Inequality as feudalism

What’s wrong with inequality? This is the question posed by Oxfam’s claim that eight men have as much wealth as the poorest half of the world’s population.

Of course, you can quibble with this: if we look only at net financial wealth, someone starting work at Goldman Sachs with lots of student debt is one of the world’s poorest people and poorer than an Indian beggar who’s just got one rupee. Such quibbles, however, are irrelevant. As Oxfam point out, a lot of the indebted are genuinely poor. And if we consider human capital as wealth (as we should) there remain massive inequalities, not least between our Goldmans trainee and the world’s poorest.

So, what’s wrong with this? We should distinguish between economic and moral arguments against inequality. The economic objections are that high inequality is often a sign of economic dysfunctions such as malfunctioning markets, restrictive intellectual property laws and crony capitalism or that it can be a cause of worse economic performance and increased distrust.

I suspect, though, that the strongest argument against global inequality isn’t so much the economic as the moral one. Global inequality – especially when accompanied by absolute poverty – means that people are suffering through no fault of their own but simply because of the bad luck of being born in the wrong place. Someone born in sub-Saharan Africa will earn much less than someone of similar talent born in the UK; as Herbert Simon argued, most of our incomes we owe to the good luck of being born in the right place. And they face greater health risks too, especially if they are a woman.

Such inequalities violate the principle of luck egalitarianism. And given the shortened and impoverished lives the worst victims of such back luck suffer, they might well represent a violation of human rights (big pdf).

The case for global redistribution is simply that it is a means of rebalancing such bad luck. Those of us who won the birth lottery should share our good luck with those who lost – not least because the losers never asked to enter the lottery in the first place.

This, though, is exactly what we don’t see. One way to pool such luck is overseas aid. But there’s recently been a backlash against this in the trash papers. This isn’t, I think, because people believe Rawlsian law of the peoples-type arguments (pdf) for prioritizing domestic over global redistribution*. Most people who are opposed to higher global redistribution don’t favour greater domestic redistribution. Instead, the Daily Mash called them right:

We need to look after our own first, say people who would never help anyone

But there’s another way of balancing the massive differences in global luck – open borders. Allowing people to move from poor to rich countries would greatly relieve their poverty. But again, we’re seeing a backlash against this.

Now, I can of course see practical objections to open borders and global redistribution – I’m not completely stupid – but I’m not at all clear how robust the moral objections are.

In fact, what such objections amount to is a belief that one’s fate in life should be determined by one’s birth. This is a form of feudalism. Unless public attitudes change very much in the west, feudalism might outlive capitalism.

* Even Rawls believed we have a duty to help “burdened societies”.

Comments

[Metatone]

I'd add that if we take de Soto etc. seriously then what is holding many people out of the formal economy (and in a level of povery because of that) is a lack of capital. The hoarding of capital that this inequality represents might be part of the problem?

[Steve]

One might attack the "where one is born" problem by reducing the number of people born in these impoverished locations as much as possible, and increasing the number of people born in rich societies.

[Staberinde]

Chris, I'd be interested in your views on gentrification. Critics say that gentrification forces out poorer people who've invested a lot of their social capital in an area and community. Others say it's ludicrous to have a right to live where you grew up - modest earners in Stoke would be subsidising social tenants in places they couldn't afford to live themselves, like Chelsea.

Is there not a parallel here with your argument for open borders?

[e]

Hmm https://www.theguardian.com/global-development-professionals-network/2017/jan/14/aid-in-reverse-how-poor-countries-develop-rich-countries
What's the strongest argument for a moral political-economy be it global or national?

[John Halstead]

I don't think it is ok to put out a completely misleading statistic because it raises awareness about poverty. Oxfam do this every year, people point out the massive flaws in it, and they don't seem to care.

Luck egalitarianism is one way of analysing what's wrong with large inequality. But equality of luck would be improved if all the wealthy people threw all their assets into the sea without benefitting the poorest. Wealth inequality is obnoxious because the govts and rich individuals have the capacity to provide large benefits to the poorest at basically no cost to themselves but they don't do it. For the reasons given, framing this as a concern about equalising luck is a mistake.

[aragon]

Civilization or the lack of it (War) is not a function of territory but of social capital.

http://www.historyguide.org/ancient/lecture1b.html

"One definition of civilization requires that a civilized people have a sense of [shared] history -- meaning that the past counts in the present."

http://www.thefreedictionary.com/civilisation

"civilisation - the social process whereby societies achieve an advanced stage of development and organization"

It is something the barbarians need to sort out for themselves or have imposed on them. (The second has gone out of fashion).

Perceptions of civilisations differ but it is a function of society and therefore not redistributable (but is repeatable).

Of course our own civilisation could do with improvement, it is only good by contrast with the rest.

Adding barbarians reduces social capital/cohesion (civilisation).

p.s.
If I haven't offended all the snowflakes yet, do not worry I will get around to it soon.

Family, Friends, Tribe, Country etc, mutual support grows weaker at each stage, until at world citizen is just abstract concept, as is the ability to effect change on at that scale.

Not least because cultures and civilisations differ.

It really was a dumb question, it's not about currency.

It is not an issue of resources, where Africa clear advantage over the Britain (Oil, Gold, Agriculture, you name the resource), including being where humans evolved and are better adapted to the environment.

[cjcjc]

Instead of publishing this rubbish, might Oxfam not serve the poor better by pointing out how rapidly absolute poverty has fallen over the past 30 years and encourage those policies - globalisation, open markets, property rights, strong institutions etc. - which have brought that about.
Those policies have also brought about the billionaires too (who also give back a multiple of Oxfam's contribution)...well, so what?

[Fang__z]

It really bothers me that people attack the negative wealth thing on the Oxfam report without stopping for a moment to ask what difference a different accounting of the numbers would make... and the answer is really, not a lot.

Anyway, I think the compelling argument made by inequality (as opposed to just poverty) is that of *power*. Which I think goes into the feudalism thing. The collapse of capitalism into what increasingly seems like a global feudalism is not about the injustice of luck, but about concentration of power into tiny slivers of the population that become the sole people that matter.

[Elizabeth Pula]

Some people think they are better than others. Some people think they can do anything they want to other people, based on the prior basic thought of "being better". Health is probably the greater equalizer of all citizen within and without the same state, and other states.
The state is organized as a system based on the concept that the state is better and always must function and survive, regardless of the predicament of any one, or the minority of the citizens of that state. Human political leadership defines the boundaries and conflicts within the basic structure of any particular state, and the resulting predicaments of the citizens of any particular state. Some states as a whole have a larger majority of citizens surviving at a better mean, and average level of existence compared to other states. The predicament of "TIME: at any historical time point affects which state is relatively considered "better" pr "better survival of a percentage of citizens in that state".

[Elizabeth Pula]

note: "pr" should be "or"

[Jesse]

Why are we always so ready to overlook the monopolistic abuses of the economy, the consciously determined twisting of the laws by the powerful, and the fraudulent practices of the financial system, and attribute vast inequality to some objective 'invisible hand?'

It is because economists are caught in a credibility trap. The system is neither fair, nor efficient, nor providing the maximum utility of resources.

And there is nothing wrong with using net worth, except when you do not like what it tells you.

[fledermaus]

"Why are we always so ready to overlook the monopolistic abuses of the economy"

Because modern economic theory has come to the conclusion that monopolies only impose minimal costs on the rest of society. Because monopolies are efficient, if they weren't efficient then they wouldn't be monopolies, QED.

It is a lovely bit of circular reasoning that goes to show how far down the rabbit hole mainstream economic theory has fallen.