Outliers, Inequality, and Injustice

Ezra Klein writes:

But since we justify income inequality by understanding success as an outcome of virtue, there’s a tendency to ascribe achievement to diligent effort rather than the market’s amoral decisions to attach high value to certain spheres of labor and low value to others. The important variable for success, however, does not seem to be hard work but profession. If you’re in a high-value profession, hard work can do you a lot of good. If you’re not, it may not do you much good at all. And though anyone can work hard, we’re mostly able to admit that not everyone has the specific constellation of opportunities that lets you go to law school, or spend your time goofing off in amateur political punditry. Occupation is rather more useful for understanding why someone’s hard work pays off than is their relative level of toil, but since occupation is more clearly contingent on circumstance, and high-value occupations have more obvious barriers to entry, they also raise questions of justice in outcome, and thus have fairly uncomfortable answers for those atop the pyramid. So hard work it is.

If “success” equals “high income,” then Ezra’s right. Now, I deny that income inequality, per se, requires justification. There’s no good reason to treat equality in money as some kind of moral baseline, deviations from which must be accounted for. If you understand that prices convey information about supply and demand, and that a wage is a price, then you understand that differences in wages for different kinds of labor convey information about the supply of different kinds of labor relative to demand. Wage inequalities are how people can know what’s a “high-value profession” and what isn’t. It guides our choices about the kinds of skills to seek. We need that guidance because effort isn’t enough. You can work as hard as you like in a low-wage job, and you’ll still be in a low-wage job. If Ezra and I have any disagreement here, it’s probably in our sense of what does and does not “raise questions of justice in outcome.” But even here I think we may agree. As I said, the mere fact of inequality raises no question at all about justice. But if the extent of inequality is in part a function of barriers to entry, then injustice is likely. Still, the injustice is not the differences in outcome, but in the morally unjustified infringements of liberty that help explain them.

Gladwell makes a big deal out of being in the right place at the right time. The fact that he talks almost exclusively about Americans obscures just how crucial this point is. Simply being born an American or a Canadian or a Swede is a much bigger deal than having had a computer lab when nobody else had one, or having been a youth hockey player born in January. If you were born where there were computers at all in the 1980s, or where there are youth hockey leagues, then you’re already an outlier of sorts.

Ezra’s right to draw our attention to unjust barriers. Far and away, the greatest of all such barriers are restrictions on immigration. Wages also convey information about more than supply and demand; they convey unseful information about labor productivity. Skill level is hugely important to productivity and therefore wages, but two workers with identical skill levels may get paid very different wages because skills do not translate into the same level of productvity everywhere. Institutional structure and technology helps determine productivity and therefore wages. If you are barred from entering a political jurisdiction where technology and institutions will best complement your skills, you will earn less than someone with the same skills, who tries exactly as hard, but who lucked into the jurisdiction. Immigration law is often explicitly intended as opportunity hoarding, and the inequalities it creates reflect this injustice. 

Within countries, many professions have succeeded in creating barriers that brake growth in the supply of skill, ensuring unfairly high wages. That’s unjust. That’s also relatively trivial compared to the more fundamental failure of public education to deliver enough to millions of studens. Wage differences tell us which skills are most-highly valued in the labor market. But the ability to make the most of these signals, to acquire these economically-valued skills, depends on a foundation of basic, multipurpose skills that too few are given a chance to develop. If you grow up in inner-city America, the outrageous barriers thrown up by the medical cartel do not loom large among the injustices to which you are subject.

Success will always be contingent. Opportunities cannot be evenly spread. And lucky people should be encouraged to make the most of their luck. But the difference in opportunity between a typical American and a typical Mexican is more than a matter of luck. We can build a wall or create a common labor market. The difference in opportunity between a typical poor American and a typical middle-class American is more than a matter of luck. We can prop up our failed system of education or fundamentally reconfigure it. Justice forbids one and demands the other.

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