Economic Inequality: opportunity vs outcomes

Our last posting -- extensively  shared by thousands -- offered long, verbatim quotations from epic science fiction author Robert A. Heinlein, revealing his amazing prophecy of an America falling into perilous failure mode.  

Now let's back off from our immediate crisis and try some perspective.

== The Equality Problem ==

This article - Is Inequality Inevitable? — asks a fair enough question, whose answer is “Sure, inequality is inevitable. So?” 

That don’t mean we can't always make things better.

Pascal-Emmanuel Gobry starts with studies showing that the children of elites have always stood a better chance of becoming elite, themselves, and that efforts to equalize outcomes by force - such as Maoist cultural revolution - always fail. Indeed, in Europe, the same surnames have been elite for 400 years.

True enough.  Only then M. Gagny calls all liberal efforts at mitigation futile and useless -- an assertion that amounts to stark-jibbering toilet raving.

One refutation is to point out the staggering amounts of cheating and repression that inherited oligarchies and other elites have engaged in, across all eras, to ensure advantages for their offspring. Nearly all of recorded human history reveals the lengths that lords and masters went to, using law and religion and sheer economic bullying to prevent sons or daughters of the poor from competing fairly with their own children. 

If aristocracy were self-replicating on the basis of simple, inherited quality, why then the relentless frenzy of desperate repression that we see across all annals, in all nations and eras?

Further, if inherited lordship were a matter of genuine superiority, then why - across the long epochs before our egalitarian experiment - were nearly all kingdoms and oligarchies so delusional and so horrifically-governed?  There is a name for the cosmically stupid way that 99% of post agricultural societies were governed. In a general sense, that name is feudalism. Another word for the endless litany of insipid and lethal errors committed by aristocrats is -- history.

Or, in more modern parlance: Idiocracy.

In my novel, Existence, I portray a meeting of uber-trillionaires in 2048. They can see they are going to win, that their putsch against liberal democracy is about to succeed, and looming success has them worried.  They can also see that feudalism is vastly less productive, innovative and far more error prone than open systems like transparent republics. Is there a way out of this dilemma?

At their conference, they earnestly seek ways to imbue the rule of inherited oligarchy with meritocratic and competitive elements, weaving in some of the powerful synergies of the Enlightenment... without its egalitarianism.  Kind of like what the Chinese ruling caste has been desperately trying to achieve, for decades. There are inherent flaws to this plan. But at least these oligarchs are smart enough to see the alternative:

Paris: 1789. And tumbrels.

(See my earlier posting: Class War and the Lessons of History. Oh and ponder this: why have Google searches on the words "Karl" and "Marx" been skyrocketing of late?)

== Easing our way out of a lethal attractor state ==

Sure, our egalitarianism has been flawed, often corrupted and always imperfect. Yet, our ongoing enlightenment experiment does correlate with a singular society that has been vastly more creative, productive, fair, scientific and happier than all others… and yes I mean absolutely all of them… combined.

If the grandchildren of rich people do tend to be rich, and the kids of scientists may somewhat tend to replicate that success, then liberal-minded folk will cite favorable circumstance as a chief reason. Nurture over nature. And so far, that presumption seems more right than wrong. 

But even if there is also a strong, genetic component, we still seem well-served by at least addressing those unfair inequalities that do cause disparities. And make each generation of favored kids work to prove it. To earn what they achieve.

We must do this for one reason, above all others — in order to stop wasting human talent.  Expanding opportunity for the children of the poor, of all races, genders etc., is simply logical and a vast improvement over the institutionalized, reflexive and wasteful bigotries of the past. 

Any excuse-making in the opposite direction is not only morally vile, it is also deeply impractical! Because it rationalizes reducing the number of skilled, eager, confident and competent competitors to enter our markets.  In other words, those who rationalize inequality of opportunity for children and youths are betraying the very essence of Adam Smith, of Friedrich Hayek and all other icons of competitive enterprise.

Hypocrisy -- by their own standards.

And sure, yes, inequality (for children and youths) is also immoral. But notice that some people find it easier to shrug off that appeal, than when you base your argument on the practical benefits of equalization. Remember -- oh remember -- that the American founders seized up to a third of the lad in the former colonies from elite-lordly families and redistributed it! An act of "leveling that made FDR look tame. And they did it for pragmatic reasons. In order to keep the revolution one of a calm, middle class, not a rabid mob.

Why emphasize children and youths?

Elsewhere I explain in detail the difference between interventions that aim to equalize opportunity and those that aim at equality of outcomes. Foolish  reactionaries like M. Gagny seem to agree with radical levelers on the other side, that liberal interventions aim at outcome-equalization. Indeed, if that were the case, perhaps I could see a point to the ravings of the far-right and the far-left. 

If that were the aim, then call me a rebel-libertarian.

But that vile, lobotomizing “left-right axis” is built upon shavings of stupidity. In fact, I assert: if state actions concentrate only on raising up possible opportunities for children of the poor, then outcomes will manage themselves. Contra-wise, those who slash investments in the children of the poor aren't just evil people, they are traitors to our revolution.

== The context for it all: The Fermi Paradox ==

Many of you know that I am the principal tabulator of hypotheses and proposed explanations for why we seem to be alone in the cosmos -- the Great Silence... also called The Fermi Paradox.  Of the hundred or so theories that have been offered, I rank a Top Ten.  And high on my list is...

... feudalism.  The chief attractor state of human governance, sucking in 99% of all human societies that ever got metals.  Feudalism rewards big males who act like elephant seals and bash other males to take their women and wheat.  We are all descended from the harems of guys who pulled that off.  

Moreover, the Darwinian logic probably applies on other worlds, perhaps most other worlds. And if so, we get a powerful "fermi" hypothesis: that all over the galaxy kings and feudal lords and priests suppress science and advancement and environmental care, because they are focused on short term battles to stay on top.  

Only our enlightenment experiment broke away from this pattern and found another, in which equalization of opportunity, plus rights and transparency and love of science, opened up all the positive sum games that utilize competition -- markets, democracy, science, justice courts and sports.  The resulting cornucopia has been dazzling!  But humans who rise up high will always be tempted by urges to shut down competition and become lords.

That is the grand context.  Our current struggles may matter even on a galactic scale!  If we are the first to rise up to Star Trek levels of enlightened maturity, then we could rescue all the others, out there, trapped in cycles of feudalism.

Oh but let's get back to Earth. Literally.

== Climate denialism is a symptom ==

Did I say feudalists suppress science? We've reached the point where denialists are frantic. Having invested in raging contempt for science and scientific civilization, while claiming the opposite, they must now double down -- trying desperately to prevent cognitive dissonance. They must avoid doing that almost-impossible thing for human beings... but the act that science teaches.  

To admit: "maybe I was wrong."

I could link to sage articles and scientific studies till the sun burns out and they would have no effect. Cultists will answer with nostrums and "talking points" concocted by Koch-financed shills who could not parse the gas vapor laws if their lives depended on it. But jpegs re sometimes convincing. Here are four images that make the point fiercely.

First the rate at which humans have been adding CO2 to the atmosphere of a world that skates the inner edge of our sun's continuously habitable zone. And that's a crucial aspect!  Because it answers the cultist line: "How could measly humans affect habitability of a giant planet?"

Let me reiterate: our Earth skates the very inner edge of our sun's continuously habitable zone. Because of that, our world must have a very transparent atmosphere with a Gaia Balance that has only just enough CO2 for plants to live.  Needing to allow heat to escape, we can afford very little greenhouse gas. 

Indeed, some time soon (less than 100M years) we will have to move the Earth!)

But saying "humans can't change an atmosphere" can easily be measured.  That is: if we're allowed to!  The Bushites sabotaged satellites and hampered scientists, but the Trumpists have taken things to a whole new level, cancelling programs and ordering NASA to never look down at a planet called Earth.  

You denialists who have long proclaimed "the jury is still out!  We need more data!" are now exposed as hypocrites. The truth is the very last thing you want.

But none of this is as horrifically dishonest as the standard riff used by Ten Cruz and other fanatics, claiming "there's been no net warming for 5 years!" Then 6 years. Then it was 7! Always increasing by one.  

Why so specific?  Look at our third jpeg and note the spike in 1998. The general slope of temperature has increased relentlessly, but fools and liars used that spike as a "before" to claim subsequent years were 'decreases.'  That is, till new peaks came in 2014... and 2015... and so far 2016, with all but one of the last seven months breaking records. Oh, so much to be proud of.

But the kicker is the ocean. Not one of the cult's shill "think tanks" has been able to concoct an incantation to answer the damage we are doing via ocean acidification. There are no even hypothetical causes for the effect that is killing coral and replacing fish with jellies, in all the regions depicted in our third jpeg, as well as helping to eutrophy (choke) the Black Sea and Mediterranean and Caribbean.

So what can we conclude?

Nothing new.  I made this list to arm you with talking points, because all that America needs to do, in order to win this phase of our recurring Civil War is to just peel off just 10 million still somewhat sane and reluctant and uncomfortable members of this weird-confederate coalition.  

     

You can do your part by hammering one, just one nervous aunt out there. (Your uncle is probably hopeless. Unless he's ex military; stay tuned for ammo that will work with him!)

Peel away one, then another. It's your assignment. Start with ocean acidification. I mean it. They cannot run from it or explain it, and Fox doesn't even try. They shout "squirrel!" and point offstage.  But use it, over and over again...  ocean acidification. ocean acidification.ocean acidification.

Two Very Different Excuses for Government Intervention

Although I have a new book published today, let's put that aside, for what I feel is a vital topic. A way to put all of our "left-right" political wranglings into a much, much deeper and more calmly mature perspective. Get ready for some basics underlying it all.

Largely unspoken, amid hand-wringing over Donald Trump’s potential Republican nomination, is a scenario that could deeply discomfit GOP elders. Oh, Trump would battle Hillary Clinton or Bernie Sanders hard. But at some point in the summer and autumn debates, he is almost certain to say: “Of course the rich pay too little tax!” 

Moreover, with both nominees agreeing, on live TV, that needle would shift, hard. With almost a consensus sigh, Supply Side will be finished, precipitating the first of several convergences of left- and right- populisms.

At one level, this is only to be expected. Today’s American uber-rich are now paying their lowest averaged rate since income taxes began. The latest budget bill, passed by this GOP Congress, sweetened the deal even more, helping accelerate, as economist Robert Samuelson wrote the "hollowing out of the middle class."

And yet, the public rightfully frets over “interventions” to level the playing field. Government is inherently worrisome and “leveling” strikes a dissonant chord to American ears. We can argue over ways and means to improve both fairness and competitiveness. But is there a fundamental metric to differentiate among our options?

Two kinds of “meddling”

Americans have a tendency to differentiate between government interventions that increase opportunity versus interventions that aim at fairness in outcomes.

Step back a bit. Most of us fret about fairness to some degree. Social psychologist Jonathan Haidt and others have shown that human moral reasoning has an innate modularity divided into: Care, Fairness, Liberty, Loyalty, Authority, and Purity.

Progressives tend to stress the first two: Care and Fairness. 

Libertarians stress Liberty and Fairness, while conservatives stress all six more equally. Brain function scans show, for example, that conservatives tend to have a stronger sense of visceral revulsion to things they find distasteful (impurity), hence judging them morally, and we all know their stronger fealty towards authority. However, regardless of partisanship, all three groups overlap with a clear moral concern about fairness.

So, now let’s go back to why people differ between fairness of opportunity or of outcomes.

Types of fairness

The latter of these two – aiming to flatten or level economic results or wealth - would strike some as a "European thing." Which is, of course, ironic since oligarchy has always been (and in many ways remains) far more embedded in European life than in North America.


Even when well-motivated, outcomes-leveling can become a calcified, meddlesome process, providing sinecures for paternalistic bureaucrats. It can also - as bruited by conservatives and libertarians - foster dependency. 

Outcomes-equalization puts negative pressure on what Americans feel are positive sum games that, in order to function well, must remain competitive and thus have winners. Viscerally, they feel it undermines ambition, encouraging laziness and whining. We have all heard this story told, often in its nastier-prejudiced forms. And yet, there is some sound, underlying basis. 

Our spectacular successes - which created the wealth enabling us to do many good deeds - arose from positive sum competitive arenas: markets, democracy, science, courts, sports, and now, crudely, the Internet. These all require some degree of inequality of outcomes in order to spur creative vigor.

At one scale or another (subject to fierce argument) outcomes-intervention by the state could stifle these arenas. Americans tend to set the boundary farther to the "right" in that demands for government outcomes-intervention should face a burden of proof. 

Now mind-you, very few of my fellow citizens would express it in the way I just did, using five dollar words, game theory and such. Still, it is important to recognize this underlying motif of American sensibility. Some might attribute it to the long Frontier Experience, or to the “American founder” who never actually visited the continent, Adam Smith. There is a sense that equalizing outcomes is a self-defeating process that could kill the golden egg-laying goose – a reflex that has been manipulated skillfully by right-wing media.

To be honest, I share all of these reservations! Surprised? Given my denunciations of the madness that has taken over U.S. conservatism? And indeed, my harsh critiques of today's version of libertarianism? Well, there is a simple explanation. It arises when you look at the other modern approach to bringing economic fairness.

Opportunity

Things are very different when it comes to opportunity-equalization. 

Even most Americans see real value there, voting repeatedly over two centuries to build highways and schools that can be used by all, subsidizing research shared by all, expanding rights protection (albeit far too gradually) to all races and genders, and building the finest universities on the planet. To the extent that we have been failing in this mission -- e.g. the horrendous student loan scandal, and allowing even a single American child to lack nutrition and health care -- I tend leftward, just as I tend rightward regarding outcomes equalization.

In this disparity, I think most of my countrymen would agree, if only the choice were put to them plainly, as I just did here. Moreover, the distinction was made very clear as long ago as 1776, with publication of Adam Smith's founding document of western society, The Wealth of Nations, wherein he asserts that the state should take actions to increase the number of skilled and confident competitors, in order to stimulate a vibrantly competitive and creative capitalism. Investing in infrastructure and schools and sanitation would - Smith avowed - allow more children to rise up and participate in vibrant markets for goods, services and labor. 


The economist-idol who has been quasi-deified by the American Right - Friedrich Hayek - in fact said pretty much the same thing! Hayek deemed valid those taxpayer supported interventions that will clearly increase the number and fraction of citizens who are skilled and confident market participants. A fact that is now repressed by today's self-described "Hayekians."

(Indeed, to be even more ironic, this is an area of agreement between Hayek and Karl Marx.)

When a state action aims to address a clear and blatant disparity of opportunity - an inequality that limits the supply of new, capable competitors - then the burden of proof must fall upon those who object to the intervention.  The default should be to intervene in favor of opportunity, until challengers show that the problem can be eliminated by non-governmental means. Feed these children now! Save those bridges now! Improve schools now! Then show us how state programs can wither away.


The burden of proof shifts when it comes to outcome equalization, or leveling of wealth and income. Because we know that some substantial disparity in outcomes is necessary, as an incentive, in order for our competitive arenas (markets, democracy, science, etc.) to work at all. We also know that outcomes equalization - if taken too far - could lead to tyrannical horrors as awful as any conceived by Orwell. 

In illustration, let me cite Kurt Vonnegut's wonderfully chilling short story "Harrison Bergeron" which portrays a future in which the Handicapper General of the United States rigorously enforces actual equality of outcomes.  Ayn Rand's "Anthem" also portrays this extremum, though turgidly preachy and unrealistic.

Sure, make some outcomes more equal

 
Am I excluding all outcomes equalization, by demanding that they bear burden of proof? Not at all. Such burdens can be met! Those competitive arenas I mentioned do not maintain themselves. If we can glean one truth from six thousand years of varied human societies, it is that they will always tumble into oligarchic cheating and feudalism, unless kept in tune by careful regulation. Over time, wealth disparities always widen till they become outrageous, warping both politics and markets.

Clearly that has already happened in America and the world, when 62 near-trillionaires own as much wealth as humanity's entire bottom half. Conservative economist George Cooper reaches the same conclusion from a different direction in his recent Evonomics article “Piketty Debate Exposed The Failure of Economics. 5 Steps to Fix It.” Cooper shows that our civilization must continue a “circulation” pattern of government actions to stimulate the bottom while capitalist processes feed the top.


Up to this point my aim has been to make clear a dichotomy of twin generalities. And while in general, opportunity-levelers get benefit of the doubt, outcomes-levelers bear the onus to show clearly why it is necessary to reduce this or that caste's economic gains.

 That onus may be easy to satisfy, right now! Indeed, I deem it to be blatantly so. Still, it should still be kept clearly in mind, lest we tumble into the nightmare worlds -- the leveling extrema -- of "Harrison Bergeron," or even "Anthem."

It gets complicated

Now, these two notions - equalization of opportunity vs. outcome - do overlap!  When a competitor fails in the marketplace of labor or business, there should be a limit to how low they are allowed to fall. This wonderful civilization is not, as Tennyson put it, “Nature, red in tooth and claw.” We have a better version of creative competition than Nature, more cognizant and less wasteful. In a market, or in elections, or in science, this year's loser might come roaring back next year, with improved products, policies or data. Second and third chances come under opportunity enhancement, though the major effort must be yours.

The most controversial overlap comes in wealth redistribution, which certainly sounds like outcome equalization! But, as Gershwin reminds us, it ain't necessarily so. 




Let's go back to that earlier point and restate what is blatantly obvious, yet utterly ignored by mavens of the right. The worst destructive force that ruined flat-fair-open-creative markets and suppressed equality of opportunity across 60 centuries was inherited oligarchy and feudal overlordship. That was the normal system in most large-scale human societies. Feudal inherited oligarchy was the system of cheating despised by Adam Smith.

Indeed, partly influenced by Smith, the American Founders, in the 1780s, seized up to a third of the land in the former colonies, owned by aristocratic families, and sold or redistributed it to make the playing field more level. States also banned primogeniture and fiercely enforced equal inheritance so that rich family fortunes would break up among many heirs. The Founders' economic meddling and redistribution was thus vastly greater than ever attempted later, by either Roosevelt!

Today's inheritance tax has similar (if much smaller) effects, incentivizing wealthy families to create charitable foundations, rather than let the feds get their clutches on it. In practice, this limits the likely creation of neo-feudal castes, made up of kids who never produced any goods or services or earned the wealth and power they would then exert over the rest. And yes, a progressive income tax helped to foster the sense of general, middle class justice that today’s conservatives ironically yearn for, in the 1950s.

Wealth redistribution is thus a tricky middle ground. Equalization of opportunity (and maximization of competitive creativity) is impossible without some. On the other hand, some inequality of outcomes is absolutely required in order to maintain the kinds of incentives that spur creative people to take risks and develop great new things.  

This is one more area in which we need to again be a people capable of thoughtful negotiation and pragmatic compromise. But always bearing in mind what is fundamental: the incentive of some wealth-disparity is a necessary fuel to propel our competitive arenas to maximum effort. But those creative arenas will seize-up and grind to a halt, unless lubricated by maximized opportunity for all children -- all of them -- to confidently participate.

If we fail to enhance opportunity, we’re guaranteed to regret the outcome.

=========

Addendum: Here’s a cantankerously different take on the plusses and minuses of contemporary libertarianism and other oversimplifying dogmas: Models, Maps and Visions of Tomorrow. 

This article is reprinted from Evonomics.