The Inherent Inequality in the Distribution of Income or Resources - Research Paper Example

Outline I. Introduction A. Envy-free inequalities are just. B. Thesis statement: unfair income or resource distribution is still unfair even with the absence of envy if the manner of distribution is inequitable II. Inequality in Income or Resource Distribution A. Inequitable Envy-Free Division of Resources B. Lack of envy is not a suitable description of fairness C. A deep-rooted social inequality: racial and power inequality III. Conclusions Inequality of Income/Resource Distribution Introduction As eloquently stated by Berliant and colleagues (1992), “There now exists in economics a well-developed literature devoted to the formulation and the analysis of equity concepts. The concept that has played the central role is that of an envy-free allocation, that is, an allocation such that nobody prefers what someone else receives to what he receives” (p. 203). The notion that envy-free inequalities are just has been endorsed by several scholars besides Berliant and colleagues (1992). This notion has a long history, though remains modern. Although this description of envy is recognized, the premise of the absence of envy to fairness is basically unsound because it evaluates the equality of the outcome without taking into account the processes that generated the outcome (Holcombe 1983). Equitable outcomes are outcomes that are generated by just processes, and outcomes that are free from envy may not be just, if they are generated by unequal processes (Crawford 1977). The objective of this essay is to discuss the inherent inequality in the distribution of income or resources. The argument of this essay is that an unfair income or resource distribution is still unfair even with the absence of envy if the manner of distribution is unjust. Most apparently, by some degree of merit, some individuals may be worthy of more resources than others, which would imply that equal income distributions are not envy-free, and envy-free distributions are unfair. The next section includes a discussion of inequitable envy-free resource distributions in an entirely distributional context without production, and in which no person is any more worthy than any other. The dilemma is basically one of equal distribution. Inequality in Income or Resource Distribution Take into account the simplest scenarios of a more common dilemma of equal distribution. First, two individuals should divide a bag of two supplies between them. The most common solution is for one of them to partition the bag in two, and afterwards let the other pick which of the two bags s/he would prefer to have. The solution is envy-free since the picker gets the bag s/he most favors, and the divider has an inducement to partition the bags so that s/he is not left with a bag she wants less than the bag the picker chooses. The traditional understanding, characterized by the passage that introduced the essay, is that because the outcome is envy-free, it is equal. A simple case can demonstrate that it is indeed unfair. Take into account two people, Ben and John, dividing two things, mangoes and bananas. Imagine that the persons are well acquainted of each other that they know precisely each other’s value preferences. Performing this game of allocation, John partitions the mangoes and bananas into two bunches and Ben selects the bunch he most wants. John could simply place half the mangoes and half the bananas in each bunch, but there is another technique he can use that can gain him a vantage point. Knowing Ben’s value preference, John knows that he loves bananas, while John wants mangoes. Hence, John partitions the fruits so that one has more bananas and the other more mangoes, such that Ben is on the similar situation as he would have been had the two varieties of fruits been partitioned fairly. At this point, John is at an advantage than an equal distribution. If equality is described as the lack of envy, then in principle the process would be equitable, although one participant is cleverly privileged over the other. This strengthens the idea that the lack of envy is not a suitable description of fairness (Holcombe 1983). As Rawls (1971) makes use of the word fair, it would be difficult to assume that from behind a cloak of ignorance participants would consent to a process that would cleverly gain some over others after the cloak was raised. Certainly, it was merely this form of clever advantage that the cloak of ignorance concept was designed to remove. Luce and Raiffa (1957) talk about this game of equal distribution and underline what they refer to as the divider’s benefit. They support the procedure of selecting the divider by some fair process, such as toss coin, so as to examine the characteristics of this procedure of distribution further. Brother Grimm’s (2005) The Fisherman and His Wife vividly illustrates this need to objectively choose the divider. The divider in Grimm’s story is the wife, although she did not exactly play the role of a literal divider. However, the power to take control of the situation was granted to her. She was given the power to make wishes to the magical flounder and she took advantage of the situation to get all the things that she desires. The fisherman who caught the magical flounder, on the other hand, should be given an equal power in the situation but because the wife knows the humble nature of her husband she took full control of the situation. Likewise, Crawford (1977) illustrates that a person is at least at an advantage being the divider as the chooser, but assumes that this is a procedure of equal distribution, without further dealing with the advantage of the divider. Holcombe (1983) also comments on the advantage of the divider, but the connection between unbiased results and envy-free results has remained recognized in the literature, possibly due to the fact that none of these instances was the concern directly dealt with. The divider-choose procedure of equal distribution puts direct emphasis on this concern. There is the absence of production, and no individual is any more worthy than any other individual. The result is envy-free (Holcombe 1983) however one individual is cleverly advantaged over the other. Is this equitable? The distribution of heterogeneous acres of land is commonly applied to demonstrate this process of distribution (Crawford 1977). For instance, in Leo Tolstoy’s (2001) How Much Land does a Man Need Pahom, a Russian peasant, was eventually given the opportunity to own a large bundle of land. Assume that Pahom, instead of acquiring land through the demon, inherit an acre of land that is to be partitioned between him and his sister. The land encloses some especially developable land close to a main road and a remote spot with a good fishing pond elsewhere on the area. Pahom’s sister, being a city lover, has revealed an interest in developing the land close to the road, whereas a more introspective Pahom prefers to fish at the isolated fishpond. If Pahom were the divider, he would put more property in the tract with fishpond, assured that his sister would prefer the land that could be easily developed, while if the sister were the divider, she would put more property in the tract close to the road, assured that the introspective brother would want to keep hold of ownership of the remote pond. Would this procedure of distribution actually be regarded equitable when we know beforehand that it is inclined to benefit more one of the individuals over the other? The privilege to be the divider might be accidentally determined, possibly by a toss coin as proposed by Luce and Raiffa (1957). However, one would be troubled to consider even this as equitable as one participant would gain relative to the other on the basis of a chance event. In order to explore this more thoroughly, one should disconnect the fairness of the toss coin from the fairness of the advantage of the divider that is selected by the toss coin (Luce & Raiffa 1957). Afterward one can observe that a fair procedure, the toss coin, assigns which participant is advantaged in relation to the other. It is the toss coin that is fair, and seemingly just, but the divider-chooser rule still prefers one individual over the other. If one merely aims to allocate an advantage in a fair manner, then the participants could toss a coin and award all of the land to the winner, leaving the other with nothing. Prior to the toss coin, neither participant has a lead over the other; hence the anticipated result is identical either way (Luce & Raiffa 1957). Nevertheless, this fair process of selecting the privileged one cannot be applied in power distribution, such as that portrayed by Mark Twain’s (2008) Luck and King’s Letter from a Birmingham Jail. Although the presence of ‘luck’ in the toss coin procedure and Scoresby’s triumph in life is quite similar, it does not imply the same thing. In the case of Scoresby, the people around him, such as the Reverend, are aware that he is not really a talented or remarkable being, but only gifted with luck. The Reverend, who has the military and intellectual capability, trails behind the successes of the untalented or unremarkable Scoresby. In this case, it is shown that there is an obvious inequality in the power allocation between Scoresby and the Reverend; he who has the capability is relegated to an inferior position relative to that of an incapable individual. This case is inherently biased that no amount of toss coin will be able to resolve. Similarly, in King’s (2000) Letter from a Birmingham Jail, the inequality in power distribution between the White and Black races is expressed. Due to the historical subordination of Blacks to the White race the former is seen as inherently inferior to the latter. This form of deep-rooted social inequality is something that would be very difficult to amend. Baumol (1982) has called this as a linguistic and philosophical matter, and he is certainly accurate. For most of history, individuals recognized their inherited positions in life as reasonable, although they were not envy-free as the current scholarship describes it. It is similarly sensible to recognize envy-free results as fair, although some individuals are methodically advantaged over others (Baumol 1982). If one is eager to question whether absence of envy means fairness, then it is important to examine the reason why it is not an appropriate description of fairness. The above examples help demonstrate the dilemma. In majority of instances, envy-free distributions are likely to be equitable, unless some participants are worthy of more than others. But in a number of instances, an envy-free distribution can be produced that makes some individuals, or the choosers, unjustly. The explanation is that the procedure that produced the outcome was inequitable. In most actual distributional concerns, the notion of fairness will be complicated if one attempts to evaluate fairness only by considering the outcome, without analyzing the procedure that results in the outcome (Rawls 1971). The notion that equitable outcomes are the product of equitable procedures has been debated before. Rawls (1971) formulated his famous instrument of the ‘cloak of ignorance’ to embody an equitable process. Rawls (1971) argues further, to propose a number of equitable results, such as the ‘maximin’ principle, which would capitalize on the interests of the least advantaged individual, that he thinks would be the outcome of just processes. Nozick (1974) is opposed to Rawls (1971) on this topic, and formulates a pure procedural model of equality, where the equality of the outcome is rigidly evaluated by the fairness of the process. Rawls (1971) and Nozick (1974) regard more multifaceted contexts where people differ in their creative capabilities, and where merit can serve a function in the equality of outcomes. The divider-chooser model reviewed above illustrates that even in a quite plain entirely distributional context where there is without production and no one is worthy of more than anyone else, the equality of a result still cannot be assessed without examining the process that generated the result. This is specifically important to a continuing scholarship that makes use of the feature of absence of envy as a decisive factor for predicting whether an outcome is equitable. The dilemma with applying absence of envy as a standard for fairness is that the standard analyzes only the result of the procedure rather than the procedure itself. Any fairness standard that suggests examining only an outcome will bear a similar defect. One cannot evaluate the fairness of an income or resource distribution by examining a curve or coefficient, for instance, because those assessments of income inequality examine only the outcome, without taking into account the procedure that generated the outcome. Likewise, one cannot evaluate the equality of prices without taking into account the procedure that produced those prices (Holcombe 1983). Equitable outcomes are the product of equitable procedures (Lavoie n.d.) Conclusions The mechanisms that generate prices or income/resource distributions are multifaceted and include features of hard work, luck, and varying inherent capabilities, among other aspects, and one could be compelled to assume that these obscuring aspects complicate the merits of exercising liberty from envy as a fairness standard. In this sense, the divider-chooser rule explored above is particularly enlightening. In the divider—chooser match no one is worthy of more than anyone else, and no one generates anything; hence hard work and merit, vital aspects in most actual distributional concerns, are beside the point. Yet, in an entirely distributional setting, the distributional procedure can be inequitable, as in the match between the divider and chooser, resulting in an envy-free but inequitable result. As the passage at the start of this essay asserts, there is a rich scholarship on fairness notion that makes use of the absence of envy as its standard for equality. Nevertheless, absence of envy is neither needed nor adequate for equality. It is not needed because in numerous situations some individuals are worthy of more than others. The match between the divider and choose demonstrates that it is not adequate for equality even when capability or skill is a not an issue. Freedom from envy does not mean fairness. Works Cited Baumol, William. "Applied Fairness Theory and Rationing Policy." American Economic Review (1982): 639-51. Berliant, Marcus, William Thomson, and Karl Dunz. "On the Fair Division of a Heterogenous Commodity." Journal of Mathematical Economics (1992): 201-206. Crawford, Vincent. "A Game of Fair Division." Review of Economic Studies (1977): 235-47. Grimm, Wilhelm, Eric Metaxas and Jacob Grimm. The Fisherman and His Wife. Spotlight, 2005. Holcombe, Randall. "Applied Fairness Theory: Comment." American Economic Review (1983): 1153-56. King, Martin Luther. Why We Can't Wait. Signet Classics, 2000. Lavoie, Richard. "Fairness: To Each According to his Needs." (n.d.): http://www.ricklavoie.com/Fairness.pdf. Luce, Robert Duncan & Howard Raiffa. Games and Decisions: An Introduction and Critical Survey. New York: John Wiley & Sons, 1957. Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, 1974. Rawls, John. A Theory of Justice . Cambridge, Mass: Belknap, 1971. Tolstoy, Leo. How Much Land Does a Man Need? Crocodile Books, 2001. Twain, Mark. The Complete Short Stories of Mark Twain. Stilwell, KS: Digireads.com, 2008. Read More