Wealth and Justice
I am reading economist Tyler Cowen’s philosophy mini-book, “Stubborn Attachments”. In which he vigorously defended economic growth as social good and a value individuals must strive for or at the very least defend. I have mixed feelings about Tyler’s effort in this book. I am quite passionate about economic growth and I think it merits a strong moral case. Though I am not sure this effort is quite fundamental enough for that goal. I hope to write a full review at some future point. But I’ll like to quickly quibble about a tiny point.
In the section on “Growth rates and Long time horizons”, Tyler considers whether redistribution to the wealthy can be justified (starting from pp 127). His argument is that utilitarian logic, which he is very non-committal about, may justify such redistribution. If what we care about is long-run growth and we can transfer resources to the wealthy who can earn good returns on that investment, then it is at least morally defensible for us to do so. For example if Dangote can earn 8% on capital whereas I can only earn 1% returns, but suppose 1.6% of Dangote’s returns will trickle down to me. Then it seems efficient for more resources to be redistributed to him and not me.
In my experience, that argument seem at odds with most people’s moral intuition (even the wealthy). Why give more to those who already have plenty? Even more disagreeable is the progressive attitude towards wealth. It is almost impossible to associate wealth with merit in any progressive redistributive framework. Most people would willingly deny the wealthy any social benefits whenever they are competing with the poor. Even if the metrics and rewards are unrelated to wealth. This led some philosophers(e.g Nozick) to conclude from this that most downward redistributive frameworks are driven partly by envy. The philosopher John Rawls in stating his “difference principle”, insisted that social arrangements must always be to the benefit of the “least well-off”.
Now I have profound disagreements with the progressives' attitude to wealth. But I find Tyler Cowen’s example/argument in this area deeply disturbing. Even if you accept the utilitarian logic, I find wealth as a proxy for ability or know-how fallacious. Suppose I have demonstrably superior investment capabilities (say my knowledge of statistics) over Dangote, would it still be socially optimal to redistribute to him because he has more to invest at compounded interest? Not without some other justification other than future returns. Because now there’s an objective basis to assume I can do more with more. We can argue at this point that Dangote may be able to hire more quants, whose combined ability may beat mine in the long run. But what this does is to expose the flaws in the utilitarian framework’s aggregate view.
Human capital, whether in the form of acquired skills, natural talents or other inherent abilities that people have is a much better proxy when discussing social resources and human access. Wealth by itself does not confer any fundamental rights (with the exception of property rights) on it’s holder.
Now there may be some objections to what rights skills and talents grant individuals. Rawls for example thinks that differences in skills and natural abilities are “arbitrary from a moral point of view”. I disagree with him of course. But if you’re going to stand up for sustainable economic growth, you cannot ignore human capital. A growing nation is one that puts it’s best talents to work, not it’s wealthiest.