Outcomes and opportunity

Among the many comments lost (temporarily I hope) in the great database disaster was a discussion of the old distinction between equality of outcomes (like life expectancy) and equality of opportunity. This distinction has long been a staple of debates between market liberals and social democrats, and now defines a central point of distinction between supporters of a Third Way (such as Blair) and modernising social democrats (such as Gordon Brown), who may be indistinguishable on issues like privatisation that formerly acted as litmus tests.

A look at the evidence suggests that a position supporting equality of opportunity while accepting highly unequal outcomes is not sustainable. The most important observation is that, contrary to popular belief, there is less mobility between income classes in the United States than in European social democracies. A good, and fairly recent study in this is The Real Worlds of Welfare Capitalism by Goodin, Headey Muffels and Dirven, which I reviewed here, along with Barbara Ehrenreich’s Nickel and Dimed.

There’s plenty of other evidence suggesting that high levels of inequality naturally perpetuate themselves, most obviously through unequal access to education, but also through more subtle channels like health status – Ehrenreich gives plenty on the plight of the uninsured working poor in the United States, but this isn’t only a US problem.

Turning to the theory, a good starting point is Richard Arneson’s article in the Stanford Encyclopedia of Philosophy. As is appropriate for an encyclopedia, the Stanford encyclopedia generally seems to encapsulate the conventional wisdom, and its accessibility on the web makes it an ideal subject for blogging.

Arneson starts with what he calls ‘formal equality of opportunity’, which prohibits things like nepotism in the distribution of public office, and racial or gender-based discrimination. Arneson asserts that a market-based economy is a natural setting for formal equality of opportunity (though not the only possible one) but defines out of existence the central problems that arise in such an economy as a result of inequality of wealth. He wants to ignore, as a ‘private’ matter, nepotistic appointment practices by private businesses, while perhaps prohibiting racial or gender-based discrimination.

To summarise, in Arneson’s treatment “formal equality of opportunity” means, primarily, the absence of officially sanctioned discrimination on the basis of group membership . This is important, but it is not equality of opportunity.

The discussion here is blurring two different concepts. One is the notion that requirements for formal equality of opportunity apply only in relation to the state. The other is some sort of distinction between different types of legitimate and illegitimate discrimination. For example, nepotism is OK in the private sector but not in the public sector.

To sharpen up the analysis, consider the case when public offices are sold, with any qualified person being able to bid. This was the case, for example, with commissions in the British army in the 19th century. This is, I think, a breach of formal equality of opportunity. Suppose then that instead of filling the relevant offices by, say, competitive examination, the government privatised the appointment function, taking a lump sum cash payment from the buyer, who then acquired the rights to sell the offices as they saw fit (perhaps subject to rules about racial and gender discrimination). This would make no difference to the actual inequality of opportunity, but would, at least arguably, satisfy the requirements for formal equality of opportunity.

But the problem doesn’t arise only, or most severely, in employment. If places in schools or universities are available only, or preferentially, to those able to pay for them, equality of opportunity is clearly not present. The same is true if ownership of businesses is passed on by inheritance. The idea that these are not ‘formal’ violations of equality of opportunity makes sense only if market wealth inequality is taken as, in some sense, natural. Although never explicit, this assumption clearly underlies Arneson’s discussion.

An obvious implication is that the smaller the economic role of the state, the smaller is the scope of the notion of formal equality of opportunity. In a fully privatised state, everything that was formerly a public office or service would be the subject of private property rights, and therefore heritable, and yet formal equality of opportunity would apply by definition. This is essentially the ideal position favored by Nozick

The really interesting part of Arneson’s discussion relates to “substantive equality of opportunity” and particularly the notion of “equality of fair opportunity” due to Rawls, which is satisfied if “

any individuals who have the same native talent and the same ambition will have the same prospects of success in competitions that determine who gets positions that generate superior benefits for their occupants

This is the only definition considered in the article that seems to correspond to a reasonable notion of equal opportunity. However, as Arneson points out, achievement of substantive equality of opportunity appears to require substantial and intrusive government intervention to prevent parents passing on advantages to their children.

The crucial unstated assumption here is that social outcomes are substantially unequal. The more equality prevails among parents, the less intervention is required to ensure a substantive equality of opportunity among children.

The complementarity between equality of opportunity and equality of outcomes is particularly important when we move from ideal definitions to practical possibilities. It is, no doubt, impossible to achieve perfect equality on either definition. But,social-democratic states can get reasonably close, and have done so, though something close to full employment is needed. I have some ideas on this, but not for this post.

32 thoughts on “Outcomes and opportunity

  1. PK,

    Somewhere sometime a country has to start the ball rolling and I believe nothing succeeds like an idea whose time has come. For example, if I ask the following of people I know- ‘Do you believe that, if all the countries of the world were as successful as Australia, at converting their natural environment for their consumptive wants, the world would be a better place?’ the answer is an uncomfortable silence followed by no. This of course is the attraction of the current Green movement. They are pointing out that our current emperor has no clothes, but of course they currently offer the ludicrous, if somewhat uncomfortable sight, of a few individuals piddling into a cyclone. That is the crux of the problem. No individual can fight the overwhelming odds of our current consumer society, no matter how idealistic or motivated. We need planned group action(in the form of a democratically agreed constitutional marketplace), but we must still plan for the benefits of competition. The command route is a proven recipe for disaster socially. The Soviets were the most successful and committed at it for half a century, with some fairly unpleasant side effects.

    If the world is to take on the problem of a finite Spaceship it will need leadership. Where would you expect that leadership to come from? Logically the MDCs and most likely a country like ours. It is time this country showed the world the way, even if it means closing our economy to the world to begin with, in order to start the ball rolling. We have the intellect, the resources and wherewithall to make the adjustments required. For example, when you envisage a smaller consumptive pie, it is axiomatic you will have to tackle the equity issue. I am not pessimistic that the wealthy in this country, will see the self interest and benefits of a fair go Australia again. They certainly must be having some doubts about their world at the moment. In any case wealth is a relative state and the push for a greener, fairer society must necessarily be lead by its most able citizens. At any rate, as first cab off the rank, we will of course gain an advantage in the new technologies and systems required in this greener world.

    In the final analysis, I suppose the blogworld is a convenient place to throw a constitutional marketplace on the table for questions and suggestions. First question is do you like the skeleton and where would you like to see some more flesh?

  2. Quite a deal of material here; but little attention paid to the underlying principles on which this “equality” would be based. The starting point is not so much a moral or economic decision, as a mqtter of defining what you are dealing with. You need to work within a framework in which acknowledges that:

    1]People are NOT born innately equal.

    2]No matter what you do, they’ll never be able to be made equal in their various capacities.

    3]Reducing all innate would entail quite significant discrimination against most citizens, be against the overall interests of a society, be incredibly costly, and wouldn’t be able to be achieved anyway.

    4]Even when we move away from the question of innately determined limits, equal opportuniy is still unattainable, so the real issue becomes the question of the extent to which we’re able and/or should, and/or willing, to reduce the extent of the various inequalities that will always be with us.

    It’s more fun, of course, to “forget” these parameters, and simply rabbit on regardless.

  3. Observa

    I don’t entirely agree with your solution, but I applaud your bravery in putting it forward. I’m also glad to see you have some idea that your policies have to be grounded in reality, a position many on the Green Left refuse to take.

  4. Micha, I think the clarity of definiion gives a spuriously natural appearance to rigts over money but there is no reason they should be any simpler than say property rights which is to say not simple or immutable at all.

    Surely the overall interest of society must be shared. Someone will care if there are dogs in the mangger. From that point of view estate or inheritance taxes diminish the value of money for some people and so skew incentives but inherited wealth does just the same.

    Nor is redistribution necessarily a zero sum game in so far as it can function as insurance.

    One final point is that inheritance taxes are very effective or there would not be such a big effort to abolish them.

  5. Trapped ?
    Brad de Long picks up my post on opportunities and outcomes (see also this crossposting with further discussion), in which I argued that the achievement of meaningful equality of opportunity in a society with highly unequal outcomes would require exten…

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