Some Thoughts on Inequality of Wealth and the Moral Claims We May Make on Each Other

Nicole Hassoun raises a number of interesting points worth pondering. So here’s some pondering, starting with her remarks on the Lockean proviso, about which she claims:

Even on the most libertarian justification for property rights, advanced by John Locke, one can only have a right to acquire something if that person leaves enough and as good for others. As Robert Nozick develops the theory, one cannot keep anything that he or she has not created that others need to survive. On a better (Rousseauian) conception of property rights, if the current distribution of property does not allow all to meet their basic needs, there is something wrong with it. Obviously, many people do not have enough to meet their needs in a world where billions are in desperate poverty and millions die every year from easily preventable poverty-related illnesses. The current distribution of property rights is not justified.

I’ll leave aside the provocative but unjustified remark that Rousseau, one of the most malignant enemies of liberty and civilization who ever set pen to paper (two can be provocative[1]), had a “better conception of rights,” and focus on just three issues. The first is what would meet a proviso; the second is whether it is unequal distribution of “property” or unequal distribution of “wealth” that should cause concern to those whose sympathies are aroused by people suffering in poverty; and the third is whether what is responsible for the unequal distribution of wealth, which leaves “billions…in desperate poverty,” is unequal distribution of property or unequal enjoyment of liberty.

1. Provisos on Acquisition

When discussing the acquisition of unowned resources, Locke offers two provisos; one is the “enough and as good left in common for others,” and the other is the “spoilage proviso.” The latter is solved when money, which does not “spoil,” is introduced. After discussing the benefits of money, he adds some remarks that are, puzzlingly enough, rarely (and that is an understatement) commented upon by those who consider the issue:

To which let me add, that he who appropriates land to himself by his labour, does not lessen, but increase the common stock of mankind: for the provisions serving to the support of human life, produced by one acre of inclosed and cultivated land, are (to speak much within compass) ten times more than those which are yielded by an acre of land of an equal richness lying waste in common. And therefore he that incloses land, and has a greater plenty of the conveniencies of life from ten acres, than he could have from an hundred left to nature, may truly be said to give ninety acres to mankind: for his labour now supplies him with provisions out of ten acres, which were but the product of an hundred lying in common. I have here rated the improved land very low, in making its product but as ten to one, when it is much nearer an hundred to one.[2]

Thus, the initial appropriator, by creating the conditions for the improvement of land, “does not lessen but increase the common stock of mankind” and “may truly be said, to give ninety acres to mankind.” Thus, it is the act of appropriation itself that satisfies the proviso that there be “enough, and as good left in common for others,” most especially after a means of exchange (money) is introduced, which allows accumulation without spoilage. The greater productivity generally means more for all, which “gives” more to mankind than was lost by the appropriation. Several property, as Locke terms it, “gives” more to all others, including later generations, than they could have hoped for without such a system of property.

David Schmidtz has spelled out the argument in greater detail and put it into the context of the “tragedy of the commons” that would obtain without appropriation.

Leaving goods in the commons fails to satisfy the Proviso. In fact, leaving goods in the commons practically ensures their ruin. The essence of what [Garrett] Hardin calls the Tragedy of the Commons – what makes it tragic, is precisely that not enough and as good is left for others. As a necessary condition for satisfying the Proviso, goods must be removed from the commons. Moreover, the more severe the scarcity, the faster resources will be destroyed in the commons, and thus the more urgently the Proviso will require that resources be removed from the commons.[3]

Systems of well-defined, legally secure, and transferable property rights do not impoverish the poor. Property “does not lessen but increase the common stock of mankind.” The property owned by the people of Luxemburg is not responsible for the poverty of the people of Namibia. There is no justification for redistribution on Lockean grounds.

2. Property or Wealth?

Property is a legal concept, whereas wealth is an economic concept. The two are often confused, but they should be kept quite clearly distinct. The one refers to a set of rights, the other to how people value such rights. The same legal claim to property may yield great wealth today and none tomorrow. Market exchanges change the values of property claims continuously, as Ludwig Lachmann explained clearly in his important essay on “The Market Economy and the Distribution of Wealth.”[4]

The resources of the world are, indeed, divided in very uneven ways.[5] Consider geography. Some nation states (to start with that fairly recent unit of analysis) are landlocked and some have long coastlines with deep harbors (and some long coastlines with few harbors). Some have diamonds and gold, others farmland with deep topsoil, and others rainforests with little topsoil. And yet, those various factors seem to be very weakly correlated, if at all, to wealth. Many poor countries have enormous mineral wealth (consider Zaire, Nigeria, etc.) and many rich countries have virtually no natural resources (consider the Netherlands, where people even had to manufacture land, or Luxembourg, or Switzerland, or Hong Kong). It’s not the “property,” that is, the claims to resources, that people concerned about poverty alleviation should be thinking about, but the income they derive from it, i.e., the wealth. Consumption – of food, medicine, shelter, education, transportation, and so on – is the measurement of wealth, which is what those concerned about poverty should be focusing on.

3. What Causes Wealth Inequalities?

What is responsible for wealth inequality is a very complicated topic. It seems that, in market-based economies, education drives much of the inequality. Thus, to get rid of the inequality, we could stop people from acquiring knowledge. It’s clear that’s not the kind of direction Hassoun would want to go. (At least, I hope not.) She’s concerned about people suffering in poverty.

Bryan Caplan posed scenarios according to which people in the United States might be responsible for the plight of the poor of Haiti. Hassoun affirmed in her response, “I think that the current distribution of property rights globally is very unjust because it leaves people unable to meet their basic needs.” I think that she missed the point. Caplan focused on how people in wealthy countries could act to improve the lot of people in poor countries, and I agree wholeheartedly with what he says. But it’s really only a part of the problem. The people of Haiti are poor because they have been governed for generations by a succession of kleptocrats and psychopaths.

In the course of their histories, of course, most countries have suffered from such rulers. Those that have succeeded in limiting their power and thus liberating creative activity have increased their wealth and prosperity. I encourage people interested in this issue to consider the treatment of the causes of prosperity in Deirdre McCloskey’s remarkable book Bourgeois Dignity, which considers all the accounts I’d ever heard of (and some I hadn’t) and measures them against the enormous wealth explosion of the past two centuries. Economic freedom and respect for entrepreneurship are the only explanations that emerge as capable of explaining what she calls “the great fact.”

The great inequalities in the world are not caused by inequalities in the division of resources, but by unequal enjoyment of liberty. Oil-rich Nigeria is not a wealthy country, although there are wealthy people there, most of whom are associated with the state. The per capita incomes of Switzerland (per capita GDP [PPP] of $51,262)[6] and Luxembourg (per capita GDP [PPP] of $89,012) and Hong Kong (per capita GDP [PPP] of $50,551) are not high because they found themselves on top of some valuable gold mines or oil deposits, but because the people who live there enjoy personal and economic liberty under relatively limited government. One might even argue that they’re so rich because of the “anarchical system of competition”[7] of which Marx bitterly complained and which he hoped to replace.

If the poor were poor because they lost out and the rich benefited from a maldistribution of property, one would think that the poor would be much better if the rich simply ceased to exist. If I am poor because I am being robbed, then if the robber were to go away, I’d be much better off. So, would my friends in Burkina Faso (per capita GDP [PPP] of $1,301) be better off if Nicole Hassoun were to cease to exist? I very much doubt it. They would be much better off if she were to campaign for free trade. They would be even better off if their dysfunctional government were to be reformed and were to stop stealing from them or, worse than the theft, blocking them from creating and enjoying wealth.

It’s not unequal distributions of property that are responsible for poverty on the scale that concerns Hassoun, but unequal enjoyment of liberty. That’s one of the reasons why libertarians are libertarians, because liberty makes better lives possible.[8] And the combination of injustice, inefficiency, rank corruption, and perverse incentives created by the programs Hassoun supports is why I prefer to help people through Mercy Corps (one of the most effective charities in the world, in my opinion) rather than having my income taken from me under the threat of force and redistributed in the ways the U.S. government chooses.

Where does this leave Huemer’s case?

The above reasoning suggests that attempts to take by force what the people of Luxembourg have to send it to the people of Burkina Faso, even if it could be done without enormous corruption (i.e., even if the Tooth Fairy does, in fact, exist), would be unjust, because the people of Burkina Faso are not poor as a result of an unequal distribution of property. Thus, no one would be justified in carrying out such acts of theft, whether states or other criminal bands. We would be justified, however, in demanding that the governments of wealthy countries cease prohibiting mutually beneficial exchanges that would benefit those people. We would also be justified, whether individually or in voluntary groups, in doing what we can to help the people of Burkina Faso improve the governance of their country and to limit the predatory and wealth-inhibiting powers of the state that rules them.

That leaves Huemer’s questions regarding political authority still hanging in the air. I’ll address some of Hassoun’s other points about authority in another post.

Notes

[1] I am hardly the only person who considers it less-than-obvious that Rousseau’s account of rights was “better.” Consider, for example, how Rousseau deliberately undermined Voltaire’s campaign for religious liberty in France, which triggered, after much patient suffering, Voltaire’s campaign against him. Voltaire and Hume were far more humane men, as well as better philosophers, than the misanthropic totalitarian from Geneva who abused them. But enough provocation.

[2] Locke, John, Two Treatises of Government, ed. by Peter Laslett (Cambridge: Cambridge University Press, 1988), p. 294.

[3] Schmidtz, David, The Limits of Government: An Essay on the Public Goods Argument (Boulder: Westview Press, 1991), pp. 21-22.

[4] “In a market economy a process of redistribution of wealth is taking place all the time before which those outwardly similar processes which modern politicians are in the habit of instituting, pale into comparative insignificance, if for no other reason than that the market gives wealth to those who can hold it, while politicians give it to their constituents who, as a rule, cannot.” Ludwig M. Lachmann, Capital, Expectations, and the Market Process: Essays on the Theory of the Market Economy, ed. with an Introduction by Walter E. Grinder (Kansas City: Sheed Andrews and McMeel, 1977). Chapter: “The Market Economy and the Distribution of Wealth,” Accessed from http://oll.libertyfund.org/title/97/3326 on 2013-03-21.

[5] Some have argued that unequal “world ownership” is responsible for unequal income and that joint ownership, even with “self-ownership,” would yield equality. See the arguments of G. A. Cohen in Self-Ownership, Freedom, and Equality (Cambridge: Cambridge University Press, 1995). I argued that his ingenious arguments fail completely, due to a fatal confusion of the scenarios he describes, in “G. A. Cohen on Self-Ownership, Property, and Equality,” Critical Review 12 no. 3 (1998), pp. 225-251.

[6] All per capita GDP in PPP numbers from http://search.worldbank.org/data?qterm=per+capita+GDP+PPP&language=EN&format=.

[7] Marx, Karl, Capital: A Critique of Political Economy, Volume I, https://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-I.pdf, p. 368.

[8] A good place to start in explaining inequality of wealth is with the Fraser Institute’s Economic Freedom of the World Report, which measures the enjoyment of economic freedom (a wider metric of freedom is under construction) for all of the countries of the world for which reliable public data are available. Chapter 1, Exhibit 1.9 and Exhibit 1.10, pp. 23-24, are especially interesting in light of discussions of inequality of income. Here are full-sized versions of Exhibit 1.9 and Exhibit 1.10.

Also from This Issue

Lead Essay

  • The Problem of Authority by Michael Huemer

    Michael Huemer advances two broad theses: First, we should judge government actions using precisely the same standards that we commonly employ in judging individuals’ actions; governments and their agents get no special moral status. Second, he suggests that a society without a monopoly government might not be as different different as is sometimes imagined. Those who fear corporate power should question whether government, which bears a striking resemblance to an especially large, ill-behaved, and overbearing corporation, can ever be a vehicle for social justice.

Response Essays

  • Plausible Libertarianism: Philosophy, Social Science, and Huemer by Bryan Caplan

    Bryan Caplan praises Michael Huemer’s work on the problem of political authority because it avoids the extremes of both rights-based and consequentialist reasoning. Each has notoriously foundered on difficult problems in the past, as is well-known to students of political philosophy. Huemer instead resorts to commonly shared moral intuitions, thus establishing a strong foundation for his still quite radical libertarian politics.

  • Moral Philosophy, Obligation, and Some Concerns by Tom G. Palmer

    Tom G. Palmer suggests two areas where Huemer’s argument may need elaboration. First, he suggests that a monopolistic government authority may indeed be necessary at times in order to solve coordination problems. Rules can help coordinate behavior, but they can only do so if nearly everyone knows about them and follows them. Second, Palmer suggests that the intuitionist method may only be of limited use, as people in other times and places will not share the common intuitions of present-day westerners. If we are to make the case for human liberty, we need to make the case to them as well.

  • Authority is Not the (Only) Problem: People Have Positive as Well as Negative Rights by Nicole Hassoun

    Nicole Hassoun makes the case for positive rights. Without adequate water, food, and health care, questions of consent cannot be reached in the first place. A government that does not help all its citizens to secure these things is not one we could ever reasonably consent to. Somalia suggests that in the real world, anarchy can be horrible. Pre-tax income is not a thing we own as a property right; it is simply an accounting figure. These conclusions, she argues, follow from common sense.

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