How Inequality Shapes Our Lives (Part 1)

Those of us who regard socioeconomic inequality as a serious problem are often accused of “envy,” as though such concerns were simply a matter of begrudging someone else’s having more cookies than we do.

I think this reaction misses the point in a number of ways; let me say just a bit about just one of those ways:

Suppose you forget to pay your power bill (or your phone bill, or your cable tv bill, or your internet access bill, or your credit card bill, or whatever). What happens? Your provider disconnects you, and you’ll probably have to pay an extra fee to get service reestablished. You also get a frowny face on your credit report.

On the other hand, suppose that, for whatever reason (internet glitches, downed power lines after a storm, or who knows), you suffer a temporary interruption of service from your provider. Do they offer to reimburse you? Hell no. And there’s no easy way for you to put a frowny face on their credit report.

Now, if you rent your home, take a look at your lease. Did you write it? Of course not. Did you and your landlord write it together? Again, of course not. It was written by your landlord (or by your landlord’s lawyer), and is filled with far more stipulations of your obligations to her than of her obligations to you. It may even contain such ominously sweeping language as “lessee agrees to abide by all such additional instructions and regulations as the lessor may from time to time provide” (which, if taken literally, would be not far shy of a slavery contract). If you’re late in paying your rent, can the landlord assess a punitive fee? You betcha. By contrast, if she’s late in fixing the toilet, can you withhold a portion of the rent? Just try it.

Now think about your relationship with your employer. In theory, you and she are free and equal individuals entering into a contract for mutual benefit. In practice, she most likely orders the hours and minutes of your day in exacting detail. As with the landlord case, the contract is provided by her and is designed to benefit her. She also undertakes to interpret it; and you will find yourself subjected to loads of regulations and directives that you never consented to. And if you try inventing new obligations for her as she does for you, I predict you will be, shall we say, disappointed.

These aren’t merely cases of some people having more stuff than you do. They’re cases in which some people are systematically empowered to dictate the terms on which other people live, work, and trade. And we generally take it for granted. But it’s not obvious that things have to be that way.

When it comes to diagnosis and prescription, those of us who worry about socioeconomic inequality go in two different directions. Some identify the free market as the cause of such inequality, and government regulation as the cure; for others, it’s precisely the other way around. I’m obviously with the latter group; all the phenomena I mentioned are made possible by systematic restrictions on competition. Libertarians need to spend more time focusing on liberty as the solution to these pervasive asymmetries of power, rather than giving the impression that they find them unproblematic.

How Inequality Shapes Our Lives (Part 2)

My friend Bryan Caplan has a response to my recent post about inequality. I’m preparing to leave town for the Alabama Philosophical Society and so probably won’t have a chance to reply in detail until I get back. (This also applies to the comments section of my previous post, which I haven’t had a chance to look at.) But three short points just for now:

a) Bryan’s response focuses on the ways in which free markets would solve the problems I point to if they were really problems. But the whole point of my position is that we don’t have a free market! Left-libertarians have pointed out in detail the ways in which the housing and labour markets, for example, are skewed in ologopolistic and oligopsonistic directions respectively. By ignoring these analyses rather than refuting them, Bryan in effect assumes the problems out of existence; he might just as well say “taxes can’t really be too high, because if they were, consumers would just switch to a rival protection agency with lower fees.”

b) The fact that workers can shirk, that tenants can be delinquent, etc., is beside the point. We already know upfront that each party to a contract can potentially screw over the other. The point is that, giventhat context, the contracts are then skewed to favour one side. That skewing isn’t counterbalanced by the other side’s capacity for delinquency, because each side has that capacity, and one side has the favourable contract in addition.

c) Yes, there are various regulations that purport to help the weaker party to the contract; but left-libertarians have argued in detail that those regulations in practice actually tend to help the stronger party instead. Maybe we’re right about that and maybe we’re wrong, but as far as I know, Bryan hasn’t addressed those arguments, and we can hardly be expected to pretend we haven’t made them.