331.
Just reward and allocation
What is a just reward or remuneration? A soccer star or pop star earns many times more than, say, someone in nursing. Is that justified? The soccer player and pop singer have a talent that they have developed with great commitment end effort, and that is an accomplishment. They also have the luck that their particular talents are scarce and in demand. Here we find the economic argument of utility as satisfaction of demand. People are prepared to pay more for a good soccer match or pop concert than for medical care.
Then, it is necessary to recognize other values than
only success in a market, such as value for society, in contributions to
society. However, one can also argue that the soccer player or pop singer have
cultural, symbolic value. The soccer player as symbol for the hero who takes
risks and overcomes pain and opponents, and does that together, in a team. One
can see the singers song as an expression and celebration of human emotion.
One can argue that talent is mere luck, but one can
also argue that everyone has talent for something, however modest, and that
utilizing talent not only has instrumental, economic value, as a source of
income, but also intrinsic value: it is satisfying to do something you are good
at, and for that one should be willing to sacrifice at least some economic
value.
Justice also requires the virtue of moderation: one
can be immoderate in ambition and
excellence, but not at the cost of others, and should
be willing and able to engage in give and take.
Also, economic success arises not only from talent and
commitment, and supply and demand, but also builds on a vast heritage of
institutions (rule of law), culture (knowledge), and infrastructure (roads,
technology, etc.). That heritage has been produced at the cost of blood, sweat
and tears of many generations, who had to conquer it all. This calls for some
modesty, and the willingness to share the returns from that heritage with those
who were less lucky in the lottery of genes and birthplace.
Next to remuneration for work, how about allocation of
scarce resources? Is that to be left entirely to markets? The argument for
markets is to let scarcity lead to higher prices, which evokes new supply that
resolves the shortage. That does not apply when there are hard constraints, for
example from nature. Temporary shortage can lead to extortion, as in the supply
of water after a disaster.
Markets cannot cover everything. Alternative forms of
allocation are a lottery, queue, rationing, and ‘attribution’: allocation
according to certain criteria. A degree or Nobel prize requires attribution of
merit, and would lose its value when sold to the highest bidder.
Some measures are debatable for other reasons. How
about letting rich dentists shoot a rhino at an exorbitant price, to use the
proceeds for protecting rhino’s? What if due to a ban on child labour people
die from hunger? Perhaps one should first abolish hunger and get children to
school, and then forbid child labour.
Markets are clever in circumventing non-market
allocation. Michael Sandel[i] recounts the story of the
mayor of New York who wanted to offer a free concert to the citizens, rich and
poor, in the park, but because of limited capacity they had to queue for free
tickets. An entrepreneur had vagrants stand in queue to collect tickets which
he then auctioned to the rich.
An example of attribution is attribution of merit, as
in a contest or a prize. Another is attribution according urgency, as the
triage in hospitals, with a waiting list in case of equal urgency.
[i] Michael Sandel, What money can’t buy, Penguin 2013, p.
79.
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