One of the more distinctive features of the universe is that it is unequal. It is unequal in the sense that it is not one mass of undifferentiated goo. It has differentiated features, starting with the distinction between inanimate and animate matter. A lump of coal is quite distinct from a squirrel even though at the most basic level, both are collections of atoms, each atom a composite of protons, neutrons and electrons–which reduces to two types of quarks and electrons.
In this essary I consider the matter of inequality and what it implies about the human condition and what therefore are its normative implications.[1]
Technology
What’s technology? I define technology broadly as “know how” — the knowledge of how to do something. The products of the technology have “know how” embodied in them. Every human artifact and process of production is, in that sense, a technology product. How to convert ore into metal, how to communicate using writing, how to transmit information using wires, or wirelessly, how to build a transistor, how to put 21 billion transistors on a tiny silicon chip, how to build a commercial jetliner starting from materials that are provided by nature, … ad infinitum.
Technology has made ordinary human life unimaginably better compared to, say, just a couple of centuries ago. Think of the advances in modern medicine and the understanding of diseases; of the immense productivity increases in mining, manufacturing and agriculture; in mathematics and the sciences; in computation and communications; and so on. Technology has allowed the earth to support billions of people at a level of comfort that was beyond the wildest optimistic imaginations of our ancestors. Technology has provided the steps for humanity to climb up Maslow’s hierarchy of needs.
But technology has also increased inequality.
Universal Inequality
Increasing inequality is an inescapable feature of the universe, not just of human society. From a cosmic viewpoint, the universe started off extremely equal. Some time after the Big Bang, the entire universe was uniformly filled with energy, and was isotropic. Later the energy condensed into particles, and then into hydrogen. That was the start of the inequality. Greater inequality followed with the formation of stars, and galaxies.
From the very beginning, there’s been an increase in inequality. You will have equality once again if the universe ends in a heat death. Who knows. But the universe is interesting because it is not at either end of its life, and is in a state of inequality. There’s inequality not just in the non-living world, but more strikingly so in the living world.
Inequality of Life
Let’s consider the inequality of life on earth. There wasn’t much inequality when life arose as single-celled organisms. With increasing size and complexity of life, inequality grew. Today we have millions of species — all of which are strictly unequal by definition. A blue whale (137,000 kgs) is 65 million times more massive than a humming bird (0.002 kgs).
Human civilization itself is tightly bound with inequality. As hunter-gatherers, people were generally equal. The very best could probably hunt and gather maybe ten times as much stuff as the worst. The strongest human could probably lift ten times more than what the average human could. The wealthiest emperor of the past would have had a very comfortable life but nothing compared to what the average person in the world today.
But now, with the push of a button, one man can destroy humanity. Any billionaire today has more wealth, both in relative and absolute terms, than any of the richest people of the past.
The fact is that there’s been a monotonic increase in inequality in the natural world, and in the human world. And it will only get more unequal. The story of civilization is a story of a monotonic increase in inequality.
Inequality of Development
We need to understand what William Easterly said in the context of economic development — “Development is unequal. Get used to it.” Technology has made the world less equal and that inequality will increase with time.
But — and here’s the important point — the increase in inequality does not necessarily mean that some people are falling behind in absolute terms. All can — and indeed do — advance even as the gap between the leaders and the laggards increases. For me, the first concern is whether anyone is worse off now than they were in the past. Thankfully, the answer is no.
Absolute poverty bothers me, not inequality. It does not matter whether the poorest person’s wealth is a billionth of the richest person’s wealth; what matters is that the poorest person has sufficient wealth to live a fulfilling life. In short, I value general prosperity that makes the poorest better off even at the cost of increasing inequality.
Inequality and Prosperity
Confining ourselves to the two dimensions of economic inequality and prosperity, we can ask how are the two related. Are they orthogonal? That is, they are independent of each other, and if that is so, can we choose any value we wish of the two independent variables. If they are not orthogonal (that is they are linked in some way), what combination of values are possible, and what freedom do we have to choose among those?
Let’s consider a limited number of states:
- Low inequality and high prosperity
- High inequality and high prosperity
- Low inequality and low prosperity
- High inequality and low prosperity
I value high prosperity over low prosperity, and low inequality over high inequality. Therefore I value states 1 and 2, over states 3 and 4. Furthermore, I prefer state 1 over 2, and state 3 over 4. In other words, I rank 1 > 2 > 3 > 4 and would choose accordingly if I had the choice.
To illustrate the point, I would prefer to have an income of $200K and the rich have an income of $200M, rather than I have an income of $10K and the rich have an income of $20K.
The question is then: do we necessarily have a trade-off between inequality and prosperity? Perhaps there is a trade-off and you cannot have the best of both, that is state 1. Perhaps the best you can do is choose between 2 and 3: where only the value of one variable is to your liking and not the other.
If there is no trade-off, then we can simultaneously have low inequality and high prosperity — that is state 1 — if we wish. My conjecture here is that there is a trade-off. Meaning, if you wish to have high prosperity, you are necessarily forced to also have high inequality. The argument for that will have to wait for now. That will depend on the mechanism we use to achieve high prosperity.
For any given level of prosperity, we should be concerned more about the absolute level of prosperity of the lowest segment of the population than the relative prosperity between the rich and the poor. My position is that as long as no one is destitute, I don’t care how rich the rich are.
I will explore the implications of inequality in the next bit.
NOTES:
- This post was motivated by a comment that Ameet Deshpande posted to the most recent AKA. I expect to address the several points he raised in his comment in later posts.
Life is a Random Draw 
Atanu,
What do you have to say about Scandinavian countries where inequality is generally low and prosperity high.
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Abhijeet,
Countries differ because of differing cultures. What’s culture? A collection of practices, values, material and cosmological beliefs, norms, modes of behavior, the sets of formal and informal rules that constrain what people do in their personal capacities, and what they do when they act in the social sphere, etc. Different cultures consequently have different levels of material success and different levels of equality. Scandinavian countries have cultures that are in some sense “superior” to other cultures that are not as materially prosperous, if we value material prosperity.
As I wrote in the post, I believe there is a trade-off between equality of outcome and prosperity which flows from the fundamental fact that people are unequal. The basketball superstar is better than nearly all of us, and that inequality results in the superstar becoming wealthier than others. The inequality in wealth is a consequence of the inequality in ability.
What we have to pay attention to is the process and not just the outcome. If the process through which wealth or income is acquired is “fair”, then we have to accept that the outcome is “fair”. Unfairly acquired wealth cannot be morally justified and is economically inefficient.
Why is there a trade-off between prosperity and equality? Because attempts to force equality of outcome would reduce the scope for the more talented to create wealth.
The Scandinavian countries have lower inequality and higher prosperity compared to some other countries. Granted. But can we say that they did not suffer a trade-off? Can we be sure that if they had admitted a bit of higher inequality that they would not have been on average more prosperous, and that the poor would not have been better off than they are today?
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Sir – I am sure that is not your view and you are talking mainly from an economic perspective but similar arguments have been misused by imperialists/white supremacists in the west to justify racial superiority and that the black community (which in my view has been shabbily treated) are still better off than they were in African forests. After all these are subjective terms to some extent at least (involving trade-offs like independence versus subjugation albeit with better living standards and technology )
Another genuine question. I have been in the US only for 2 years or so , so my understanding of this country is limited unlike you who have spent decades, but was curious to know why the black community in the US is in such a bad shape, they are 25% of the prison population. There are people who view it as something the community has to deal with it themselves (i.e they are perfectly fine with some communities at the bottom of the social pyramid) whereas others like me find it very disturbing and shameful that in a rich country like America there are private prisons who have vested interest in incarcerating large number of socially disadvantaged groups…And the people who justify it use the inequality theory to justify there will be communities who will be at the bottom but overall they are still better off..
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Shruti,
I write precisely what I mean and I mean what I write. Besides, I am an economist and my analysis proceeds from an economic viewpoint. My argument pivots around the point that inequality is a fact of nature, both in the inanimate and animate world. Recognizing inequality as an objective fact does is not a value judgement and nor is there anything in it to recommend it to racists/white supremacists.
Why Americans of African descent not as well off as other racial groups in the US? The answer depends on whom you ask. People like Al Sharpton and Jesee Jackson would lay the blame on the history of American slavery. But scholars like Thomas Sowell and Walter Williams have debunked that as an explanation. You can if you wish hear their arguments on Youtube and in various books, articles, and interviews. In general, they place the blame partly on Black culture and partly on the government. Here’s one brief extract from an interview where Sowell is talking about his book, “Black Rednecks and White Liberals”.
Also, here he talks about slavery. It’s an excerpt from his “Black Rednecks and White Liberals.
Sowell and Williams are intellectual giants. One can learn a lot about history and economics from them. Here’s one that’s a must-watch from Prof Williams’ “Suffer no Fools”
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As always cannot thank you enough sir, for the detailed response and the links.Much appreciated.
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You may find an essay by Paul Graham (YCombinator founder) interesting: http://paulgraham.com/gap.html
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Thanks for the link to Paul Graham’s essay “Mind the Gap”. Graham is a very clear thinker, and a clear writer (the former being a necessary bit for the latter.)
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