Wes Markofski, 2/17/09 (Philos 955 Week #5)

Equality of Resources (Dworkin, Varian, Roemer, Scanlon)

I.  Overview

1.  Varian: What does the economic literature add to Dworkin’s equality of resources? 

a.  Markets; Dworkin’s insurance mechanism; Optimal insurance/tax schemes for real world incentive problems (Income differences due to ability recommend regressive tax scheme, income differences due to luck recommend progressive scheme, for efficiency)

2.  Roemer: What should we equalize?  Welfarism, Utilitarianism, Resourcism

a.  Four critiques of welfarism (152-153); Dworkin’s insurance mechanism; Reduction to welfarism

3.  Scanlon: Response to Roemer

a.  Welfarism ≠ Resourcism; Alternative resourcist approach (names of goods and non-ideal theory)   

II.  Why should resource egalitarians like markets? (Question #1)

1.  Envy-free and Pareto efficient (Pareto efficient definition: An allocation of resources such that no one can be made better off without someone being made worse off)

a.  Market mechanism (not simple voluntary trade) preserves initial envy-free allocation through prices, selects among numerous possible envy-free allocations

-“the market mechanism…provides the special property of preserving the symmetry of equal endowment” (Varian 114)

-given equal talent, the distribution that satisfies envy-free and efficient criterion is equal income distribution (115)

b.  Questions: Pareto efficient more strict? (Varian 112); Measures utility, not resources

III.  Equality of resources under variations in talent (Equalize Talents or just Goods?)

1.  Basic Problem: Talent differences lead to unequal resource distributions after trade (Dworkin, Varian 115)     

2.   “Wealth fair” versus “income fair” allocations (Varian 116)

a.  Wealth fair allocation: equalize resources, not labor

b.  Income fair allocation: equalize resources and labor to account for differences in talent in productive labor and exchange

-Wealth fair” favors talented (after work and trade, talented do better); “income fair” favors less talented (Dworkin’s “slavery of the talented”?)

IV.  Does Dworkin’s insurance mechanism avoid “slavery of the talented”? (No) (Question #2) 

            1.  Identical preferences, Single-Good model: after insurance, all have equal corn (Roemer 160)

                        a.  Utilitarian, Welfarist, Resourcist solution all give same solution

            2.  Different preferences, Single-Good model: after insurance, all have equal corn (161)

                        a. Sectional utilitarianism: utility maximized among shared preference groups

            3.  Thick-veil versus thin-veil of ignorance = utilitarianism versus sectional utilitarianism

-“there is a thin line between insurance as an institution for realizing equality of resources and utilitarianism” (162) [this is an unexpected, perhaps undesirable, outcome]

4.  Insurance mechanism can be even worse (lower utility) for talented (Bob) than equal-division mechanism (pure exchange model of inalienable resources, 168-171).

V.  Roemer: “Equal-division” or insurance mechanism for equality of resources given variations in talent?

-Equalize talent: “If we consider talent a resource, the distribution of which is morally arbitrary, then one might wish to compensate those who draw a low talent in the birth lottery” (163)

-Equal-division: “A…natural proposal is to divide up the property rights in all goods, transferable and non-transferable, so that each has an equal share in society’s total resources” (157)

1.  Insurance mechanism leads to following outcomes:

1-agents have same amount of corn, 2-“the higher one’s talent, the more one works”, 3-“the higher one’s talent, the lower one’s final utility” (Theorem 1, 164)

2.  Equal-division mechanism leads to following outcomes:

1-welfare of high-talent person (Bob) is lower than welfare of low-talent person (Andrea), 2-corn is not always equally distributed (167-168)

3. Problems with the insurance model?

a.  Given same preferences, equality of resources should lead to equality of welfare

b.  talented have “involuntary expensive taste” for their own leisure (165)

c.  same outcome as utilitarianism

d.  assumes “talent is identifiable” and interpersonal utility comparisons possible (164)

            4.  Problems with both models

a.  Overcompensate the unlucky?  Harm the unlucky?  (in terms of welfare)     

-“Both of them may render the people we wish to subsidize under an equality-of-resource ethic even worse off than they would have been without the subsidy, in terms of welfare.  This is disturbing because…one purpose of equalizing resources is to improve the welfare of those who have few resources, who less than “their share” of resources” (173)

5.  Measuring equality of resource mechanisms by their effect on welfare?

-“With equality-of-resource ethics, we redistribute resources equally, not without any regard to welfare, but because we are motivated to improve…the welfare of those who began with few resources…It does not follow from this that we should equalize welfares” (173). 

VI.  Does resource egalitarianism reduce to welfare egalitarianism? (Question #3)

            a.  Roemer’s 4 general “resource equalizing” conditions (177)

b.  Scanlon’s critique: Pareto optimality (Condition 1), resource monotonicity (2), and consistency (4) are welfarist, not resourcist, conditions!

VII.  Is there a meaningful distinction between preferences and resources?  (Question #4)

-“what initially appears as a difference between people for which they must bear responsibility (i.e. preferences) become a difference for which they do not bear responsibility (i.e. resources).  Where does one draw the line?” (178)

            a.  Should we equalize (or compensate for) inalienable talents like endorphins?  Can we?

b.  Dworkin: “the equality-of-resource mechanism should be ambition-sensitive but not endowment-sensitive” (179).  Why isn’t ambition (or risk-taking) a “resource”? 

VIII.  Reviving resourcism by naming resources of “shared general interest” (Scanlon 116)? (Question #5)

            a.  What’s on the list? (food, shelter, education, religious freedom, preferences…???)

b.  Why can’t we fix the list?  “No list of resources can be taken as fundamental; any list must be defended with reference to the needs and interests of the people whom the theory is meant to apply” (115).

IX.  Ideal versus non-ideal egalitarian theories (Question #6) 

a.  In favor of ideal theories: “Before one begins to compromise, it would be nice to know what the goal would be, if everyone knew everything” (Roemer in Scanlon 117)

b.  In favor of ‘empirically grounded’ theories:

-Don’t we want “operational” theories of justice (Varian)?  Empirical details change recommendations for mechanism design (e.g. incentive problems of ability insurance, optimal tax scheme changes based on whether income differences arise from differences in luck versus ability (Varian 121)).