Freeman

ARTICLE

An Inquiry Concerning Inequality

JANUARY 01, 1969 by W. A. PATON

Dr. Paton is Professor Emeritus of Accounting and of Economics, University of Michigan, and is known throughout the world for his out­standing work in these fields. His current com­ments on American attitudes and behavior are worthy of everyone’s attention.

The view that a state of inequality in mankind is bad, almost wicked, has been booming. Among welfare "workers", school teachers (in­cluding the college professors), ministers, politicians, and in the ranks of reformers and do-gooders wherever you find them, there are many who are ardently espousing the egalitarian cause, and almost everybody nowadays acquiesces in the general notion that continuing efforts to whittle down the in­equalities found in the economic sphere are warranted. As can be said of most movements promising to hasten the dawn of the millen­nium, the dedication of the true believers is typically based on emo­tion or mystic yearning rather than careful observation and study, and total ignorance of the subject seems to be the norm among both the enthusiasts and those who simply go along. This benighted condition of the advo­cates, plus the prevailing lack of forthright opposition, or even of critical review, provide the excuse for this attempt to do a bit of prob­ing.

Variation in Man’s Surround­ings

On undertaking even a lim­ited inquiry the observer can hardly overlook, at the outset, the variations that are found on every hand throughout nature. Mother Earth is far from a homogeneous or quiescent mass. Our planet ex­hibits a great range of geologic formations and climatic conditions. Differences in soil and water sup­plies, and in temperature, wind velocity, humidity and so on are the rule, and in many localities changes in some factors are severe from day to day as well as from season to season. Turning to plant and animal life we find a fasci­nating complexity of classes, kinds, species, and other groupings, with noticeable individual differences within both broad and narrow divi­sions. Those who handle horses or dogs, for example, become very familiar with the marked dissimi­larities in temperament and talent found among individuals in speci­fic breeds, strains, and even in the progeny of particular parents. The plain fact is that we are every­where confronted with variety, not uniformity. Indeed, the fussy per­son will note here that no two grains of sand, or blades of grass, or leaves on the tree, or kernels of wheat are identical in size, shape, and other features.

Man’s Peculiarities

When atten­tion is focused on man alone a wide range of characteristics is dis­closed among races and regional groups, and also in narrow sub­divisions such as the tribe, clan, or specific family. Differences in size, build, skin, eyesight, blood type and a host of other physical factors abound among representa­tives of Homo sapiens, wherever they live. And such differences can hardly be ignored by even the most rabid supporter of egalitarian doctrine. We can’t avoid accept­ing the proposition that no one can add a cubit to his stature by taking thought, and as yet there is no transplanting technique available or proposed by which several inches could be removed from Wilt Chamberlain’s frame and trans­ferred to one of his shorter team­mates. Individual human beings do not look alike, they behave differ­ently, and they are different, be­yond doubt.

Sweeping Heredity Under the Rug

But this is not the whole story. Those who proclaim the basic equality of men may con­cede the differences in appearance and physical makeup and still argue that all of us begin life abreast in a basic sense, that all have the same potential or worth at the starting line. Taking this position means acceptance of the view that everyone is born a blank, a clean slate, or, alternatively, that each individual starts with pre­cisely the same inherent level of intelligence, talents, over-all ca­pacity. In other words, the factor of inheritance is either disre­garded entirely or is considered to be equalized, and the individual’s record in life is assumed to be due solely to the impact of environ­ment, the influences and events ex­perienced. Thus the door is opened to the claim that a poor perform­ance is attributable entirely to an unfortunate background of experi­ence—lack of proper food, hous­ing, or medical care, inadequate education and training, inferior employment opportunities, harass­ment and exploitation encoun­tered, and so on, and also, perhaps, sheer bad luck.

For anyone who is well ac­quainted with human physiology and behavior, and indeed for all laymen with a fair amount of com­mon sense and willingness to rec­ognize realities, this thesis is hard to swallow, even preposterous. The evidence is conclusive that each in­dividual comes on the scene with a distinctive package of traits, tendencies, capacities. Typically the differences are more outstand­ing than the similarities, and some of the ingredients may be at odds rather than in harmony. As to the impact of the varying hereditary package, moreover, the case is quite clear; on every hand ex­amples appear in which the influ­ence of inheritance is plainly re­flected in the individual’s career. This is especially noticeable among persons who are virtuosos in mu­sic, and in the fine arts generally; usually it is easy to spot conspicu­ous talent in the family trees of such individuals. And likewise among those who show brilliance in professional fields, or in any line requiring high-level ability, the hereditary background is com­monly very much in evidence. "Brains" are inherited, beyond doubt, along with other qualities. That the more commonplace in­clinations and aptitudes are handed down may be somewhat less ap­parent, but that inheritance plays a part here too can scarcely be questioned.

These comments are not in­tended to deny that outstanding ability crops up here and there where the ancestry of the individ­ual—assuming the facts are avail­able—is very unpromising. Even so, we will rarely see genius sprout­ing from a line of progenitors heavily loaded with morons. Fur­ther, although almost any one can become more capable with inten­sive training there is no program that will make great writers, phi­losophers, mathematicians, engi­neers, researchers, executives and so on from below-par raw material.

From the Haves to the Havenots

Recognition of the wide range of abilities and accomplishments among men, based at least in part on the hereditary variables, and of the impossibility of equalizing energy and talent through any sys­tem of education and training, leaves us still confronted by the widespread opinion that the good society, the happy land, is one where rewards, if not attainments, are substantially equal, and that the coercive powers of the state should be invoked for the purpose of achieving—or at least moving toward—this idealistic goal. This view has been politically dominant for several decades in the United States (and in many other coun­tries, of course), and the pressures designed to exploit the haves for the benefit of the have-nots (and the have lesses) have been mount­ing. The major means employed, as we all know, has been that of main­taining a high level of tax levies on the more successful and productive individuals and business units and use of a portion of the funds thus confiscated to provide handouts to the elderly (our "senior citizens"), the unemployed, the needy stu­dents, the badly housed, the neg­lected children, the mentally re­tarded, the sufferers from disaster, the farmers (both poor and afflu­ent), and many other special groups.

It is difficult to appraise the ef­fect of these efforts to date in terms of progress toward economic equality, or in other respects. The assault on high incomes through the progressive tax structure has surely been a leveling influence, but even here the net results are not clear. In the case of high in­dividual salaries, for example, there may be offsetting factors in the market for top-flight services. Earnings from property holdings probably have been hit harder—over-all—than service incomes. Evidence is not wanting to suggest that initiative and enterprise have been discouraged by the weight of punitive taxation and the continu­ously increasing load of regulation and interference to which individ­uals and business organizations have been subjected. The GNP as officially computed keeps on in­creasing, but the rate of growth may well have been retarded by the flood of "reform" legislation. Evi­dence can also be found suggesting that some of the programs launched have not only missed the mark but have resulted in injury rather than benefit to the "under­privileged". All in all the showing is not one for the egalitarians to crow about.

Equalizing Economic Satisfac­tion Impossible

That it is difficult to rate the results of the schemes designed to despoil the rich and leaven the lot of the poor, from the days of the New Deal on, would be conceded by most ob­servers. The opponents of such programs, needless to say, would like to see a retreat begun from a movement that they regard as basically unsound and harmful. The supporters, on the other hand, while generally dissatisfied with progress to date, insist that what is needed is more of the same—higher taxes on the well-to-do and on business enterprise, expansion of existing government aid pro­grams and extension of such ef­forts in new directions, govern­mental control of economic activ­ity all along the line. In other words, there is thus far no abate­ment of the enthusiasm for the egalitarian and socialist causes. In the light of this situation it may be desirable to point out the practical impossibility of cutting the economic pie into equal con­sumable slices for all, regardless of what is done to money incomes by tax levies or other financial confiscatory devices.

Assuming a society in which there is only one simple product consumed—plain rice, for exam­ple—a division of the output into equal portions by governmental authority may be imagined (al­though even in this extreme case the size of an adult share might exceed that of a small child, and other variations might well be pre­scribed or tolerated). But when attention is turned to the actual situation in the United States, or any other area with a market economy providing an output of many thousands of different kinds of consumer commodities and services, the task of providing each person with the same amount of consumer satisfaction en­counters insurmountable obstacles.

Some folks like a big car and some prefer a small job. Some mil­lionaires want a yacht with lots of marble and gold doorknobs and some don’t care for such trim­mings. The taste for sport and travel is not uniform, which means that not everyone wants an equal share of the output of fish­ing rods, golf clubs, sun glasses, and the like. Some of us are ad­dicted to television watching and some are not, and there are still a lot of people who have no use for cocktails or cigarettes. Some like to read and some don’t, and desires vary as to types of read­ing material. Not everyone cares for concerts and operas, and even if attendance were required how could everyone be furnished with equally attractive seats? And still more bothersome, how could it be arranged to provide everyone with the same degree of enjoyment? Some members of the audience will be relatively unappreciative, especially those with impaired hearing and those who don’t know one note from another.

Likewise in the prosaic areas of food, clothing, furniture, and housing, in the presence of a mar­ket offering almost unlimited choices, the packages of individual preferences are legion. And is it proposed that we all be compelled to buy and eat the same kind of pizzas, or any pizzas, for example, or wear neckties of a particular color? Are the diversities of con­sumer inclination to be disre­garded by the police state envis­aged, with a resulting required uniformity in products made available for consumption?

In the case of large and com­plex physical units of product the equalizer faces an obviously im­possible problem of division. For example, if every family wanted a riding horse, and the number of families was larger than the num­ber of horses available, it would hardly be practicable to award a piece of a horse to each.

No, the plain fact is that divi­sion of an elaborate array of con­sumer products into equal shares is literally impossible, and pro­viding each individual with the same amount of "psychic in­come", or consumer satisfaction, is something still further not of reach. No human being or group, even if operating in the frame­work of a government bureau, and even if backed by plenty of armed marshals, can cope with such problems successfully.

The only kind of a society or community in which even an ap­proach to equal sharing is practi­cable is the prison, the slave camp, an army of privates, or—tempo­rarily—castaways or other dis­tressed persons on short rations.

This brings us to an important and neglected point. Equality in the distribution and consuming of economic output is inherently in­compatible with a prosperous, progressive society, blessed with a great diversity of tangible goods and services. Variety may not be the spice of life but it is an essen­tial feature of today’s market economy. A complex, competitive market, pillared on specialization and exchange, is not easily devel­oped where egalitarian views are dominant (as can be seen in some backward areas of the world to­day), and such an economy—even if long established and flourish­ing—can be crippled and eventu­ally destroyed by a continuing avalanche of share-the-wealth measures—even if the extreme step of imprisonment or liquida­tion of the more prosperous (the treatment accorded to the Kulaks) is avoided.

Impairing Individual Incentive

It was noted above that evidence is accumulating indicating that enterprise and productivity have been unfavorably affected by pro­gressive taxes and the accompany­ing business controls and interfer­ences. There remains for brief at­tention the question of the effect of redistribution programs—aimed at more equal sharing—upon in­dividual human beings and their basic motivations.

That no two individuals have the same package of traits, incli­nations, and abilities has been stressed. This does not deny, how­ever, that there are some character­istics common to many men. One such widespread trait is an un­willingness on the part of the worker, in the vineyard or else­where, to see a part of his output commandeered by government, or private pirates, for any purpose. This is particularly true of the hustlers and highly efficient. The superior worker will not continue to maintain his stride indefinitely if the fruits of his labor are seized and turned over to others, be they worthy unfortunates or parasitic drones. The experience in this country and abroad of the scores of idealistic, utopian com­munities, often launched in an at­mosphere of religious fervor, has a bearing. Examination of the history of such undertakings shows that almost invariably the more energetic and productive members became dissatisfied when they realized that they were sup­porting the inefficient and shift­less, and the usual outcome was either a slowing down to the pace of the sluggards, or departure for a more promising environment, if this were practicable.

Use of the machinery of taxa­tion and other financial devices, including inflation, to take from Peter and give to Paul, may tem­porarily obscure what is going on. In a complex economy, in which money and credit are employed to facilitate exchange, the partici­pating individual often seems to have difficulty in tracing relation­ships and effects. The young berry picker who works diligently and effectively out in the swamp all day and has twenty quarts of nice raspberries to show for his ef­forts, would be astounded and in­furiated if Uncle Sam came along and took half of his out­put away from him. But when he grows up and becomes superin­tendent of the berry canning fac­tory, and is paid by check for his services, he may be somewhat less outraged when laws are passed requiring him to turn over to his good uncle—either by employer withholding or on his own initia­tive—half of his money income.

Free spenders of the other fel­low’s money seldom mention the need for efficiency and high pro­ductivity if the level of economic output is to keep pace with a growing population, to say noth­ing of an increase in the per-capita slice. They take it for granted that there will always be a willing mule to do the plowing, regardless of how well he is fed. The spenders talk and act as if the purse into which they dip to get the funds for their grandiose schemes had no bottom whatever—like the widow’s cruse of oil back in Elijah’s time. There is good reason for regarding their faith as unjustified. Just where the breaking point will be reached in a particular setting can not be readily predicted, but the old story of the last straw and the camel’s back should not be forgotten. One thing is certain: when the econ­omic climate becomes so cloudy that it offers no lure to the enter­prisers, the innovators, the hus­tlers, the savers, there will be a disastrous decline in productivity.

The conclusion indicated by this survey is that variation, differ­ences, inequalities are a common-place feature of man’s life on this planet, and—what is crucially im­portant—are indispensable to a thriving, growing market econ­omy, with high living standards. A world in which there was a complete equality in economic shares and consumer satisfactions would be a drab, unproductive, slave-camp sort of place. Hence we will do well to guard against being beguiled by any version of the egalitarian philosophy, how­ever idealistic and well-inten­tioned. Let’s not be misled by those urgently beckoning us toward a downhill road. Let’s be thankful for the blessing of diver­sity, inequality, and staunchly re­sist its erosion.

 

***

The Independent Individual

The Social unit is the independent individual; the more individ­ual and independent he is, the more able is he to cooperate, and the stronger the society he creates. Cooperation is possible only amongst independent individuals; amongst others, there may be regimentation but no creative cooperation. Society is a vast, nat­ural, complex, intentional, and yet largely unconscious coopera­tion amongst those able to stand on their own, and, in the exi­gencies of life, lend a hand.

From a Ford Sunday Evening Hour broadcast by W. J. Cameron (circa 1937) 

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