Wednesday, April 26, 2006

Just Deserts

Bryan Caplan:
"Olsaretti relies heavily on the Rawlsian premise that no one deserves to profit from inborn talent. If this is right, of course, the free market looks awful, precisely because it allows and indeed encourages talented people to get ahead. But this Rawlsian premise is truly bizarre. It implies, for example, that smart students don't deserve better grades, that great athletes don't deserve to win, and that inventors don't deserve to get rich from their ideas. And obviously they do."

This purported Rawlsian premise seems odd to me. I suspect the issue here involves the Rawlsian difference principle, which is that inequalities should be arranged to the advantage of the least well off. The very point of the difference principle was to identify the inequalities in a system of political economy that could be called just inequalities. Rawls of course understood that people are born with different abilities, different strengths and weaknesses. The question of justice was not the distribution of abilities and talents people are born with, but rather the question of justice concerns the way the system of political economy responds to the differences in talents and abilities. In coming to understand that the difference principle would be one of the principles of justice, Rawls specifically discussed the opportunities for inequalities to provide "rewards" to those with greater abilities. Such rewards would provide the incentives for people to invest and risk for future rewards that responded to their greater abilities. The inequalities that would result could nonetheless be to the advantage of the least well off in the community because the incentives would be in place for people to risk and invest in ways that benefitted others. Without such incentives the least well off may not find suppliers of medical and dental services, etc.

Further, the innate human tendency to exchange would seem to be ignored by the idea the people don't deserve to profit from inborn talent. It is the division of labor and specialization in production that allows each to choose to develop their special skills for greater personal rewards. These very same greater personal rewards are available precisely becuase the economic activity that results is valuable to others. Both parties to an exchange, both buyer and seller "profit" from the exchange. Both parties are better off. If we want to say the person who gains rewards from special talents that are undeserved, then perhaps we must also then say that the buyer as well does not deserve to benefit, to be rewarded, for the efforts of the supplier.

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