It’s one of the most commonly cited axioms in the English language (and I’m willing to bet the equivalent is quoted in most other languages, as well): ‘Life isn’t fair’. A complete list of the examples of unfairness in life would fill an entire blog. (Not a blog entry, or even a week’s worth of blog entries, but an entire blog run for years with the sole purpose of documenting the unfairness of life.) From the fact that your quality of life is largely determined where you are born (as well as your race and gender at birth) to the fact that Death can reach out his icy hand and drag you into the great beyond at any time, life in its entirety is pretty unfair. (Don’t get too depressed; this post’ll get more upbeat by the end.)
This is the point made by Investor Junkie in his well-titled post ‘Life Isn’t Fair. Now Get Over It.‘ It’s a decent summation of ways in which life isn’t fair, as well as the suggested method of handling that unfairness: getting over it and moving on with your life. He makes some very good points about how the world currently exists, and does so with a nice reference to Dr. Seuss. (I do love me some Seuss).
But that brings up the inevitable question: should we try to make life fair? After all, the desire for fairness is deeply ingrained in most of us from a young age. From the time we go to elementary school, teachers, parents, and we ourselves try to make everything from games to tests fair to everyone. Tests are administered simultaneously, cheating is prevented, and assuming the teacher is any good, ample opportunity exists to study and get further assistance, if needed. Board games start with everyone having equal standing; nobody begins Monopoly with hotels on Boardwalk and Park Place and half the money in the game. Even when you get your friends together to play kickball, you try to make the teams ‘even'; the captains take turns choosing team members so that not all the huge, athletic kids end up on one team against the nerds.
Already we’ve run into a problem, though; not everyone is created equal, in spite of what the Declaration of Independence states. Some people are more intelligent, more athletic, or better at making money than others, simply by virtue of their genes and upbringing. Attempting to make everyone equal in all aspects of life will mean going against the natural order of things, and most attempts have the tendency to bring everyone down to the lowest common denominator (at it’s easier to make the strong (or otherwise gifted) hold back than it is to make the weak stronger).
That, in a nutshell,is the same argument that arises whenever issues of federal programs, taxes, and ‘fairness’ arise in the government. On the Left, you have progressives and liberals who maintain that the government should take a greater hand in redistributing wealth for the benefit of society as a whole, with the communists on the far left arguing that everyone should have exactly the same amount of money and other possessions (colloquially, the same amount of ‘stuff’). On the Right, you hear the conservatives arguing that high taxes and generous government handouts will discourage people from working, with the most extreme libertarians arguing that we’d be better off without government, period.
As is the case with most the intractable political debates, there’s truth to both arguments, at least, the less extreme arguments; this makes sense, as even the most die-hard partisans would hopefully come to an agreement if all the evidence was against them. Not that this always happens… Societies with a more equal distribution of money and other property tend to be healthier and happier, at all levels of society, which is a key to the Left’s argument. On the other hand, high and rising taxes can (and unfortunately do) discourage labor, savings, and other industry, as the Right claims.
Finding a balance
How do we thread the needle, then, between creating an economically equal society that promotes a good society overall (with crippling high taxes) and a society that rewards those who take risks, build empires, and further spur the advance of mankind (while generating a greater gap between the haves and have-nots)?
I’ll be honest, I don’t know the answer. From my perspective, the key seems to be establishing a floor (or safety net) to keep those who are earning little from falling into the depth of poverty, as well as a tax rate low enough to minimize disincentives to working but high enough to level the field a bit (to say nothing of providing for the needs of the government, for better or for worse). That’s what we’re currently attempting to do, with the myriad of social programs in existence, although it creates the unfortunate side effect of causing those being helped to spend all their time being administered to rather than working on something that could better society. A simpler plan, like Milton Friedman’s negative income tax plan, might be workable, although getting the needed number of politicians together to so radically change the tax system would be a monumental undertaking.
That said, I don’t believe the American system is either as unfair or as discouraging to economic growth as critics on both sides occasionally attempt to contend. Taxes are far from punitive on most people, with a max marginal rate of roughly 40% (and as mentioned before, marginal rates are far from the actual rate of taxes paid) as of this writing and most wage earners getting nowhere near that amount. Similarly, there are already plenty of social programs designed to keep people from starving in the streets (not to say that people don’t still fall through the cracks). Is it perfect, no; but we’ve still done a decent job of protecting the worst off while allowing the best to profit from their skills. (See, I told you I would end on a high note.)