Property, egalitarianism, socialism

I got an e-mail from a frequent commenter here, Lee Newberg, which I will quote (with slight abridgment) and then reply to:

Perhaps it is already in your book, but … I’d like to hear your thoughts on the capitalism / socialism continuum — we live in the United States, often cast as an “ownership society” … where we have deeds, titles, etc. that indicate which property and assets are more-or-less for the exclusive use of specified individuals.  However … there are other societies, such as some of the Native American nations, that would consider ludicrous the claim that, e.g., land could be owned by an individual … In a strange twist of perspective, I suppose these “socialists” might argue that it is the individuals who dare to claim titles to land who are the ones with an overactive sense of entitlement.

I think all rational beings agree that there is a proper balance between too much and too little ownership, though, of course, there is much disagreement as to where that balance should be … Although there may be no way to sway the most ardent supporters of one side or the other, what arguments might be convincing enough to sway some of the more open-minded capitalists and socialists?  And how do these arguments apply to the topics of the day, such as public health care, financial institution reforms, inheritance taxes, ….

…  Since I can imagine how either side might describe the other side as overly entitled, I am seeking reasons and arguments that avoid the use of the “entitlement” label.

MY RESPONSE: There is a viewpoint (e.g., John Rawls in A Theory of Justice) that regards wealth and property as fundamentally illegitimate, the result of mere fortuity or, worse, malfeasance; thereby justifying various egalitarian (or “socialist”) approaches to how we deal with wealth. There are two problems here.

First, the premise is simply wrong. Most possessions and wealth are acquired by most people by working, which actually means contributing to society by producing things for which other people willingly pay. Or else they are acquired by gift or inheritance from former owners who had to work (contribute) to get them. As for land in particular, some may have been granted royally, but most was again acquired by work (e.g., hacking it out of wilderness), and that work, making land useful, was likewise contributory to society. And anyhow, practically all owners of land today got it via legitimate purchase (i.e., exchanging something of value).

Accordingly, the notion of achieving some kind of “justice” by taking property or wealth away from its owners, to benefit others who did not work to earn it, strikes me as antithetical; quintessentially unjust.

The second problem is that severing the link between effort and investment, on the one hand, and wealth and property on the other, de-motivates effort and investment. “Share the wealth” presupposes wealth to share; but without effort and investment, wealth is not created. Thus socialism fails.

Of course, we as a society of highly social creatures care about the well-being of others, even strangers, and thus we willingly do share some of our wealth, through collective decisions to relieve distress. That is not “social justice;” it’s not because the wealthy are guilty toward the poor; it’s instead simply humane. And it avoids the toxic class antagonisms implicit in Rawlsian egalitarianism.

Still, some lefties imagine that institutions of private property are somehow bad for the poor. The opposite is true; worldwide, great numbers of people are stuck in poverty precisely because private property protections are weak. Where governance and rule of law are shambolic, people don’t have clear title to their property, making them vulnerable to abuse and inhibiting investment and development. The economist Hernando DeSoto has done great work highlighting this problem and promoting correctives; and it’s been shown that strengthening private property protections is a great boon for poor people.

(And yes, all of this is indeed covered in my recent and very excellent book, The Case for Rational Optimism.)

16 Responses to “Property, egalitarianism, socialism”

  1. Lee Newberg Says:

    Thank you. Yes, this is the conversation I want to see.

    Most everyone agrees that unchecked capitalism can be too cruel (in distributing wealth) and unchecked socialism can be too inefficient (in producing wealth). In a different dimension, most people agree that many things should be ownable (e.g. personal effects, etc.) but some things should not be ownable (e.g., slaves, the air that we breathe).

    But in the case of public health care, financial institution regulation, inheritance taxes, etc. I think we are in the middle ground. Sure, public health care would, in some measure, remove the incentive to efficiently produce wealth, but it would also, in some measure, more humanely distribute the fruits of wealth. For the up or down decision on public health care, where I perceive neither alternative to be extreme capitalism nor extreme socialism, how should I balance the competing benefits? I am seeking an approach that does not appeal to the slippery slope to extremism, and does not label our opponents as thieves, fuzzy thinkers, or similar; both of which are too common in much of the public discourse. This is where I am having trouble.

    For instance, I find unappealing the fall back that the middle ground should almost always default to capitalism (or, similarly, to socialism). “Individualism” and “ownership society” make nice slogans, but why must they almost always trump our other ideals?

    FSR COMMENT: Difficult problems are never right versus wrong, but right versus right. In the case of health care, nobody thinks poor people should be shut out from treatment for, say, dog bites. But what about costly exotic treatment for a 96 year old’s cancer, that is not likely to add much quality of life? Somewhere in between, a line ought to be drawn, but that very fundamental issue about how to distribute health care is something our society has simply refused to confront.

  2. Lee Newberg Says:

    It is indeed a difficult problem, where to draw the line in health care. Fortunately, other countries have faced this issue before us, so perhaps we can learn from their accomplishments and their mistakes.

    Regardless, I expect that there is no perfect solution and that, if we go with public health care, we will always have this problem to deal with in one form or another. To me, the important question is whether it is a net win to go with a solution that includes, at least to some extent: less cruelty in wealth distribution, less motivation for wealth creation, a reasonable implementation in clear-cut cases (e.g., dog bites), and an irresolvable problem in cases that are not clear cut.

    My belief is that public health care is a net win. But I yearn for a set of objective standards that would allow me and someone with whom I disagree to evaluate that belief in a quantitative way.

  3. Scott Robinson Says:

    You have hit the nail on the head with the notion of a “net win.” This either means that there will be more winners than losers (not convincingly the case with health care) or that the magnitude of winning will exceed the costs. As soon as the “market” for healthcare is socialized, the individual calculation of the costs and benefits is lost and there is no way to calculate whether or even if there is such a thing as a “net win.” There are too many variables. The muddle we are in right now, I would submit is in large part due to efforts of government to manipulate the costs and benefits of the market. The more it costs one to over eat, smoke, take drugs, drive recklessly etc. the less likely those variables will add to the total cost of healthcare.

  4. Lee Newberg Says:

    I am hopeful that evaluating whether we have a “net win” is not unsolvablely difficult in an after-the-fact sense. We can look at infant mortality rates, cancer survival rates, costs, etc. in tests of both “before vs. after” and “here vs. there” (between countries that have implemented different paradigms for health care). Sure, such comparisons are not foolproof, but they should lead to one of three conclusions: the old system was better, the new system is better, or we can’t tell which is better. (That the last case would be dispiriting to all the predictors of doom and gloom from both the left and the right!)

    Where I am more pessimistic is whether we can find an evaluation approach that works “before the fact” and which is convincing to both left-leaning and right-leaning moderates.

    Also, I am less pessimistic about the removal of the cost incentive from health care. I don’t think that having a public police force leads people to be more reckless in protecting themselves from crime and I don’t think that having a public fire department causes more recklessness with fire, so I am hopeful that non-cost-related incentives will keep people from being reckless with their health — nearly to the extent that throwing in cost-related incentives would provide. But there’s more. The cost incentive influences not only the patient but the health care provider. The new approach may remove some of the “cost incentives” whereby some health providers profit more when we get sick; and removing this pressure from the free market could possibly increase the net incentive to stay healthy!

  5. Scott Robinson Says:

    The evaluation is everything. I am a physician, and most of us who have been practicing for a number of years (35 for me) continually shake our collective heads at the stupidity that passes for “scientific evaluation” of healthcare systems. It seems like most of the datas comes from people who have never actually taken care of a patient. Take the indicator of infant mortality. Comparative statistics are currently meaningless because most non-US systems don’t count stillborns. Other countries have more homogeneous populations than the US when it comes to racial makeup ( the African American population seems to have an unexplained higher incidence of perinatal problems unrelated to socioeconomic status or pre-natal care.) Many systems simply don’t have the resources to make an effort to get very premature infants to survive. It would be useful and convincing to have comparative data that represents the same thing, or at least highlight variables other than the healthcare system that can explain differences (higher murder rates in the US impacting longevity,for example). Cheers.

  6. American Inequality « The Rational Optimist Says:

    […] However, lately there’s been increasing concern over the issue of material equality, with apparently growing disparities of wealth and income. I’ve given this a lot of thought (as evidenced by previous blog postings: June 21, 2008 & May 11, 2010). […]

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