Monday, September 3, 2012

What is fair?

Fair sounds like a good idea. We learn as children how to share, say, a piece of cake, equally.

That works well for cake. What about the world's wealth?

Should that be shared equally too? Should every man, woman, and child have and control an equal amount of the world's money?

Here's an interesting thought experiment, proposed to me by my uncle when I was a youth. Suppose somehow, that all the money in the world could be brought together in one place and then distributed equally (fairly?) to every person in the world.

The question then, is what would the world look like two, three, or five years later? He convinced me that the distribution of wealth would look much the same as it did before the redistribution, with the majority of the wealth in the hands of relatively few, those who are lucky/smart/clever/ruthless enough*.

If your idea of fairness exactly matches equality, then what is the fair share of taxes which the wealthy should pay? Probably pretty close to the 100% or more of income that has been suggested by some thinkers.

Others believe that fairness means equal opportunities, with the outcome being success for those who are lucky/smart/clever/ruthless enough.

Everyone starts out being able to take advantage of the various opportunities provided by the community. These include various kinds of infrastructure. Some are provided by private interests (e.x. railroads). Others are provided by government and paid for by taxes from a previous generation of successful business people (e.x. Interstate highway system).

Starting from that foundation, the contestants begin. Perhaps one in a hundred will start a business. The rest of us will work for someone else and watch television. Perhaps one in a hundred of the startups will survive the first few years. Perhaps one in a thousand of those will go on to become very successful businesses and build a great deal of wealth for their owners.

Of course, as to the infrastructure, our contestants did not build that. However, as to the business itself, they did build that.

The accumulated wealth of the lucky/smart/clever/ruthless belong to them, and since taxes are inevitable, they ought to pay their fair share. Equality might get involved in the definition of "fair" by asking them to pay the same percentage of their income as do the rest of us.

This post started with "fair" meaning equal share of GDP, and ends with an opposing view meaning equal percentage of earnings/income.

What is your view?

*choose your description, knowing that your choice will say as much about you as it does about them

1 comment:

Myrna said...

I am just wondering which uncle?