Human Progress: (4) Life Shows More Equality of Opportunity

Five years ago, the "Occupy Wall Street" movement began when protesters settled into Zuccotti Park in New York City's Wall Street financial district.  Their slogan was "We Are the 99%"--to indicate their protest against the economic inequality that allows too much wealth to be concentrated in the top 1% of society. 

One of the protesters in the park held a poster that said: "Equality First! Liberty Later."

This suggests that equality and liberty are in conflict, and that fairness requires that equality take priority over liberty, that we sacrifice liberty to achieve equality.

Against this position, classical liberals argue that equality and liberty are compatible, as long as equality is rightly understood as equality of opportunity rather than equality of outcome.  According to this liberal view, inequality of outcome is good inequality if it arises from equality of opportunity.   By this standard, the liberal social order has achieved human progress if life shows more equality of opportunity than ever before.

Despite the general agreement in American political debate on the idea that government should secure equal liberty for all individuals, as expressed in the Declaration of Independence, Americans disagree about the best way to pursue that goal. 

Thomas Jefferson hoped that although previous regimes had promoted "an artificial aristocracy, founded on wealth and birth," American democracy would be ruled by "a natural aristocracy" grounded on "virtue and talents."  He thought that an educational system was needed that would allow the most talented few to rise to the top even if they were born poor and of low social status.  Democratic equality, therefore, would be an equality of opportunity that would give all people the liberty to develop their talents, so that the naturally best could rise to the top.

Abraham Lincoln conveyed this thought in his metaphor of life as a race.  The primary aim of popular government, he believed, was "to elevate the condition of men--to life artificial weights from all shoulders--to clear the paths of laudable pursuit for all--to afford all, an unfettered start, and a fair chance, in the race of life."  This is the noble vision that elevates American political rhetoric.  It's the American Dream--a fair chance for all to get ahead in life.  And, of course, Lincoln himself--born in a log cabin--was the exemplification of this American story.

And yet Lincoln's image of the race of life suggests a possible conflict between equality and liberty.  The fairness of the race demands equality at the starting line but liberty in the running of the race.  The faster runners must be free to take the lead and leave the slower runners behind.  But how can we be sure that the slower runners are not hindered by "artificial weights"?  How many of the slower runners were raised in families that didn't train them to run fast?  Were they perhaps born to parents who had already fallen behind in the race?  Is it unfair for the fast runners to be free to give their children a head start?  Was it unfair, for example, that Fred Trump gave his son Donald a head start in becoming a real estate developer in New York, and that Donald could later give his children the same head start?

Does fairness require that we occasionally stop the race, bring everyone back to the starting line, and then start again?  If so, what does this mean?  Would we have to abolish the family, because children born into different families will not be equal at the starting line? 

What should we do for those who from birth suffer physical or mental disabilities that prevent them from running well?  And what should we do for those who accidentally injure themselves during the race?  Should the faster runners be forced to help those who are unfairly disadvantaged? 

President Lyndon Johnson answered yes to this question in 1965, when he announced the policy of "affirmative action" to ensure for black Americans not just equality of opportunity but equality of result in the race of life.  Does this mean that slower runners must have a head-start in the race?

On the one hand, those of us who stress the fairness of equality would want to protect the unfortunate from unfair competition.  On the other hand, those of us who stress the fairness of liberty would want to protect the freedom of the fastest runners to win the trophies.

If we were serious about achieving equality of outcome, even at the expense of liberty, would we have to embrace pure socialism, in which the private family and private property would be abolished, and the means of production would be collectively owned by government?  This is what Karl Marx proposed.  And this is what has been attempted in some utopian socialist communities, like the original kibbutzim in Israel.  (As I have indicated in some previous posts here, and here., the kibbutzim have given up their attempts to abolish private property and private families.)

Max Roser's article on "Income Inequality." is a good survey of the empirical data on inequality in economic income.  But he does not distinguish inequality of outcome and inequality of opportunity.  And so he does not consider the possibility that some of the inequality of income that we see arises from equality of opportunity.

He employs the Gini index as a measure of the income distribution of a population.  The Gini index is a number from zero to 1, where zero represents a distribution that is perfectly equal--so that 10% of the population earn 10% of the total income, 20% earn 20%, and so on--and 1 represents the maximum of inequality--so that one person has all the income of a population.  Another measure of income distribution is to calculate the share of total income or wealth received by various strata of the population--the top 1%, the top 20%, and so on.

Despite the debates over these measurements and what they mean, some patterns do emerge rather clearly. In the richest countries, there was great economic inequality at the beginning of the 20th century.  So that, for example, in the USA, before the Second World War, 18% of all the yearly income went to the richest 1%.  But then the share of the top 1% began to drop.  In 1980, in the USA, the richest 1% received 8% of the total income, much lower than the 18% before the war.  Then, however, inequality started to rise again.  By 2010, in the USA, the richest 1% received 17% of the total income, which was back up to the pre-war levels.  Other English-speaking countries (Canada, the UK, Ireland, and Australia) show the same U-shaped pattern: high inequality, then a drop down to the 1980s, and then rising again to the high levels of inequality seen at the beginning of the 20th century.

The pattern for much of continental Europe and Japan is a little different.  It's an L-shaped pattern: first high inequality, then a drop down to the 1980s, and then leveling off or only slightly rising over the past 25 years.  For example, in Sweden, the richest 1% in 1938 received 12% of the total yearly income, then in 1980, this was down to 4%, and in 2010, it was up slightly to 7%.  Sweden and the other Nordic countries (Iceland, Norway, Finland, and Denmark) have the lowest levels of economic inequality today, apparently because their policies of Social Democracy (or Democratic Socialism) favor a redistribution of wealth from the rich to the poor.

Those people who worry most about economic inequality--people like Thomas Piketty and Bernie Sanders--generally argue that the English-speaking countries should try to be more like the Nordic Social Democracies--using confiscatory progressive tax rates and social welfare programs to redistribute wealth from the rich to the poor and the middle class.  To escape from an unfair inequality, they argue, we need to move from liberalism to socialism. (I have written a series of posts on Piketty that begins here.)

And yet, there are at least three objections to this argument for socialist equality.  The first is that the empirical data for economic inequality does not necessarily show a lack of equal opportunity, because there can be a lot of mobility into and out of the top economic ranks of society.

 In fact, there is a lot of evidence for such mobility.  Economists who study this have shown that over 50 percent of Americans will be in the top 10 percent of income-earners for at least one year in their lives.  Over 11 percent of Americans will be among the top 1 percent of income-earners (people making a minimum of $332,000 per year) for at least one year in their lives.  94 percent of the Americans who join the top 1 percent group will keep that status for only one year.

Moreover, the factors that explain higher household incomes among Americans are not fixed over a lifetime, and they are to some degree a matter of personal decisions, which means that people are not forced to remain in one income bracket for their whole lives.  American households with higher than average incomes tend to be households where the members are well-educated, in their prime earning years (between the ages of 35 and 64), working full-time, and are in stable marriages.  Households with lower than average incomes tend to be households where the members are less-educated, outside their prime earning years, unemployed or working only part-time, and they are likely to be unmarried.

A large part of the growth in economic inequality among Americans over the past 40 years has been a result of assortative mating:  college students marry people they have met in college, and then form two-income households with the higher income levels correlated with higher education.  These "power couples" are then in a position to help their children become successful, because their children will inherit the good genes of their parents as well as the good environments of rearing the parents provide.  Since high educational achievement is correlated with high IQ, and since the higher paying jobs in a highly technological and mentally challenging economy require higher intelligence, what we see here is the emergence of what Charles Murray has called a "cognitive elite."  So if we really wanted to reduce economic inequality, we would have to prohibit intelligent and well-educated people from marrying other intelligent and well-educated people.

Consequently, people can raise their chances of becoming wealthy by getting a good education, by getting married to other well-educated people, by getting lots of professional work experience, and by forming two-income households.  When people do this, they create economic inequality.  But isn't this good inequality?

That supports the second objection to socialist equality--inequality of outcome is not necessarily unfair if it arises from an inequality of skills, education, and intelligence.  As Roser shows in his article on "The Skill Premium," much of the growing inequality of income over the past 30 years can be explained as the growing gap between skilled and highly educated people and those who are unskilled and less educated.  The economic effects of technology and globalization have increased this gap.

The third objection to the argument for socialist equality as achieved by the Nordic Social Democracies is that these are not really socialist regimes but capitalist welfare states, and consequently they fail to achieve the absolute equality of outcome that would require a pure socialism that most human beings find undesirable.  As I have indicated in a previous post, the Nordic Social Democracies are highly ranked on the indexes for "economic freedom" compiled by the Heritage Foundation and the Frazer Institute.  This confirms Rosa Luxemburg's complaint that Eduard Bernstein's proposal for social democracy was actually a "variety of liberalism" and not true socialism. 

While it is true that the Nordic countries have a lower level of economic inequality than does the United States, it is also true that those countries have not achieved absolute equality.  So, for example, in 2007, the richest 1% in the United States had 33.8% of the total wealth, while the richest 1% in Sweden had 18.8%.

Only once have democratic socialists succeeded in creating real socialism with real socialist equality--in the kibbutz.  (Bernie Sanders volunteered on an Israeli kibbutz in the 1960s.) But once the kibbutzniks had created socialist equality, they chose democratically to abolish it, because most of them found life in a perfectly egalitarian community unbearable.  (I have written about the kibbutzim and other socialist communes in Darwinian Natural Right, pp. 92-101.)

The kibbutzniks were the pioneers of Jewish resettlement in Palestine.  The first kibbutz, Deganya, was founded in 1910.  By 1980, there were over 130,000 people in over 270 kibbutzim in Israel.

The kibbutzim practiced pure socialism that came as close to absolute equality as any human community has ever achieved.  The members rotated jobs.  They took all of their meals in a common dining hall.  They had no private property.  They did not even own the clothing they wore, which was provided for them by the community.  When children were born, they were sent to a children's house to be cared for and educated by the community.  Children were allowed to visit their parents only a few hours in the afternoon.  This was understood as necessary for the sexual equality of men and women, because women were free from the burden of caring for their children. All decisions about the organization of the community were made by consensus in a general assembly, usually held weekly, where every member participated equally.  The kibbutzniks saw themselves as putting into practice the Marxist principle of "from each according to his ability, to each according to his need."  They also seemed to be following Plato's recommendation in The Republic that the Guardians in the just city should not have private property or private families, because they should care for the common good of the whole community rather than their selfish private interests.

But then, beginning in the 1950s and 1960s, young mothers began to complain that they did not have enough time with their children.  They wanted at least to be able to put their children to sleep at night.  As the children matured to adulthood, many of them left the kibbutz because they didn't like the communal childrearing.  Beginning in the 1970s, many of the kibbutzim decided to allow family sleeping rather than collective sleeping.  Socialists complained that allowing children to live with their parents would lead to the privatization of many things and inequality.

The kibbutzniks wanted not only private families but also private property.  Some of them returning from serving in the British army in World War Two came back with teakettles.  Allowing some people to own private teakettles, and to drink tea privately in their homes rather than in the communal dining room, violated socialist equality.  Then some people wanted to own their own clothes and to select their clothing.  They also wanted to own their homes.

The kibbutzim had to abandon job rotation to keep skilled people in their specialized jobs.  The most skilled workers wanted extra pay for their work, and they complained about those people who didn't work hard but received equal pay.  By the end of the 1990s, many kibbutzim were assigning wages according to skill level.

Henry Near has written the most comprehensive history of the kibbutzim--The Kibbutz Movement: A History (2 volumes).  He concluded:

"During most of the history of the kibbutz movement social change was justified (or resisted) on grounds which stemmed from, or were compatible with, a socialist world-view. From about 1980 onwards, however, the ideological background changed. . . . The improvisations were still ideologized, but the ideology was no longer that of socialism, but of late twentieth-century capitalism" (vol. 2, pp. 357-58).

The most fervently socialist of the kibbutzniks complained bitterly about this, and some of them lamented that they had tried to change human nature, but they had failed.

In a liberal social order, people are free to form egalitarian socialist communes like the kibbutz, as long as they are voluntary.  Indeed, in the history of the United States, there have been hundreds of such socialist communes, beginning with Robert Owen's New Harmony in Indiana (1825-1827).  Most of them lasted no longer than a few years.  Some of those that were animated by some religious faith lasted a few decades.   This shows that people devoted to socialist equality can form small communities that succeed for some time, and in the case of the kibbutzim, they succeeded for at least seventy years.  But eventually they must fail, because most human beings will find that the conditions for socialist equality--abolishing private families and private property--frustrate their deepest natural desires.

By contrast, liberal equality--equality of opportunity rather than equality of outcome--is more achievable because it does not require changing human nature.

There is one major objection to my argument here.  Even if equality of opportunity and equality of outcome are different, aren't they connected, in that countries with a higher degree of equality of outcome tend to be countries with a higher degree of equality of opportunity?  That's the point of what some economists have called "The Great Gatsby Curve."  (See Miles Corak, "Income Inequality, Equality of Opportunity, and Intergenerational Mobility," Journal of Economic Perspectives, 27 [2013]: 79-102.)

We might not regard income inequality as unfair as long as there is social mobility, so that children born into poor families have the opportunity to enter the high income levels as adults, and the children born into rich families do not always inherit the high income levels of their parents. 

This is how Abraham Lincoln interpreted equality in the race of life.  Speaking to Union soldiers in the Civil War who had come to meet him at the White House, he explained to them what they were fighting for:

"I happen temporarily to occupy this big White House. I am a living witness that any one of your children may look to come here as my father's child has.  It is in order that each of you here may have through this free government which we have enjoyed, an open field and a fair chance for your industry, enterprise, and intelligence, that you may all have equal privileges in the race of life, with all its desirable human aspirations. It is for this the struggle should be maintained" (August 22, 1864).

But the Great Gatsby Curve suggests that this equal opportunity in the race of life is no longer true in the United States and other rich countries (particularly the English-speaking countries), because income inequality lowers social mobility by shaping opportunity, so that the children of poor parents remain poor as adults, and the children of rich parents remain rich as adults.  The Great Gatsby Curve plots countries against a x-axis that is the Gini index of inequality and a y-axis that measures intergenerational immobility as the probability that people have the same income level as their parents.  The Curve rises and thus indicates that countries like the United States and the United Kingdom with high income inequality also have high intergenerational immobility, while countries like Norway and Finland with low income inequality also have low intergenerational immobility.

There are various factors to explain how parents pass on their economic status to their children.  Children might inherit genetic propensities from their parents (intelligence, talents, and personality traits) that make it more or less likely that they will enter high-paying occupations.  Rich parents might instill in their children the habits of self-discipline, ambitious striving, and education that are required for economic success.  Rich parents might help their children enter the expensive and highly selective schools that train their graduates for economic success.  Rich parents might also use their social connections to help their children find the best jobs for economic success.

Some critics of the Great Gatsby Curve say that it is being misinterpreted.  The differences between the United States and Norway, for example, might be due to the fact that the United States is a large and culturally diverse country, while Norway is a small and culturally homogeneous country, so that the inequality in the United States is actually mostly inequality between different cultural groups.

But this would not explain the differences between the United States and Canada, both of which are large and culturally diverse countries.  Canada has both a lower level of inequality than the United States, and a lower level of intergenerational immobility. 

Miles Corak has compared the income rankings of fathers and sons in the United States and Canada, comparing sons born to top decile fathers (the top 10% in earnings) and sons born to bottom decile fathers (the bottom 10% in earnings).  In the United States, there is a 25% probability that the son of the top decile father will remain in the top decile.  In Canada, the probability is about 17%.  In the United States, there is a 22% probability that the son of the bottom decile father will remain in the bottom decile.  In Canada, the probability is 16%.  In both the United States and Canada, the son of the bottom decile father has about a 7% probability of rising to the top decile.  More than half of sons raised by top decile American fathers fall no further than the 8th decile, and about half of those raised by bottom decile fathers rise no further than the third decile.

But notice what this means.  There is some social mobility in all of these rich liberal countries.  But they differ in the degree of social mobility.  The opportunities at the starting line of the race of life are not perfectly equal, because parents and the environments that they create influence the opportunities for their children.  It is harder for the children of poor parents to reach the highest level of economic success than it is for the children of rich parents.  But notice that about 50% of the sons of fathers at the bottom of the economic ladder can enter the lower middle class level.

Remember also that while at least 95% of all human beings before 1800 lived in grinding poverty--close to mere subsistence--almost all Americans, Canadians, and others in the richest countries today live a richer life than most human beings have ever lived before, and that greater wealth brings greater opportunity for living a flourishing life.