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The Price of Equality: A Participation Society

Those promoting the notions of equality fail to recognize that their deity fails to exist in both theory and practice, as no two objects, whether notional or physical, can occupy the same space in time.

A cursory perspective on the composition of poverty, for example, is akin to finding inequality in the stations where newborns are brought into this world.

While it is true that most of the newborns are delivered at hospitals, as opposed to palaces, they do not spend their entire lives there.

Just as with their birthplaces, individuals spend merely a fraction of their time in the lowest quintile of the income spectrum, while a majority of them will scale the ranks throughout their lives, and a great number of them will even drift between the the higher and lower quintiles at some point in their lives.

The free world is a place of mobility, not one of equality.

Ultimately, suggesting that all people are equal is analogous to claiming that a BMW 320i is equivalent to an M3, purely because they appear identical.

One isn't necessarily "better" than the other, but their qualities can widely vary.

Even in the social arena, the philosophical tenet of equality was originally introduced in the classical liberal tradition as a form of targeted equality in the eyes of the law, not between individuals. This distinction escapes most people, including the Winklevoss twins in this scene from the acclaimed 2010 film The Social Network, wherein Larry Summers informs the two students, "You enter into a code of ethics with the university, not with each other."

There exists a tremendous distinction between a targeted equality before the law and that which is enforced between individuals. As explained above, equality between individuals is an always-elusive target, an end pursued only by those who have something to sell, oftentimes a narrative or a campaign platform, or by others who plainly fail to understand the implications and tradeoffs attending such an agenda. In this capacity, economic evaluation proves a productive tool in revealing the ramifications of this widely-misunderstood philosophical disposition. 



The Price of Equality 

An instituted equality of incomes would drive disastrous results for future inventories and innovations while encouraging explorations into alternative media of exchange and stores of value. The function of money is to actively coordinate human labor and to determine which commissions are sustainable by expressed marginal preference and utility. Let’s investigate the complexity of the Olympics. 

There are multiple events and disciplines across a myriad of sports varying in popularity, competitiveness and even risk. Take, for example, the 100-meter dash and the hours-long marathon: one lasts mere blinks of an eye while the other takes a considerable chunk out of your morning. 

A core institution of thinkers, once emboldened democratically or bureaucratically through the political process, might assess these two events in a number of ways, if indeed they were to operate from consensus in determining the monetary value of human commissions: they could disburse equal amounts to every athlete in the field independent of discipline or performance, or they could assume a fixed seconds- or distance-based valuation, compensating each athlete by time or distance, or they could employ a tiered structure of payments by employing a weighted arithmetic mean based on calories burned, change in heart rate, etc. from start to finish, or they could prioritize each event by the decibel levels reached in the arena during each event. 

The principal challenge in determining market priority through a single core agency is its inexorable bias and immediate obsolescence in following prevailing proclivities. Each of the aforementioned pricing mechanisms, all else equal, would fall far short of engendering the quality of performance coveted by those who attend, watch or respect the Games, who wish to emulate its competitors’ extraordinary success and even their perceived lifestyles, and who corroborate the Games by facilitating the infrastructure, sponsorship, and coordination of largely-unrecognized minutia which, in total, motivate the focused consumption thereof and residually the behavioral modification which encourages its sponsorship and scaled accessibility. 

A dissection of each of those aforementioned pricing mechanisms will reveal grotesque externalities and moral hazards which the agency would have just as well avoided by affording discretion to the individuals who have actively spearheaded the task of procuring the infrastructure, conducting both the calculus and the negotiations to coordinate an event that is expected to leave participants, sponsors and viewers satisfied and ready for more in four years. Ultimately, participants, sponsors and viewers are hardly interested in any medal rankings based on mere participation, time on the course, heart rate, calories burned, or the height of decibel levels, though the latter may bear a relatively closer semblance to the mental accounting exercised in this market.  

One popular notion among quasi-intellectuals who tend to routinely contradict their headline principles is that politically-expedient endorsement of equality, an elusive, ill-comprehended and liberty-exhausting target which is attainable in neither theory nor practice, as no two objects, whether notional or physical, may occupy the same space in time. Nevertheless, talking heads stand to advance their own political interests by grandstanding on the notion that all persons ought to be equal or that they ought to be made that way.

Nobel laureate Friedrich von Hayek wrote in 1948 in his treatise Individualism and Economic Order, "There is all the difference in the world between treating people equally and attempting to make them equal.” Indeed, to enforce equality is to dispense of the voluntary engagement of individuals which is rooted in and absolutely essential to liberty.

One oft-overlooked facet of politically-imposed remedial measures compelled by intellectually-stressed inequities is that active moral hazard produced by renegotiating the marginal utility of marginal labor or marginal risk. This is readily observable in the context of welfare wherein participants collect competitive net monetary values equivalent to full-time workers, causing them to either remain unemployed due to their perceived ceiling of attainment — subtracting the perceived costs and risks of pursuing it — residing below the standard currently reliably enjoyed.    


In the wake of neutralized incomes, the law of least effort will lead market participants to interact with the commons with little concern for sustainable development or proprietary maintenance. Work in and of itself, in the sphere of trade beyond the scope of personal, hobby-specific delight, has no intrinsic value. People far too readily neglect to recognize that monetary values are, when unadulterated, consequentially the collective representation of popular marginal preference across tested intervals of time. Money, whether commodity or fiat, is a luxury of specialized labor and profit-motivated entrepreneurship, hardly an entitlement.

Another largely-ignored externality of income neutralization is its impact upon present balances of assets and liabilities and by what means those would be reconciled, and furthermore how savings, loans and expenses would be controlled to ensure that future interest and dividends wouldn’t disrupt the measured maintenance of equality. Of course, these mentioned variables are the very source of and ignition for future employment, capital formation and enhanced purchasing power. The variability of returns is the impulse which signals to entrepreneurs the specific viability of ventures: this viability, revenue in excess of expenses, is the palpable expression of resource-specific time preferences by symbiotically-intertwined market participants. Their penchants being dynamic, the neutralization of the prevailing pricing mechanism would merely hamstring the efficacious coordination of resources while compelling market participants to pursue alternative media for exchanges and stores of value. 

Take, for example, the agrarian economy of colonial America. If this price structure were employed during the reign of commodity money, whereby tobacco was leveraged as the chief medium of exchange, the United States may have never benefitted from the conversion of farm labor to the relatively risky achievements of the Industrial Revolution, not to mention those various other utilities historically or eventually enjoyed from high-risk work such as logging, fishing, aircraft piloting, flight engineering, roofing, refuse and material collecting, farming, ranching, and others, along with those more rare and refined specialized skills accrued through expensive training and education. 

Moreover, in such a pay-neutral setting, entrepreneurs with large sums of savings will surely avoid working any marginalized minute, as such a policy would reduce to near-zero the marginal cost of leisure. These individuals will either retire or emigrate to a more opportunistic market to realize the potential and tangible advantages of their ideas.   

Another overlooked feature of money is its instilled blindness to market-irrelevant characteristics, automatically and dynamically imposing direct costs on producers for any shortcoming in conducting business. A dilution of the significance of money, by way of neutralizing the distribution thereof, will displace the profit motive from the commercial sphere to other forums, such as alternative investments or the social, interpersonal scene whereby special privilege is granted to those over others whose networks are insufficiently vast and whose skill sets are under-equipped to develop them to secure that which might otherwise be attainable due to both the valuations ascribed by the voluntary exchange markets and the interests served in international commerce.

I always find this topic humorous due to its generational or annual recurrence, almost on cue, and its juxtaposition with the stark, lesser-known reality of nations nearer to so-called income equality: those are the poorer nations of the world. Industrialized nations have wider spread due to the reach and efficacy of their commercial giants and profit-motivated small businesses, and their accrued riches move the ceilings of attainment to perpetually drive further and forward-looking command over wealth toward crafty displays of risk-taking for profit-sharing with shareholders, investors and even ancestors through inheritances. 

Of course, much of the extravagance today is deliverable only at the expense of the future, due to the United States being driven — as it is mislabeled through the misguided GDP calculus — chiefly by debt-financed consumption. On balance, however, the incentives for profits or any type of market gain are dynamically instituted through quantifiable figures with which we can psychologically grapple, through which dopamine levels are effectively enhanced to regulate human behavior around a reliable system of expected inputs and outputs and binary heuristics. 

The history of money tells a tale of a conversion from tangible costs to abstract philosophy. The consequences of this transformation are heady. These policies aren't instituted in a vacuum; they operate within a vast market of participants and competitive currencies whose principal interests are focused on material gain beyond nebulous philosophical penchants. 


Neutralizing incomes is, to invoke another sports reference, analogous to contending that everyone ought to make the varsity football team or that everyone ought to qualify for the starting lineup, all while their skills might be better applied and emboldened elsewhere, perhaps in the pool, on the track, or in the arts. 

Perceived failure is actually an invaluable signal which guides individuals, by the dexterity of the so-called invisible hand, to positions or hobbies in which they are optimally employed or occupied while simultaneously actively assigning graspable costs to foregone alternatives, otherwise known as opportunity costs. This phenomenon effectively enables individuals to closely monitor the prices of their actions relative to what could otherwise be gained, empowering the individual as a more adept governor of his or her life.

The proponent of income neutralization also ignores the systemic costs and risks involved in equipping those under-performers, whose performances are statistically subpar in comparison to the preferred starters. 

This can be expensive in terms of misallocated resources, the endangerment of lives (especially in the case of contact sports) and the less conspicuous unrealized potential of a market otherwise fueled by individuals employing each other to their own respective advantages. To neutralize incomes is, thus, to eradicate the most palpable cause for improvement, the reduction of waste and the realization and application of one's unique skills in a way which yields the greatest benefit to oneself and his or her counterparts.

The academic will often take this conversation a step further by drawing a distinction between styles of equality: that of opportunity and that of outcome. A popular source of confusion stemming from the debate between “equality of opportunity” and “equality of outcome” is that sliding scale by which some goods, services or broadly some expectations are held as basic essentials to life to which the human being, by virtue of being born, is inherently entitled. Of course, the relative ease with which these expectations are satisfied today, in comparison with time past, fails to, in and of itself, warrant its distribution to an audience whose own responsibilities to their respective counterparts will go largely uncontested simply because they haven’t produced such products on which the greater population has become dependent. This debate purely becomes one driven by a lackluster understanding of process and production, means and ends. It is truly one of the most distortionary conversations hosted on the intellectual front, by which yesterday’s luxuries, or so-called outcomes, are destined to become tomorrow’s entitlements, or so-called opportunities.  

Contrary to popular belief, to neutralize financial compensation is not to suggest that people are worth something, or that they’re worth more than what is expressed through their paychecks, but to rather state outright and unequivocally that people, generally entrepreneurs and employers, are responsible for others, and their standards of living, irrespective of the estimated value of their work (which would then be impossible to value because of the neutralization of the very system which would effectively determine that value) or even their apparent willingness to work.

Ultimately, a civilization focused on the elusive and liberty-exhausting features of equality — a concept viable in neither theory nor practice, as no two objects, whether notional or physical, may occupy the same space in time — will engender disastrous moral hazards and unsightly externalities that will hardly cease to exist purely because the engineers behind the vision were sincere in their intentions.

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