Monday, October 17, 2011

The Morality of Wealth

Following from my OWS musings the other day...

It occurs to me that the simplest formulation of a message from the OWS protests is the antithesis to Gordon Gekko's mantra of "Greed is Good" - the protestors are making the case that the acquisition of wealth is a moral evil.

To be sure, they are also advocating a certain amount of wealth as a civic right (and possibly as a human right). It is possible to construe this as indicative of a certain underlying confusion regarding either their ends, or the means by which they can be achieved. But it is also possible that their animus is not directed against wealth per se - rather, it is too much wealth that identifies the targets of their wrath.

This raises the question of "how much wealth is too much?" Although OWS spokespersons of varying degrees of authority might venture widely different answers to that question, I'll suggest here that the broader sympathy in society for OWS' position, if not in all its details or manifestations, stems from the sense that "good" wealth is earned; any wealth beyond earned wealth is "bad." People tend to view Social Security as "earned" wealth, and they tend to view inherited wealth as "unearned." These are generalizations, of course; but this hypothesis explains why a person who is wealthy in absolute terms may be perceived as morally justified in their wealth, and why a person in relative poverty may still be considered unjustified even in the meager income on which they depend. People who disparage "welfare" may well feel differently about its provisions for veterans of armed conflict; there again, pacifists who view volunteer service personnel as taking pay for morally questionable purposes may consider this "unearned."

The morality of wealth, then, has two dimensions. It is firstly measured in the raw amount of wealth one possesses; but, perhaps more importantly, it is determined by the manner in which one acquires that wealth. We can go further: we can say, fairly safely, that wealth acquired purely for its own sake will seldom be considered morally justified reward. We can also say that wealth acquired through exploitation will be deemed immoral. In the former case, we identify an aspect of "earned wealth" - that it is a means to some other end, essentially incidental to that end and earned in proportion with the justness of that end. In the latter case, we see further that the means to the end must also be just in order for wealth accrued ancillary to those means to be "earned." We can conceive of a noble end employing morally questionable means; it is unlikely that money acquired in the pursuit of such an end by such means would be considered "earned."

This analysis of whether income is earned or not is complicated by subjectivity. For one thing, envy is a factor that can distort our notion of what is "earned." Unless we have a very clear and objective view of what opportunities we ourselves as earned, we are apt to identify those beyond our reach as "unearned." Resentment is toxic; it clouds our judgement. Neither is this resentment a one-way street - it is quite as easy to contemplate a wealthy man resenting the relative pittance drawn by an unemployed student, as to imagine the reciprocal situation.

Another factor to consider is the human propensity to judge others by the standards and values of our own experiences. It takes an unusual character to form values that are not self-justifying; the wealthy banker who seems exploitative to the protestor who lost his job in the recession will argue that he is reaping the rewards of his own wise investments, and moreover is enabling opportunities for others to make wise investments of their own; he will argue that the failure of others to make decisions that prove as profitable as his should not be blamed on him, and he will reject the possibility that his decisions worked out because of dumb luck and accidents of circumstance, let alone the notion that his decisions enriched himself only by denying others access to their rightful share.

We are all generally much better at recognizing bad luck when it strikes us, than we are at appreciating good fortune. What we call "good fortune," when we do acknowledge it at all, is actually nothing more nor less than a Bowdlerization of "unearned wealth" - by definition we do not "earn" good fortune. Chance operates irrespective of merit, and the distorting effect of human subjectivity makes us, as a rule, incompletely aware of its operation. We equate randomness with equidistribution - the 'cluster effect' illustrates this cognitive fallacy. Another manifestation of this kind of thinking crops up when we consider distribution of wealth; intuition tells us that the fairest distribution is the one dictated by chance, the one that by definition is least tainted by deliberate willed choices and therefore minimizes the likelihood of anybody having more "unearned" wealth than anybody else. Intuition here is quite false, of course; if everybody enters a lottery and buys a single ticket, they each have equal chance of winning, but equality of opportunity will not translate into equality of outcomes. To achieve the intuitively desirable equality of outcome requires a seriously distorted inequality of opportunity, one that exactly counterbalances the random distribution of opportunity among a population of individuals. It should be noted that the intuitively desirable outcome is therefore only achievable by maximizing the distorting effect of deliberate willed choice, and that the operation of this willed choice will necessarily take the wealth that some individuals would have by fortune (and so be strictly "unearned" but not thereby immoral since it was not acquired by choice but by circumstance alone) - this in fact is the textbook example of the noble end (equality) subverted by ignoble means (arbitrary redistribution of property).

The central paradox here was well described by Derek Parfit in his refutation of utilitarian arguments. He was able to demonstrate that, if we consider any two populations, one of which has higher 'utility' (a measure of happiness, or wealth, or "good" by some abstract measure) than the other, and we adjust the 'utility' of the two populations, reducing the greater and increasing the lesser, so as to equate them and increase the total utility of the two - then repeat this process, introducing a further population whose 'utility' is lower than the newly-homogenized population and merging it into another combined population of yet greater total utility - we reach what Parfit calls "the repugnant conclusion:" a very large population whose total utility exceeds that of the original group but whose average utility is barely positive.

The, perhaps equally repugnant, conclusion we can draw from Parfit's thought experiment is that a degree of relative wealth inequality may be optimal. With a nod to John Rawl's model of social justice - in particular, its concept of the "original position" behind the "veil of ignorance" from which its minimax provisions abstract the rules that provide for minimal support standards for the poor in society - we can add that wealth inequality is optimal IFF social mobility is maximal: in other words, wealth is only truly immoral if it is made unattainable to any member of society. Genuine equality of opportunity is the hallmark of a just capitalism.

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