Kinda sick this week. Hope it isn't the bird flu. Makes it kinda hard to teach; realizing just how much energy teaching takes.
I feel like continuing to make broad sweeping statements with little specific justification. So I will.
I've been thinking for a long time about the shortcomings of a free-market system. I suppose in many ways this ongoing dialogue with myself was one of the primary reasons for beginning this blog: to make it easier to trace the course of my thought.
Since the creation of agricultural surplusses, and potentially before that point, the primary concern of society - arguably the concern that created society, religion and government - has been the distribution of that surplus. The control of excess resources (those beyond what is needed for sustinance) is the primary determinant of power in all its guises. This in turn has generated the potential for lasting creation on the part of society. Prior to the possibility of leisure, lasting advances were essentially impossible. Furthermore, greater amounts of free time lead to larger and faster advancements. I think this is relatively evident, especially when you consider the millions of years it took to develop the first cities, the thousands of years it took to create the first metropolises and the mere hundreds of years it has taken for cities to become the predominant locale of human existance (according to the Economist, more than half of humanity is expected to live in cities for the first time starting next year). It is further revealing that the poor of the world in the superslum cities are perhaps not as poor as they are generally considered. They have increasing potentials for limited levels of saving and borrowing, a primary way that the market economy measures excess and therefore leisure.
How to distribute these excess resources remains a particularly tangled issue. On the one hand, the socialist side of me advocates an even distribution of resources to everyone. On the other hand, the elitist side of me recognises that some uses of resources are more fitting than others and that certain people are better equiped to determine this allocation. A free market has shown itself to become by far the best means to distribute resources to those best able to make effective use of them; the more perfectly free the market, the beter the means of distribution. There are many good reasons for intellegent and observant people to advocate liberetarianism. Particularly at the forward- and rear-most margins of social advancement, the market seems to solve a great deal of problems: the market has long been recognized as a good means of allocating to particularly innovative people and ideas, recently it has shown itself as a pretty good means of helping the poorest and most backwards elements of society as well. The problem lies more in the middle.
I have written at least one previous post concerning the problem of the middle-man. I will summarize here by saying simply this: transporation and storage are important services that are nessisary for innovation, nevertheless they appear to take far more than their share of resouces to the point of actively supressing innovation and advancement in some cases. There are two other major problems that diminish the efficacy of the free market as a means of distribution. These can be summarized as history and happenstance.
Take as a thought experiment a group of people crash-landing on a deserted island. The individuals bring nothing with them, and the resources on the island are distributed perfectly evenly among them. Assume further that no particularly disabled individuals are included in this population and that resources are not especially scarce. A market mechanism for distribution of these resources will tend to insure that the individuals with the most talent for innovation will tend to receive more of the resources, improving both their own living standard and that of the island collectivly. Furthermore, the remainder of the population, the less-extrordianry-but-still-able individuals, will still be able to ensure a resonable standard of living for themselves, if somewhat less than that of the innovators, and will benifit from the innovations of the elite, if to a lesser degree than the elite themselves. Finally, people on the island will tend toward the jobs that best suit their skills. The only major problem with the market on this island, at least in the short term, is the afformentioned problem of distribution, which, assuming a small society, is not much of a problem.
The problems that arise when we move from hypothetical island to actual society occur when we remove the circumstances that I ruled out of the thought experiment: circumstance and history. If the resources are distributed less than equally on the island, for instance if one individual by chance lives in an area rich in building materials while the others live in areas poor in building materials, the guy with all the wood will end up richer than the others without needing to be especially intellegent or innovative. The wood-rich individual will also be unlikely to efficiently allocate his labor. This problem can clearly be seen in the distribution of natural resources in the real world (think oil in particular). A second problem of circumstance is created by the existance of individuals with particular disabilities which render them unsuitible for most or all work: they will be unable to provide for themselves. Finally, the problems of training and development are at issue. Perhaps one citizen by temperment would make an ideal doctor but because of a lack of education cannot fulfil this role. Or alternatively, an person whose frame is particularly suitable for heavy lifting and construction may be rendered inneffective by circumstances such as undernourishment or disease.
This last issue of training and development ties in well with the problem created by history, which is perhaps bigger than that of circumstance. In the short-run, the island, returning to hypothetically equal resource and ability distribution, will be run effiently by the most talented individuals recieving the resources they need to exercise their talents. In the long-run, however, certain people will inherit resources beyond their merit as a result of past merit, either their own or that of their ancestors. At first, the smartest, strongest, most skilled will excell, but eventually their children, who might not be particularly smart or strong or skilled will still be able to excell because of what they inherit. Instead of one person happening to have a bigger supply of good building materials than the others by chance, he or she will have a bigger supply because his or her ancestors were more talented. This effectively amounts to the same thing as chance, but while hapenstance cannot be helped, it seems especially unfair that the forces of history will create this same inbalance.
There is an even more insidious way in which history creates an inbalance, however. The inheritance I described above only details the effects on a population where children are only indirectly helped by their parents (by inheriting a favorable situation). This would only occur if children were born essentially mature and their parents died in childbirth. But in fact, children tend to be raised by their parents for the beter part of twenty years, if not longer. During this time, the children of rich parents recieve disproportionately good educations and typically have better health as a result of better nutrition, hygene and medical care. These effects, even without the inheritance of physical resources, are typically more than enough to help ensure elite status, even if the children do not naturally posses greater capacity to learn or superior physical stature. Consider two twenty-one year olds, both of whose families go totally bankrupt just before their twenty-first birthdays (when they are set to recieve their inheritance). The one from the richer family is still much more likely to suceed than the one from the poorer family, simply as a result of living a more comfortable life for twenty-one years.
So what does this mean? It means even if we create a society where distribution and similar concerns are non-existant (i.e. one in which there are effectively no barriers to trade, transportation is effectively free and all industries have essentially no barriers to entry) and in which resources are perfectly evenly distributed (and are all standard, as opposed to positional, goods), it will nevertheless morph into one that is unequal. Furthermore, it will become unequal in a manner that appears to me altogether unfair. While I am willing to accept a level of inequality if it is on a meritocratic basis, I continue to take issue with historical or circumstantial bases of inequality.
However, I think that these historical and circumstantial bases of inequality are exactly those that we can take measures to resolve. These measures include steeply progressive income and especially inheritance taxes, providing for those who are unable to provide for themselves (i.e. wellfare, social security and the like) and especially steps to rectify the inbalances of unequal upbringings such as good quality education and health care for everyone. These last two are especially difficult, but that is what makes them especially important. I hope to write more on this later.
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