From independence, freedom and truth

Economy

Is economic inequality unfair? (I)

Fernando del Pino Calvo Sotelo

February 3, 2015

It has become fashionable lately to criticise the inequality of income and wealth distribution, which has alledgedly worsened in recent years. I cannot understand what the distribution of wealth has to do with the genesis of this crisis or its solution, other than to use it as a scapegoat which, given the obstinacy and duration of the depression, draws the average citizen’s attention away from the manifest incompetence of our political and monetary authorities and from their own responsibility (that of the average citizen, I mean). However, this debate does raise some very important questions. What is equality? Should economic equality be considered desirable, fair and attainable?

I believe that one of the least understood concepts since the bloody French Resolution is precisely the concept of equality. There is an important paradox inherent to the famous triple premise. Setting aside the laudable premise of Fraternity, the other two components, Liberty and Equality, cannot co-exist: if there is liberty, dear reader, there cannot be equality. In fact, there are only two exceptional instances where the defence of equality should be unwavering.

Without a doubt, we owe the first clear line of defence of the concept of equality among men, stricto sensu, to Christianity, which defends with clairvoyance that all men, regardless of race, gender, age, origin, intellectual or physical ability, are children of the same God and as such we all possess the same dignity and the same inalienable rights. The second clear line in the defence of equality revolves around the idea that all men are equal in the eyes of the law so that under identical circumstances the same human action should be treated equally under the law, regardless of the subject’s identity. All political systems should safeguard these essential equalities in an unassailable castle. However, it is curious to note how, simultaneously with the invention of countless presumed equalities, these two basic concepts of equality have been violated and forgotten by western societies. On the one hand, the West has turned its back on the concept of God or Natural Law and has relegated the distinction between good and evil, and even the very definition of life itself, to the whim of the masses. On the other hand, those in power have decided that it is more convenient for them to create systems that allow them to act with enormous freedom of movement, unfettered by the very laws which oppressively restrict the rest of the citizenry. It is only by disencumbering themselves of such a heavy burden that they are able to achieve their greatest desire, which is the freedom to exercise their power arbitrarily.

However, any presumed equality that goes beyond these two concepts is much more questionable. Equal opportunity is limited by where each individual starts out. Human beings are, by nature, very different: some are tall, some short; handsome and ugly; strong and weak; pleasant and unpleasant; virtuous and immoral; intelligent and stupid; wise and foolish; hard-working and lazy; courageous and cowardly; risk-takers and those who like to play it safe. Some are born in certain countries and not others, in certain cities and into certain environments; some come from close families and others from broken families; some had good role models and others were not so lucky. If it only depended on our talents, temperaments and circumstances, along with the luck factor, man would not be man, since we would fall into determinism and denial of our most precious gift, second only to life: liberty. Man has the freedom to choose and we are responsible for our decisions; we are free to choose right or wrong, to learn, unlearn, change, create and improve. Man is, above all else, responsible for his own destiny. Even when faced with the inevitable, man is still free and therefore capable of reacting differently. As the marvellous psychologist and Auschwitz survivor Viktor Frankl reminds us, “you can take everything away from a man except the last of all human freedoms: the choice of his attitude under a given series of circumstances (…); if you cannot change a situation that causes you pain, you can always choose the attitude with which to confront your suffering”. Hence, differences and inequalities emerge from freedom, even as we face the most bottomless of all abysses, completely naked and apparently stripped of our individuality.

What appears, then, to be unquestionable is that inequality is the natural situation of human beings. There is no absolute equality of opportunities and certainly no equality of results as a consequence of our freedom. Everyone accepts the fact that they cannot sign like Freddy Mercury or Maria Callas, paint like Van Gogh, compose like Beethoven, write like Cervantes, reflect like Aristotle or play tennis like Nadal. Yet it is difficult for people to accept the same type of inequality displayed by these extraordinary people in other areas of life with the same spontaneity and admiration. One of them is economic inequality.

It is a proven fact that wealth is not evenly distributed. At the end of the nineteenth century, the Italian economist, Vilfredo Pareto, discovered that the distribution of wealth for centuries and across different societies did not coincide with the distribution of the population and that, contrary to any expected rule of proportionality, approximately 80% of the wealth was in the hands of just 20% of the population. Since then, this new statistical distribution has been known as the Pareto Principle (later popularised and applied to a multitude of phenomena by J. Juran). What was first thought to be an abnormality, a deviation that perhaps should be corrected (after all, don’t we call normal distribution… normal?) has gradually led to the discovery of a multitude of variables that share a series of characteristics which adhere to that very asymmetrical and uneven distribution which is void of any linearity or proportionality. It is what Nassim Taleb defines as Extremistan. Book sales are a good example: in Spain, 95% of books sell fewer than 2,000 copies and only 40 books sell more than 20,000 copies per year. In the United States, 97% of all books sold are written by fewer than 20% of the authors (the same applies to discs or films). Criminality is another clear example: the immense majority of crimes are committed by a very low percentage of the population.

So, if we consider the natural differences between men derived from their different points of origin and the choices they make in the use of their freedom, the weight of the luck or randomness factor and the statistical fact that, by their very nature, money and wealth (calculated by multiplying the number of books by the price) naturally tend to be concentrated in few hands, it is inevitable that such wealth will be unevenly distributed. This has always been the case and it always will be, not because of abuse, exploitation or injustice but rather because it is physically impossible for it to be any other way in an environment of freedom. Despite its inexorability, the inequitable (though, as we have seen, not necessarily unfair) distribution of wealth has been used since time immemorial by power junkies to get their fix. The second part of this article will take a closer look at economic inequality and how it is used politically to secure power.

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