20th August 2010
The dangerous idea of equality
Here are extracts from BFN about the dangerous aspiration for equality. This is a quick cut and paste without footnotes and referencing. The actual text can be readily accessed. But first a short (one and half minute) video from Youtube by Milton Friedman:
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The real choice before us today is between the two western models of governance – socialism or capitalism; between the life-denying concept of equality and the life-sustaining concept of freedom. Even if we don’t care about the philosophy of freedom, pragmatism would lead us to the more successful model. Capitalism is dramatically successful, just as socialism is dramatically unsuccessful.
But there are far more important and compelling reasons to follow the path of freedom. Of these, delivering a society based on ethics and morality ranks the highest. Despite the noble intentions of its practitioners, socialism is immoral and destroys the moral fabric of entire societies. Freedom, on the other hand, delivers the highest ethical values and creates for each individual a level playing field by providing equality of opportunity through which the individual is enabled to discover his or her talents and achieve his or her highest potential. While the individual is the moral centre of a free society, the society is the immoral centre of a socialist one. Freedom is about far more important things than economic success, although a poor country like India should welcome its merits on that ground alone.
But at times, markets challenge us emotionally as they appear to be heartless. We are not comfortable with the outcomes of a free market which we may reluctantly agree produces great wealth, but which we find also results in increased inequality. We tend to see inequality as fundamentally wrong, even though we know that every individual will actually become much better off in a free market than he or she is today.
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I wonder, though, about the hypocrisy behind our alleged preference for equality. Gandhi once asked some socialists who had come to visit him, ‘Now tell me how many of you have servants in your homes?’ The socialists Gandhi was talking to said they had a servant in each home. Gandhi replied, ‘And you call yourself Socialists while you make others slave for you! It is a queer kind of Socialism which, I must say, I cannot understand’. If we genuinely wanted everyone to have exactly the same income, why do we bargain so hard with our poor garbage pickers and maidservants and pay them only the market rate? And if bargains of this sort are good for us (it being a free market for the services of these poor people), why are these negotiations bad for the society as a whole?
I will show that not only has equality no real content, but that it is dangerous. On the other hand, I will show that equality of opportunity is a critical requirement for a free society, and helps us to eliminate poverty.
The Problem with Equality
Everyone knows that 2 = 2; a trivial equality. Its use in driving our life’s goals is very limited in consequence, for it is merely a tautology – a statement which uses words to pointlessly say the same thing. What does it matter if two equals two? What can we derive from it?
Similarly, economic equality among people is neither here nor there; a trivial curiosity. Attaching an ‘equal to’ sign between our incomes (or wealth) does not add any significance to our lives; it doesn’t say whether we are free, whether we are experiencing a high quality of life, whether our children are likely to succeed. If two people achieve equal income through the free markets it is of no import; it is a mere statistical coincidence.
The key question that we need to ask is: did these two people get to function in a free society with equality of opportunity? If they were provided with an equal opportunity then their equal outcome is unexceptionable; albeit coincidental. The more common, and expected, outcome of a free market, though, is a vast increase in individual wealth accompanied by significant inequality among individuals, noting that this inequality does not remain static. Unlike in a feudal society, the level of economic inequality as well as the persons who are wealthy or poor changes dramatically with time in a free society. The children of workers can become far richer than the children of people who are rich today, depending on how diligently they apply themselves.
The key driver of a free society is justice. Our economic worth is a function of justice, not some tautological concept like equality. While our lives have infinite intrinsic worth and we are all equal in the eyes of law, our economic worth must be determined in the market by the balance between the demand and supply for the services we provide. We may find ourselves ‘valued’ by the market on the basis of our beautiful voice that people like to hear, our philosophy that people enjoy reading about, or because of a drug we invented to save people’s lives. In each case, the fair and just price for our service is what is negotiated and agreed to in a free market.
Where wealth of any sort is acquired by trading our services in the marketplace in this manner, where all trades make the parties to the trade better off, there all outcomes of these trades are just, and therefore morally superior, irrespective of the society’s Gini coefficients and Lorenz curves. Equality is not an issue that is considered even in the passing in a free society; justice drives all understandings. Indeed, honestly acquired wealth is virtuous wealth; it must be applauded through a standing ovation. Each great singer, each great philosopher, each great inventor, and each business leader becomes rich by his or her own effort; each of them is worthy of that wealth. Who cares whether that creates inequality in society? Why should the inequality created by Lata Mangeshkar’s voice bother anyone?
And yet equality is relevant in a free society, at the commencement of the ‘race’. Everyone must be given a similar opportunity to run, to sing, to invent, or to play. But at the end of the race, only the best athlete, singer, inventor, or tennis player must win. The effort put in by an individual and his contribution being perceived as valuable by others tells us about the justness and morality of the acquisition of wealth. That is very important. For instance, wealth acquired through corruption is not just, and is therefore immoral. John Ruskin said that ‘the beneficialness of the inequality depends, first, on the methods by which it was accomplished; and, secondly, on the purposes to which it is applied’. On Ruskin’s second point, we note two things:
- We note that the very process of generation of inequality through ethical trades is beneficial. We, the consumers, benefit through the products made by hard working innovative people. Most of us will find purposeful employment through jobs that such people create.
- Second, if left to their own devices, many wealthy people promote the arts and sciences as well as other forms of philanthropy. They don’t have to do so, though, since they have contributed enough if their wealth was acquired through ethical trades.
Inequality is not the same as poverty. Extreme poverty diminishes our capacity to act freely and reduces equality of opportunity. A free society needs to take strong action against poverty. On the other hand, even the most extreme inequality does not in any way diminish anyone’s freedom if all people are well above the poverty line. In the USA or Australia, which are relatively freer than India, some people are extremely rich, but most are at least well-to-do.
Therefore India must banish poverty if it wishes to be free. Reducing inequality on the other hand, is neither here nor there; it is but idle talk for a few jealous people who are afraid to put in the hard work needed to succeed. Indeed, each of us must aspire to be dramatically unequal to others; to be rich, to be happy, to be great! A free society doesn’t countenance these utterly feeble ambitions of equality. It teaches its children to be great, to be better than others in every way; not to seek trivial equality with others. And the way a free society encourages infinite ambition in the minds of its children is by way of its government completely getting out of the way!
Indeed, equality should be banished from our list of priorities because it is extremely dangerous. Equality is not an innocuous concept – something to be had if we can: ‘And oh, yes, by the way, can I get a glass of equality with two spoons of sugar?’ Equality invariably takes us on the path to perdition. It is a poison that allures us with a strangely beautiful fragrance; but a society that drinks of it will be racked by endless pain; its members will lose their intellectual prowess and die an early death. Its people will multiply like flies; its rulers will be cruel and rapacious. Anyone who is sane and healthy flees a society where equality has poisoned the minds of its leaders.
The reason equality is dangerous is because the only mechanism available to us to create genuine equality is to redistribute wealth, not to create it. That can only be done by plundering those who are richer than us. But to steal and plunder is violation of the fundamental principles of freedom; it is an attack on our life itself. It is a crime no matter whether it is committed by an ordinary robber or an elected prime minister.
And therefore economic equality is associated only with those political ideologies which oppose freedom and which disrespect life; ideologies that do not hesitate to violently coerce others to cough up their property. The main such ideology, of socialism, aims to abolish property rights and vest all property in the state. But there is only one way to abolish property: through the use of force. Hence, socialists do not hesitate to decapitate the rich or otherwise threaten them with state-controlled violence to grab their property.
Indeed, property is anathema to socialists because of its dangerous disease of equality. If they could, they wouldn’t allow anyone to even own a pen, for even a pen or paint-brush can spew unbelievable wealth. Socialists probably hate J K Rowling with all their heart for creating Harry Potter, and Pablo Picasso for making his paintings. And they almost certainly hate Lata Mangeshkar with all their might; if they could, they would rip out her vocal chords to stop her from getting rich. The great problem from the socialists’ perspective is that no matter how hard they divest us of property and force us to become equal, then put us together inside a box, lock the box and throw away the key, inequality always springs out like Houdini – strong and triumphant.
Their problem is that the aspiration to be unequal to others, to be richer than others, to be faster and healthier than others, is unique to the human species, and cannot be abolished. Each of us spends a lifetime yearning for greater wealth, wanting to be at least equal if not better off than our neighbours. We seek the best jobs; we want to look smart and dress up in flashy clothes; we want to drive around in a fancy Porsche. Just look at the craze for lotteries – the millions of people who plunk their hard earned money into the dream of inequality; the dream of becoming richer than others. Even those who seek God seek to be selected by God ahead of others; they want to achieve nirvana before countless other lesser qualified souls. Inequality is our deepest ambition; no amount of socialism will rid us of it. Only some silly politicians seem to want such equality, but even they actually yearn to be our rulers and to be remembered by others. Stalin and Mao were not interested in equality of fame – they ruthlessly destroyed their competitors in order to remain the rulers, and as to wealth, their wealth was unlimited. Even Nehru’s family’s wealth is not equal to others; its scale is unknown, but it is nowhere near the per capita income of an
Indian. Socialist Ministers grab money with both hands and build untold wealth their family has never seen before.
Since inequality is like a starfish whose arms grow back no matter how many times they are cut off, a socialist society has no choice but to continuously plunder. The socialist society must also tell people what to produce. Picasso must be licensed to produce any painting at all; and then he is to be given a quota on how many paintings to produce. Having done that, the socialist society then has to take away his paintings so that he cannot become rich.
The socialist society has an impossible task laid out for it. Starting with an abundant faith in the idea of equality, it degenerates rapidly; its leaders fight among themselves and often kill each other; its people finally rebel against the decadence and corruption they see around themselves, as they did in the erstwhile USSR, and they will do in India upon reading this book (!). In fact this book itself is a rebellion against the much milder, but equally problematic Nehruvian socialism. Socialism comes to grief in the end for what we really crave for is freedom; not equality.
We could, under a distasteful counterfactual scenario, be persuaded to tolerate the ideology of equality could it be demonstrated to unequivocally increase our wealth to an astounding level – well beyond what free-market capitalism routinely generates. But socialism fails bitterly on this front, too. Human beings are not robots. We work hard to generate wealth only if we are free to think, free to produce what we wish to produce, and free to keep the rewards of our efforts. Creativity and innovation decline precipitously under socialism; socialism impoverishes entire societies and makes it hard for them to recoup their energies for decades. India’s example is in front of us, but there are many worse examples. When the Soviet Union tried to collectivize its agriculture in order to make each farmer ‘equal’, it quickly came on to its knees. The entire Soviet Union could not produce enough to feed itself. Tens of thousands perished of starvation. Its mighty armed force and secret service (KGB) were able to compel its scientists, under close observation, to produce, or rather, to steal the design of weapons and spacecraft, but until its end the socialist USSR could not produce enough bread for its people.
Taken to the extreme, as with the (erstwhile) Soviet Union, Maoist China, or Naxalites, socialism physically assaults and kills people. Millions of people have been murdered by Marx’s equality-driven ideology over the twentieth century. If we add to this the far more numerous indirect killings –namely deaths through hunger and preventable disease arising from socialist mismanagement in countries like India – then the number of people killed in the cause of equality runs into the hundreds of millions; possibly a couple of billions. Equality is not a hot cup of coffee that we may order if available. It is deadly poison. Once this disease of equality infects somebody’s mind, the consequences for that society can become extremely bad. People infected by equality are infinitely more dangerous than those who go berserk and shoot people at random. Equality is as bad as religious fundamentalism in its disastrous consequences for society.
Socialist countries are also some of the most unequal, the difference being that their inequality is derived from corruption and the misuse of power, and is therefore immoral inequality. Corrupt politicians in India have misused socialist controls to acquire untold wealth and create great immoral inequality in India. Our socialist ministers never hesitate to loot even those public funds intended to assist the poor. I talk about this from personal experience, including one involving a Chief Minister.
Plunder need not be pursued through physical coercion alone. It can be more sophisticated, such as under the guise of ‘welfare’ socialism. One of the most apt descriptions of socialism comes from Frédéric Bastiat (1801–50) who fought Karl Marx’s ideas tooth and nail even in Marx’s time. Unfortunately Bastiat died very young. It is possible that if he had he lived longer the world might have been saved from the killing fields of socialism. Bastiat noted in 1850 that:
[L]egal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labour, free credit, and so on, and so on. All these plans as a whole – with their common aim of legal plunder – constitute socialism.
The message for us is simple – be extremely wary of anyone who preaches equality. You never know when this person is going to shut your mouth, steal your wealth and property, and kill you and your children. There are some Indians who ‘accept’ equality as a good thing if it happens by itself. Such people are merely misguided for statistical equality is meaningless and can never be ‘good’ in isolation of the reality of that society. But if someone genuinely believes in equality, then run for your life as fast as you can! Freedom is as basic to us as life itself. Equality is simply nowhere in that league. It is a curiosity for economists who idle their time making Lorenz doodles. To consider even slightly diminishing our freedom in order to promote equality is like throwing away a priceless pearl necklace and picking up a slithering, poisonous snake to hang around our neck, instead; a snake that will bite us while we are sound asleep.
And yet, socialism will always remains tantalizingly hypnotic to people who have not understood the magic of free markets and equality of opportunity. By painting a rosy but false picture of the world, socialism ensnares children every day and continues to have a vast following among those children who never grew up. The arguments of capitalism require enormous critical thinking since the invisible hand is actually invisible! Not being a socialist is hard work for our brains. I will try to make the invisible hand a bit more visible in this book so that more of us can see through the great pitfalls of socialism.
But one need not be ashamed of having been a supporter of equality sometime in our life. The disease of equality strikes almost everyone once, like chickenpox. I too caught this disease momentarily during one of my early years in university. Who isn’t fascinated by an ideal world where all of us are somehow blissfully equally competent and equally resourced? Some residual virus of this disease remained in my head until as recently as 1995 when, during my mid-career PhD studies, I expressed concern about economic inequality among nations in one of my term papers. What I should been have concerned about, instead, was about the self-inflicted poverty of nations like India which insist on being poor despite the prescriptions for wealth being available off the shelf.
There is a strong leftist bent in most academic discourse which arises largely from desktop academics who never grew up; never got rid of their chicken pox. They have a dreamy-eyed view of politicians, bureaucrats, armed forces and the police. These academics project their own virtuous feelings about other human beings on government functionaries; and in doing so they make a fatal blunder. The good thing about Nehruvian socialism is that being a less extreme form of socialism than Russian communism, it has probably inoculated us. Once India fully recovers from its socialist fever and its head clears up, it should remain free of equality and socialism forever, unlike Russia which may yet revert to communism once again.
The thing we really want when we talk of equality is the eradication of poverty. That also remains a matter closest to my heart; and it is to a discussion of removal of poverty that I will now turn to. Just a brief comment first – poverty cannot be eliminated unless we foster conditions which create great wealth and great inequality. We need sufficient numbers of extremely rich people whom we can tap into, both as taxpayers and high calibre experts, to help us banish poverty.