The January 2008 issue of Theoretical Inquiries in Law contains an article by Richard Epstein entitled "Decentralized Responses to Good Fortune and Bad Luck." The abstract is below, and you can read the PDF here.
Most forms of egalitarian theory impose on government (and through it other people) to redress the inequalities of fortune that result from bad luck. This Article takes issue with the various forms of this large claim, and argues that decentralized forms of assistance are likely in the long run to do better by the very standards by which egalitarians justify their own program. The alleviation of poverty depends in the first instance on increases in wealth that can only come through private innovation and technological advances. These have in fact produced major improvements in overall well-being, with disproportionate advances for the poor. But if one starts with Dworkin’s unsustainable distinction between option and brute luck, or Nussbaum and Sen’s capability theory, then no egalitarian theory can deliver on the promise to level differences in wealth without seriously compromising overall levels of social welfare. By expanding the scope of government regulation, these proposals open the door to selfish political forces whose political clout ensures that ill-conceived programs, such as the Americans with Disabilities Act, frustrate the very goals they hope to achieve. State intervention to redistribute resources should be understood as a last resort for dealing with problems of ill fortune.
The epitome of bad luck is choosing your parents poorly. I have traveled full time for years now in the Third World and no longer believe in the “trickle down” theory impliedly suggested here. What I see is more like an exploitative “suck up” theory at work world-wide, with purchased law and other abuses often aiding such efforts by the well to do. The wealthy take advantage of the poor.
Increasingly sagging Lorenz income and wealth curves throughout the world clearly suggest to me that all countries need to adopt what I call a "national incomes policy," defining the distribution of income in each country by democratic consensus to be implemented by something like Milton Friedman's negative income tax proposal. Income distribution is the undeveloped and failing portion of neoclassical economics and we all need to pull our heads out of the sand and address it.
Progressive and sliding elements that could be built into a national incomes policy should avoid the oft proclaimed work disincentive. One executive I argued with for some time on board his multi million-dollar megayacht about such a policy actually came to concluded that if one were implemented, he and he suspected others would actually work harder, not less, to earn want they wanted.
Regrettably, these concepts are not even seriously on the table for discussion anywhere, although a European economist has recently published a book on the actual and growing income and wealth inequalities in countries of the world. Again, we have our head in the sand. Our life on earth is too brief; we are all simply passing through; and we are all too much in the same boat not to do better in these regards. The gated community, wealth accumulating and hoarding mind set is reeking havoc on the world.
I am glad, however, to see Prof. Epstein partially put this topic on the table and do note that he refers to decentralized efforts to ameliorate the problem. There, I largely agree with him. But my proposal is different and calls for no bureaucratic superstructure and no array of programs.
Posted by: Kimball Corson | February 14, 2008 at 01:36 AM
I'm not sure all forms of state intervention are the same. Some I imagine do dampen economic output. While others I would imagine do not. If the state has a progressive tax structure and takes those tax dollars and then acts as a investment bank with social welfare in mind, how does that necessarily lessen the amount of wealth our economy creates? If we tax the rich and invest that money in schools or, say the next new deal (nationwide automated transportation?), things for which there is unmet demand that the free market isn't capable of addressing, how is Epstein so sure that economic production goes down? I guess it's just assumed in ivory tower classical theory.
Further, what of future generations? While I've read plenty of economics by now, the best economics lessons I ever received were in studying thermodynamics and internal combustion engines. Esptein is concerned with maximizing economic output, and that is fine, but I don't think he is considering economic output over some time interval considereing the limited resources to fuel the economy.
The economy is much like an internal combustion engine. Epstein seems to be arguing that maximizing power output is what is desired as it provides the most work in the least amount of time. He calls for an unregulated ferrari engine of an economy. And while it is true there is more power coming from a ferrari, it'll get us to our destination faster, it will create wealth faster which would probably benefit those in need more now, it certainly is far less efficient than the toyota engine, which is lower power, but which ultimately is far more efficient and produces far more work on the same amount of gas. It might not get us anywhere as fast, but it will certainly take us much much farther on the same amount of gas. It's the differene between measuring work and power. Maximizing power tends to minimize efficiency.
What I guess I'm saying is that Epstein needs to factor in future generations and their suffering and their capabilities as well to his argument. Economists tend to talk about wealth output as the ultimate goal without considereing the efficient use of resources (which they often assume are infinite, and the externalities in the inefficient use of which are just starting to manifest themselves macroscopically). If the poor in this generation are made better by maximized wealth output, it means litte to future generations who may have to pay the price of our ineffciencies (for instance massive environmental disaster, or disease caused by our inefficent creation and consumption of meat).
morever, "selfish political forces" are not a problem inherent in governement regulation, but merely its management and oversight. Attributing corruption and ineffciency to governement regulation per se is a weak (and tired) argument. You want good public school and to get rid of the ridiculous teachers unions? Then give me the money to attract bright kids to go into teaching rather than going to work for Kirkland defending insurance companies.
You want top managers in governemnet? Then pay them as much as they can make in the private sector. Then we'll be comparing apples to apples.
Posted by: LAK | February 14, 2008 at 12:48 PM
Another thing, certain technological advances can ONLY be achieved through government action where cost and risks are too high for any private enterprise to enter the market. No private entity is going to spend the hundreds of billions of dollars it will take to sucessfully create a fusion reactor. Period. None. And fusion is without a doubt the most viable future source of energy for this planet. Certainly not while the status quo use of fossil fuels provides incredible profit for energy companies and where the costs of doing so are conveniently externalized on future generations. There are some projects so risky and big, ALL of us need to bear the risks and costs through the government.
Posted by: LAK | February 14, 2008 at 01:27 PM
We do have some income redistributional forces strongly at work: tax breaks for the wealthy; a war that puts big profits in the hands of stockholders of war material suppliers, themselves often of high incomes and wealthy; reduced inheritance taxes; reduced capital gains taxes, etc. The efforts to redistribute income and derivatively, wealth, are working in the opposite way they should. They and we are concentrating income among the wealthy. We are getting it backasswards.
Just like the prescription for leveling out the business cycle: run surpluses in boom times and deficits during slow or recessionary periods. Again, we have it backasswards. We are mismanaged in the extreme.
It is naive, I think, to believe that optimum resource allocational efficiency should be the sole or exclusive goal of governmental policy. What if the trade-off were a 2% efficiency loss for a massive improvement in the fairness of the U.S. income and opportunity distribution? Would that not be worth it? We are not even discussing these matters.
Also, as LAK and I suggest, look at our government’s public good and service purchases: war in several countries of marginal or questionable benefit vs. actual disinvestment in education and other public service goods and services: the many children left behind program and reduced federal subsidies for college educations, for examples. Again, we are getting it backasswards.
We can still do well, although we make an occasional mistake. We cannot do well, however, by getting too much wrong, as we are. Again, we are badly managed in the extreme by those who purchase law and control governmental policies for the benefit of wealthy interests.
Posted by: Kimball Corson | February 14, 2008 at 10:28 PM
What I was saying when I lost the blog on my new notebook is as follows:
If ever I get around to writing my non-fiction book about how I sued California, Illinois, and Washington, D.C. and got away with it, it would give people hope that it might be worth their time to figure out how the state milches claims against respondents, fails to activate the Federal Poverty Guidelines until April, when it went into effect on January 1, 200X, uses new bills instead of exhausting old bills against one's spend-down, steers everything to the Court of Claims which prolongs the abuse and most of the time exhausts the claimant's money in the process. There are so many ways the state is unfair in its implemenation of its social welfare from foods stamps to medical expenses to the intake and process of human rights claims, and this list is not exhausted.
The poor are screwed by everyone, until they stop relying on everyone to solve their problems. Trust no one is a good motto! The poor don't have the brains to solve these procedural problems and eveyone is taking advantage of this condition. How-to books made simple for the below average person offers new hope. State may change their scams, but they'll do so s l o w l y, like everything else. The state of the law in Illinois is way behind its use of technology, accountability of its system, and draws a "snake eyes" from me in front of a judge, who admits that that is the current state of the law of Illinois. Way behind the times.
The state will not correct its procedural errors, but it will have to pay for them! The federal court can only slap them on the hand for their violations, unless the claimant pleads properly, and around the intentional theories for recovery. The attorney must be inventive to get the state's abuse of office and authority. Some other states who offer a reasonable alternative to Illinois can be the role model for comparison under the Full, Faith and Credit of the United States, the Appropriation Clause, the Executive Clause, and the Separation of Powers, and Interstate Commerce Clause, U. S. Constitution: 42 U.S.C. Section 1983, The 13th, 1st, 4th, 5th, 8th, 10th, and the 14th Amendment of the United States. Did I miss anything?
Posted by: Joan A. Conway | February 17, 2008 at 09:57 PM
well the people who lost money to Bernie Madoff may well get lucky and be bailed out by the government. a lot of other working stiffs with foreclosed homes won't.
Posted by: Delicious Monsters | January 17, 2009 at 03:52 PM