at 7:37 am

Steve, Chirag

Committing to not playing the status-comparison game sounds nice, and may be possible on an individual level (that is, an individual can consciously decide to overcome his or her hardwired impulses) but on a social level it seems to me roughly impossible (or else it would require re-education of the worst sort).

Yeh, but there are degrees, aren’t there? There are some human societies which are much, much more egalitarian than others, and some in which status comparisons are emphasised much more. Just think about it this way; how many of the TV advertisements you see in the US market could be lifted wholesale and used in a campaign in the Netherlands? My perception, which I can support with some extremely tendentious and inconclusive data from mental health and suicide statistics, is that people are happier in societies which do not systematically encourage those competitive urges which are normal to humans.

14

Scott Martens 03.09.04 at 9:11 am

Just think about it this way; how many of the TV advertisements you see in the US market could be lifted wholesale and used in a campaign in the Netherlands?

Of course, the relation holds in the other direction too. Since I started getting Dutch TV, I’ve seen more breasts on display in primetime commericals on Dutch TV than you see late at night on American cable.

I’ve noticed something peculiar moving from Silicon Valley to Belgium. In San Jose, if you asked people to name five billionaires in their area code, they could easily do it. Most Belgians, in constrast, have difficulty naming a single Belgian billionaire (Euro billionaire, not francs). But, for all its repuation as the most taxed state in Europe, Belgium has very low capital gains taxes – something like 5%. It is, in fact, the home to quite a few of Europe’s wealthiest people because it is a good tax haven for someone whose income comes primarily from capital gains.

The thing is, no one’s heard of them. They’re not public figures and people don’t think of them as something either to aspire to or as something being held over their heads. The same goes for the titled nobility. Most Belgians can name more titled British nobility than Belgian nobility. I just asked my office partner, and he says that the Christian Democrat mayor of his town was known as “the Baron” because he was titled. But, he was a professional politican rather than someone who was known for his personal wealth. I remember being told about how the building that housed my department at the usinversity was the Château d’Arenberg and that the Duc d’Arenberg had donated it to the university in the 80’s when his businesses went bankrupt and he ran off to Switzerland. That’s it.

Even if status games are natural behaviour that can never be eliminated, it is certainly clear that America is far more status conscious than the minimum that human behaviour or necessity requires.

15

Steve Carr 03.09.04 at 1:37 pm

Anecdotally, it certainly seems to me that Americans are far more competitive than people in many other societies. (Of course, I also think that’s why the U.S. has been far more innovative than most other societies, too.) But what I was trying to get at in my post was the question of whether the status competition that centers on economics and wealth in the U.S. is present in other countries, but is centered on other matters (politics, fashion, success with the opposite/same sex, what have you). In other words, if Belgians don’t worry about not having as much money as the next guy, do they worry about not having (or doing) something else as much as the next guy? Or are they genuinely more free of that competitive/aspirational push?

If they aren’t, then that raises the question I asked: Is making money a socially unproductive focus for status anxiety? If they are, then Daniel’s argument about mental health and suicide becomes crucial.

16

Scott Martens 03.09.04 at 2:05 pm

Steve – I don’t know. I feel like an anthropologist in New Guinea sometimes. Life amongst the Belgians.

Promotions at work are a bigger deal here than they were for me in the States. But I lived in Silicon Valley, where you could expect to be promoted to your level of incompetence, and if you wanted more money you quit and got a better job. So, my experience of America is probably atypical.

House and apartment sizes are a lot more meaningful here too. Americans with lots of stuff get big houses, Americans with very little stuff get small ones. Status has less to do with it. But then, Belgium is a lot more crowded. Neighbourhood choice, however, is a much bigger deal in the US than here. A townhouse in Manhattan is far higher prestige than a mansion in Omaha. Here, whether you live in the city or in the banlieue has a lot more to do with personal choice than income. I guess that’s the flip side of high population densities.

Belgium has no high prestige universities, so there aren’t very many high prestige high schools. I see no “My kid is on the Honour Roll at Snobby Prep” bumperstickers. I can’t tell people’s class by the way they dress. There are very poor people in Belgium and people do look down on them, but they live mostly in Brussels and Antwerp and are distinguishable by their skin colour. So, this is not some class-free paradise by any means.

Certainly, there are competive elements of life within the broad Belgian middle classs, but they seem less entrenched and more personal than in the States. At most, it seems to be about competing with the Joneses next door, not some relationship to an external hierarchy. I just don’t know.

17

harry 03.09.04 at 2:46 pm

while I agree with Daniel’s basic point, I’m a little sceptical about the relevance of suicide rates. Don’t they vary with how much sunlight people get, and how prevalent guns are in the society? I know Americans commit suicide a lot, but when you have a gun or can easily get one its a bit harder to fail than when all you have are aspirins. I’m sure, too, that I read in the Economist once that Brits have a very high *failed* suicide rate because they believe that poison is an effective method. (Too many Agatha Christie novels, Belle). Wouldn’t attempted suicide rates be a better measure?
I’m not being flippant, but I am, I know, being a bit off-topic…

18

harry 03.09.04 at 2:54 pm

But back on topic, does anyone know whether the absence of universal healthcare explains the surprisingly weak performance of the US economy relative to Goodin’s comparators? Anecdotally I know a number of small businesspeople who claim that workplace based health-insurance creates a barrier to growth, and protects large enterpirses from competition: and I also know lots of workers who seek or retain jobs that would otherwise be unsatisfactory because they need health insurance. I guess the question is; what is the impact of universal health insurance on labor market flexibility? Do economists include this in indices of flexibility?

19

Chirag Kasbekar 03.09.04 at 7:10 pm

Daniel,

First of all, I really don’t want to get into the America v. Europe slugfest. I don’t think we’ve heard the last word on that.

In any case, I still wonder what you’re arguing are the benefits to be garnered from equalising opportunities in some meaningful sense. Is it cultural? Is it greater harmony? Can’t those be had if we had a substantial welfare system that helped reduce inequalities?

While you’re now talking of degrees of competitiveness, you’re still calling for the equalising of opportunities (I presume). Why not ‘adequateness’?

As for Harry’s point about employer-dependent welfare systems, I think it’s a very valid question and one that Rajan and Zingales (Saving Capitalism from the Capitalists) raise in their argument against the high barriers to entry of ‘relationship capitalism’. They argue that it is an important barrier to labour mobility.

20

dsquared 03.10.04 at 9:28 am

Belgium has no high prestige universities

Hmmmm … I’d say that Leuven/UCL is head and shoulders above any other Belgian university.

In any case, I still wonder what you’re arguing are the benefits to be garnered from equalising opportunities in some meaningful sense. Is it cultural? Is it greater harmony? Can’t those be had if we had a substantial welfare system that helped reduce inequalities?

It’s a psychological sense of “well-being”. Something pretty close to what’s measured by softer mental health indicators.

While you’re now talking of degrees of competitiveness, you’re still calling for the equalising of opportunities (I presume).

Speaking for myself, nope. I’m an old-fashioned egalitarian. I’m in favour of (more) equality of outcomes (than we have today).

21

Chirag Kasbekar 03.11.04 at 9:16 pm

It’s a psychological sense of “well-being”. Something pretty close to what’s measured by softer mental health indicators.

Do you have cites on this? For one, I suspect this is a very slippery beast.

Speaking for myself, nope. I’m an old-fashioned egalitarian. I’m in favour of (more) equality of outcomes (than we have today).

Like I said, I would prefer, like Sen seems to, to say that I’d (you’d) like less inequality of outcomes than there is now, rather than to talk of ‘equality’ of this and that. But then that’s probably just semantic cavilling.

Actually, to the extent I think distribution is important (and I think it is), I prefer to look at the distribution of outcomes too. I tend to think (substantive) equality of opportunity is probably more demanding.

I wonder if that is John’s point as well.

22

Chirag Kasbekar 03.12.04 at 6:05 am

Also, my point was that an obsessive focus on eliminating ‘status comparisons’ and trying to achieve an equality of opportunity (that is, an equality of specific things) — rather than focusing more on improving things, I fear, would inflict harm on independence and innovation.

For independence and innovation, you need to allow the possiblity of exit to very some significant degree. But once you do that, how can you have equality of opportunity in any meaningful sense?

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