Bryan Caplan  

Defending Desert

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I just got back from a Liberty Fund conference on Serena Olsaretti's Liberty, Desert, and the Market. (Here's Will Wilkinson's account).

The big surprise: Only one libertarian out of more than a dozen was willing to defend the free market on grounds of desert.

No big surprise: That libertarian was me.

Olsaretti relies heavily on the Rawlsian premise that no one deserves to profit from inborn talent. If this is right, of course, the free market looks awful, precisely because it allows and indeed encourages talented people to get ahead. But this Rawlsian premise is truly bizarre. It implies, for example, that smart students don't deserve better grades, that great athletes don't deserve to win, and that inventors don't deserve to get rich from their ideas. And obviously they do.

If you want to criticize the market on grounds of desert, the sensible approach is not to complain that there is a positive correlation between talented and earnings, but that the correlation is too low. In earnings regressions, for example, smarter, better-educated, and more experienced people earn more, but there is a lot of noise. Casual empiricism suggests, moreover, that there are more than a few rich incompetents and poor people of talent, though admittedly a lot of this balances out over time.

My guess is that my fellow libertarians were reluctant to defend the market on grounds of desert precisely because they're aware of these counter-examples. What I think they're missing, however, is that by the metric of desert, the free market does relatively well. What other political-economic system does a better job of rewarding talented, hard-working people?

It is also worth pointing out that from the standpoint of desert, some of the largest interventions in the market are a moral disaster. The main function of progressive income taxation is to narrow the gap between talented, hard-working people and not-so-talented, not-so-hard-working people. But this pales before the greatest of all government crimes against desert: Immigration laws. Their whole function, of course, is to make sure that foreigners earn drastically less than equally deserving Americans. The free market is not a perfect arbiter of desert, but under laissez-faire there is no way that unskilled Americans would earn twenty times more than equivalent labor in India.

The bottom line: When you measure the market against any independent standard - whether it's economic growth or desert - it falls short of perfection. It's not hard to imagine a way that government could make things better. But when you look at what governments actually do, it usually turns out that they're trying hard to make things worse.

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The author at The Burden of Proof in a related article titled Desert and Morality writes:
    There's been a lot of discussion recently about what people deserve and how should that influence policy, if any. Bryan Caplan discusses it, [Tracked on April 26, 2006 10:39 AM]
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Robert Schwartz writes:

I submit that it is intellectual arrogance and self-delusion to think that anyone can know what is good for anyone else, let alone for everyone else. Markets are what happens when we allow men to seek their own visions of the good, not impose them on others.

It is no accident that the greatest crimes are committed by those who believe that they know what is good for everyone.

Eric writes:

If genetic endowment has moral weight, then market outcomes fare very well in terms of desert. If not, it's tougher as outcomes are a product of endowment and effort. And, of course, work ethic is also heritable (conscientiousness), making that also more suspect as an input bearing moral weight. The philospher types get titchy about ascribing moral weight to outcomes where the inputs are morally arbitrary. My solution is just to be happy in attaching moral weight to genetic endowments. Not everybody's happy to go there though.

"But this Rawlsian premise is truly bizarre. It implies, for example, that smart students don't deserve better grades, that great athletes don't deserve to win, and that inventors don't deserve to get rich from their ideas."

Not at all, except possibly the last one. It depends what grades are used for, and what winning means (heard of paralympics?).

You might have got a good education, you might even have worked hard, but it's not at all obvious that you therefore deserve a swimming pool and a pony. Nor does missing an eye and a hand imply that you deserve to live in a shack. I suspect that was what the other libertarians thought, too. Most libertarians I've heard argue that giving rewards to the most skilled gives more rewards overall. When you believe some people actually deserve more options for happiness on account of things out of their control, that they can take no credit from (genes, upbringing, inheritance, etc), you're standing on very shaky moral ground.

And that is the reason for progressive taxation: while it may narrow the gap between the hard-working and the not-hard working, that is a perhaps unfortunate side effect. The reason is indeed to narrow the gap between the talented and the not talented, as long as talent is defined as "The factors which make a person more likely to be wealthy, and are outside his control".

John S Bolton writes:

That the same class of labor gets 20 or 100 times more in one country than another, is not bad at all, if it allows for technology to move ahead. If we globalize the world's technological level, out of indignation over inequality of reward for the same class of labor in different systems, there will be no way to stop technology from moving backwards, and wiping out huge numbers.
The world's technological progress depend entirely on there being regions which are at least that much ahead of the laggard countries. Loyalty to civilization and its progress should be far ahead of concern for the lack of equality of reward for the same type of work between rich and poor countries.
Globalization of wage levels via immigration, can't help but increase the aggression on the net taxpayer in the rich countries, and everything depends on his virtues and rewards, and almost nothing on whether prospective immigrants of the same skill levels as our low-income elements, get an undeserved chance for something extra.
Chances are to be deserved, not just given.

Karl Smith writes:

I consider myself a strong libertarian but I really have to break with Bryan on this.

People deserve the consquences of their choices, not the consquences of their good luck. If you are smart purely by chance you do not deserve the rewards from that.

Now this is a seperate question from whether the government has the right to go around giving people what they deserve or whether the function of the government is to preserve freedom.

I often say they are many people who deserve a swift kick in the rear. However, I would oppose the creation of a government Rear-Kicking Department.

tdl writes:

"If you are smart purely by chance you do not deserve the rewards from that."

Why not?

Ron Baty writes:

Rawl’s difference principle argues that any inequality should benefit the least advantage that is any advantage gained by your talent must also help those with the least “talent”. Rawl’s also argues for taxing the rich and inheritance to distribute to the least advantage as a leveling mechanism. Perhaps the most telling point for the outcome of Rawl’s “practical utopia” is found in 2001 book “Justice as Fairness: A Restatement” 18.3, p.64, he allows for the possibility where real capital accumulation stops, i.e. Mill’s idea of a just stationary society.

On the other hand what does desert have to due with talent? If I am seven feet tall and can throw a ball into a hop from 30 feet away because of some accident of birth, I don’t necessarily deserve or not deserve anything. I have the ability to go to an NBA team and say I want to play, how much will you pay me? The team then goes to its fans and says how much will you pay to see this team? Nobody is giving me anything just because I can do something, recruiting incentives aside, I actually have to perform, to provide something that someone else thinks is useful and is willing to pay for. The world is full of poor but talented and smart but poor people who did not get or not get what they "deserve", for what ever reason they were unable to provide a “product” that was of value to someone else. Desert has nothing to do with it.

mobile writes:

Generally speaking, doesn't the market reward those who serve others? The butcher, the brewer, the baker, and the inventor all earn their livings with products and services of value to others, and are compensated according to the value they provide (or sometimes just a fraction of that value -- didn't I see a study a while ago about how an innovator can expect to capture at most 1-2% of the value that his idea/invention contributes to the wealth of society)?

So do people deserve what they obtain in the free market? To ask this question is to ask whether the collective value judgements of individuals are in line with the values of society (whatever that means). Or to put it another way, how well do market prices represent "true value" and how often are there market failures?

It's a normative question. If you agree with the statements "you can't put a price on happiness" or "there's no good reason that a star athlete should make 500 times as much as a school teacher", then of course you'll come to a different conclusion about desert than someone that disagrees with those statements.

Karl Smith writes:
"If you are smart purely by chance you do not deserve the rewards from that."

Why not?

Let be clear. I am not saying you deserve to not have it.

There are things which are morally permissable and things that are morally obligatory.

To say that someone deserves something is to say them getting it is morally obligatory. That is, if they fail to get it then I wrong has been committed.

Imagine a person, Adam who goes to Vegas and bets $1000 on black at the roulette wheel. At this point does Adam deserve to walk away with $2000?

I would argue that it is morally permissable for Adam to walk away with $2000. He made a choice and so did the Casino and if the result is Adam having $2000 that is fine.

However, it is not morally obligatory that Adam walk away with $2000. That is, a wrong has not been comitted if he doesn't walk away with $2000.

Now suppose he the roulette wheel lands on black. Now it is morally obligatory for him to get $2000, because otherwise a contract would have been violated.

The question about intellegence is similiar. Has a wrong been committed if a person who is born smart does not make a lot of money? I would say no.

However, once that person has agreed to sell their labor for a lot of money it would be wrong for the government to take it away.

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