Philosophy 341 Quiz 3 [Income Inequalities]

libertarianism & distribution

-distribution itself is irreverent to justice (what matters is HOW the distribution came about) -applied to income distribution in the US: did people acquire what they got justly or unjustly? what makes something just or unjust is its history?

DATA: CEO income vs. average wages

(higher in 1920s and 30s) 1980: 35:1 1990: 126:1 2000: 299:1 *US is an outlier compared to other countries in terms of this ratio rate of growth - most of our economic growth is going to CEO pay! CEO pay: 8.5% avg. US employee pay: 0.30% US GDP: 3.1% US Corp. Profits: 2.90%

Rawls

*alternative to utilitarian conception of justice -thinks we should care about growth &&& about HOW the pie is cut -concern for the growing pie -concern for distributive justice of the pie -START by thinking about PEOPLE living in society & how they can treat people -even if something is more efficient & a greater good is served, the harm of doing one thing or another might not always be justified

DATA: BUT... if productivity growth has not slowed & if income inequality has not increased after 1973.......

-(productivity) median household would have $30,000 of additional income today -(income inequality) median household would have $9,000 of additional income today

Rawls: principles of justice

-1st principle (equal liberty principle) -2nd principle: difference principle & fair equality of opportunity

DATA: aftertax gin income vs. pretax mini income

-Finland & Sweden are much more regressive than the US progressive system -in F & S they use tax revenue to provide social services & supports -US government spends a lot more money on the rich (prisoners dilemma - in the state government's interest to bribe corporations to locate factories in their state, etc.)

Rawls: characteristics of his theory

-LIBERAL (emphasis on basic liberties, holds constant & equal) &&& -INDIVIDUALISTIC (counts each individually equal in calculating what's good for society - NOT whats good for the aggregate being what's good for the society)

Mankiw rejection of Rawls

-M thinks we should really just be concerned with desert

Rawls' response to Nozick's critique

-Nozick makes strong assumptions consuming rights -Rawls is addressing a prior and more fundamental problem -Rawls agrees with Nozick in rejecting a view of justice that requires a pattern among holding individuals

libertarian's implication for inequalities

-SHIFT focus from distribution to the protection of rights -rectification must be a priority -existing policies create "rents" and encourage "rent-seeking must be eliminated -some fair allocation of rights needs to be determined -redistribution should be avoided (except to rectify), but problems of DISTRIBUTION must be faced -implementing the entitlement view is very difficult --> libertarian says no one can interfere with property rights because it goes against freedoms (traced back to rights that no one really has) **DO NOT raise minimum wage laws

DATA: international comparisons

-US has one of the highest child poverty rates

Wilkinson: inequalities in outcomes and opportunity

-W, like many on the left, maintain that they go together >a reason to object to inequalities in wealth and income, OR to reject equality of opportunity?

utilitarianism & distribution

-assume that happiness increases with income, but at a diminishing rate -assume rough interpersonal comparability: same income --> same happiness THEN, distributing a fixed amount of income equally maximizes happiness BUT, total income isn't fixed, it depends in part on distribution

Rawls: choosing principles of justice

-assume the original position (impartial due to veil of ignorance) - use RATIONALITY! -remember that some types of principles have precedence over others (basic liberties > fair equality of opportunity > difference principle)

Mankiw

-begins with entitlement theory, but notes the wide & growing disparities -arguments for redistribution he considers >utilitarian argument isn't what motivates the objectives >taxes are regressive >CEOs are overpaid >taxes are owed for government benefits

DATA: distribution of US wealth (wealth inequalities)

-bottom 40% own 1/5 of 1% of the total wealth -combined wealth of 85 individuals is greater than the of 3.5 billion people -the middle rich are losing ground -2010: 388 of the richest individuals = wealth of 1/2 the world -in past 5 years, wealth of richest 62 has increased by 44% while bottom 1/2 of the world dropped by 41%

intuitive objections to utilitarianism?

-could utilitarianism justify slavery? -what about right? -slicing up the professor for his organs?

arguments against diminishing inequalities

-diminishes incentives; slows economic growth -inefficient interference with the free market -distribution is not itself morally important -violation of property rights as entitlements -an interference with desert

do workers have a right to their pretax income?

-do those who pay them have a right to their holdings? SET ASIDE -if there are taxes, then no one has a legal right to their pretax income? -do workers have amoral right to their pretax income (should they ought to have a legal right to own it?) 1. if people have a moral right to X, then it is logically possible for people to have or to do X 2. it is not logically possible for people to possess their pretax incomes (illusion to think so with the minimal things government provides & pays for with taxes) 3. thus, it is not the case that people have moral rights to their pretax incomes

Wilkinson: no increase in inequality welfare

-focus on inequality in consumption rather than in income >smoothed consumption >happiness surveys >nominal versus real consumption -quality of inexpensive goods has increased more than quality of expensive goods -cost of goods consumed by less wealthy have increased more slowly than cost of luxury goods -must of the expenditures of the wealthy are on positional goods -real inequalities (i.e. health & education) have increased much less than nominal inequalities (that we measure by money) -the important inequalities in health & education show up when we interfere with the market (SO WRONG)

DATA: racial wealth disparities

-gap between white & black families crippled in 25 years -average interview call-back for white names: black names = 10:6

libertarianism: the role of government

-government is a threat & also a protector >laws limit freedoms >laws protect rights >laws define rights

DATA: racial incarceration

-highest for blacks, then latinos, then whites (follows wealth disparities)

let freedom reign

-individuals must be protected from the "encroachments" of others -government must limit freedoms in the service of freedom -what should I be free to do? >anything I like? too permissive! >anything that doesn't in any way limit anyone else's freedom? too restrictive!

DATA: life expectancy

-life expectancy for bottom 10% of male wage earners born in 1920: 72.9 -born in 1950: 73.6 -for the top 10%: 97.2 to 79.1 -cancer survival rates higher for whites than African Americans

why utilitarianism is appealing

-matches intuitions & explains why it conflicts with other intuitions we might have -seems rational (i.e. clear, defensible purpose for what's right or wrong) -explains what morality is -tells us how to answer moral questions -explains why moral questions are hard to answer -explains why what is right & wrong may differ from society to society without surrendering the objectivity of morality (in principle, morality is objective) *the consequences themselves depend on the circumstances, & depending on society the circumstances may differ

Nozick's "entitlement" theory of justice

-my ownership of X is just (I have property rights to X) if and only if I violated no rights in obtaining X >X was something that was completely unowned & I acquired it (justified acquisition) >by a (a) voluntary transfer of X from someone (b) who had a property right to X

applying the entitlement theory

-naive: there's no problem about inequalities, BUT history is full of rights violations! -RECTIFICATION: what does justice require if... >rectify & some compensation for inconvenience millions of people in the past enslaved, murdered, beaten, & raped? -impossible to rectify wrongs on that scale -actual holdings depend on prior injustices -actual holdings depend on prior government policies PROBLEM: if we try to trace back everything we've ever owned it will lead to some injustice

libertarianism: legitimate (positive) functions of government

-national defense -police -courts -specification of legal rights

libertarianism: what rights to income should people have?

-people have defensible legal rights to the aftertax income -people ought to have defensible legal rights to their aftertax if: >obtained without rights violations >obtained with just or at least legitimate set of institutions >justified taxes and fees have been paid

Libertarian solution

-people should be free to do anything that does not interfere with those freedoms of others that one has an obligation not to interfere with >i.e. their negative rights -people should be free to do anything that does not violate the rights of others -these moral rights must be equal

taxes, distribution, & justice

-pretax distribution is already heavily (and avoidably) influenced by government policy & market forces -just distribution of the tax burden should be sensitive to how other policies & contingencies affect the pretax distribution -taxes are not analogous to a collection among co-workers for a wedding present -taxes affect incentives

desert

-rich people deserve to be rich because of the value they provide, not just because of how hard they work 1 - rule dependent: the rules determine what you deserve 2 - rule determining: the value determined what you deserve (intrinsic value/disvalue aims to specify rules/laws)

Rawls: "the basic structure"

-rules of justice should apply to: major social institutions (i.e. legal, economic, & voting systems; NOT to social norma, NOT to families) -we want to make the BS the thing that the rules of justice apply to because the BS is what applies to/influences people's life trajectories >where you are born in society has a large influence on where you can go (i.e. Trump w/ million-dollar loan) >Rawls not objecting to these inequalities, but saying they need to be justified

Utilitarianism: difficulties & ambiguities

-should we aim to maximize happiness or desire satisfaction? -whose good counts? (future human beings? animals?) -maximize total or average happiness? (if the number of people in the population doesn't change, whatever maximizes total happiness also maximizes average happiness & vice versa) -what about massive uncertainty? -problems with interpersonal comparisons -is what's right what actually maximizes happiness, or what can be expected to maximize happiness?

DATA: share of total income accusing to highest income families

1920: 1/2 total income 2008: large drop due to the recession today: highest ever

Rawls: fair equality of opportunity

2 people exerting the same effort should get equal amount back **comes before the difference principle

political vs. philosophical libertarianism

-start with radically individualistic perspective - value lies subjectively within each individuals' life (each individual ought to be able to go his/her own way in pursuing values), SO the role of government is to protect those individuals pursuing what is important to them [FREEDOM is the most important value] -freedom is central - means by which people are able to pursue what they individually value >value is instrumental >values are subjectively & exclusively individual -libertarian opposed anyone who wants to day "here's what life's all about" ...because it's about what YOU think life is all about

libertarianism: legitimate (negative) functions of government

-streets & street lights -sewers -schools -parks -emergency medical care -food & drug inspection & licensing -fire protection (?? crucial to the protection of our property rights) -disease control, environmental protection (?)

DATA: the top 400

-tax returns reported increase in average reported income of more than $111 million from 2011 to 2012 -their taxes cam etc 16.7% of their AGI

Wilkinson: central theses

-there's nothing to be concerned about in regards wealth and income inequalities 1. no increase in inequality in welfare 2. inequalities are not themselves what matter (causes & effects of inequalities?) 3. inequalities are not undermining democracy -pro-market: what we need to do to address the serious problems (poverty, poor education, etc.) is recognize that the market is the source of good things - if we leave the market alone some people may do well, but if we mess around with the market we may screw up some people's opportunities

libertarianism: taxes only justified if...

-they support legitimate government activities -they are no more than is needed for those activities -the burden is "properly" distributed

DATA: education

-top income quintile higher & increasing at a faster rate than bottom income quintile -77% of adults from families in top income quartile earned at least a bachelor's (1970: 40%) -9% of adults from families in lowest income quartile earned at least a bachelor's (1970: 6%)

arguments for diminishing inequalities

-utilitarian: demising marginal utility of wealth -protection of political equality & justice before the law -nurturing solidarity -lessening inequalities in opportunity

Consequentialism

-we judge whether actions are right or wrong by looking at their consequences >an action is right (morally permissible) if and only if there is no alternative with better consequences - note: only specifies a structure >can't say: an action is right (morally permissible) if and only if its consequences are better than any alternative - BECAUSE there might be ties!

Wilkinson: do inequalities matter

-what matters is whether people are treated fairly & as they deserve (WHAT CAUSES INEQUALITIES) -one source may be the decline of unions: W thinks this was a good thing as they unjustly limited inequalities -what if policies that increase inequalities are politically popular -nobody "distributes" incomes, they depend on: individual market choices & government interference in the market -immigration may aggravate inequality within the US, but lessen global inequalities (beneficial to families of immigrants left behind in other countries through money sent back, which increases US inequalities)

DATA: mobility (opportunity)

-white americans > black americans (born into lowest quintile families)

the magic pie!

1 - distribute things as equally as possible - move towards equality (tax cuts & raises are NOT always productive - depends on how the economy is working) 2 - distribute too equal, then the pie collapses & becomes really small (no incentive to work hard) - DO NOT undercut incentives like this!

Libertarianism: 2 arguments against mitigating inequalities

1 - redistribution by the government violates property rights (notion of rights) 2 - redistribution by the government unjustly takes from individuals the wealth & income that they deserve (notion of desert) - people deserve their income & if government tries to mitigate they are taking away from people what they deserve

Nozick: critique of patterned theories

1. if an initial set of holdings (I) is just, then any set of holdings deriving from I via voluntary exchanges will be just 2. starting from I, voluntary exchanges will sometimes result in patterns of holdings that patterned theories of distributive justice will judge to be unjust 3. if a theory of distributive justice judges a just distribution to be unjust, then it is mistaken 4. all patterned theories of distributive justice are mistaken

is taxation of earnings from labor forced labor?

1. requiring people who work 4 days a week to work an extra without pay is forced labor 2. requiring people to work 5 days for only 4 days wages is equivalent to requiring people to work one day a week without pay 3. imposing a 20% income tax is equivalent to requiring people to work 5 days for only 4 days wages 4. thus, imposing a 20% income tax is equivalent to requiring people to work an extra day without pay

Utilitarianism: 3 questions in ethics

1. what things are good (in themselves, abstracting from consequences)? 2. what actions are right, obligatory, impermissible? 3. what people deserve, praise or blame? -the utilitarian starts with #1 & defines what is right & what is praiseworthy in terms of their consequences?

how should utilitarianism guide actions?

3 methods of making moral decisions: 1. direct - attempt to calculate total happiness resulting from each alternative (unreliable, costly) 2. conservative - stick to accepted moral rules 3. modified conservative - stick to accepted moral rules unless it is obvious that violating them leads to more total happiness (WANT THIS to maximize total happiness) *one can distinguish utilitarianism as a criterion of right or wrong vs. as a method of making moral decisions

DATA: changing shares of total income

changes in shares of total income have gone entirely to people in the top percentiles of total income

DATA: real costs in America

INCREASING

Wilkinson: do inequalities undermine democracy?

W says NO -democrats are still winning elections -financial resources beyond what is needed to receive a good education contribute little to people's political views -money can't buy you a think tank with your politics if the talent and will of people with those ideas is unavailable -no evidence that right-leaning policy & advocacy groups are better funded -academics & journalists are overwhelmingly liberal and have more influence than a few billionaires - W thinks intellectuals have the power!

Rawls: equal liberty principle

basic liberties (freedom of expression, religion, association, movement, etc.) can never be violated!

Rawls: the "veil of ignorance"

carve out a situation in which bargainers don't know features of the situation (i.e. class, sex, race, religion, social status, fortune, natural abilities -original bargaining position takes place outside of space & time

Utilitarianism

consequentialism + the view that the sole intrinsic good is either (a) happiness (mental state) OR (b) satisfaction of desire -an action is right (morally permissible) if and only if no alternative results in more total happiness (or better satisfies everyone's desires) -NOT EGOISM - what's right is NOT what makes me happy, but what makes everyone happy (maximize total happiness) -the happiness of everyone counts equally -NOT EGALITARIAN - people don't count, only their happiness! - if the way to have the most total happiness is for some to have a ton and others to have a little, that's what the utilitarian wants! -SHARP contrast with Kant

DATA: labor market deregulation

higher union membership results in a lower share of income going to the top 10%

DATA: disconnect between productivity & typical worker's compensation

hourly compensation increased consistently with productivity until 1975, THEN productivity continued on the same trend & hourly wage flattened -men's real wages increased

DATA: median earnings of men with bachelor's degrees or more

increased until 2000, then declining since 2007 (less dramatic for women)

Rawls: difference principle

institutions should maximally benefit the least well-off (maximin)

inequality & equal opportunity?

no necessary connection, but can there be a contingency?

DATA: share of total income taxes paid

now: only 40% from top 1% &&&& 30% from bottom 90% (due to changes [increases] in compensation)

DATA: distribution of average income growth during the recession

steady decline in how much of the income moves out of the top 90%, THEN radical shift where everything goes to the top 90%

DATA: taxes and welfare

top 0.01% pay less than top 1%

libertarianism: is this plausible?

what about the helpless (i.e. an infant)? -if they can't survive on their own, we don't have any obligation to them OR (most -->) there are certain minimum rights given to things (i.e. compromise to some extent) -voluntary charity is okay by libertarians -coercive charity is in violation of rights has society done enough to protect my freedoms if government only protects rights to non-interference? would there be less freedom if government protected basic capabilities?