So now let's talk about the distribution of income and wealth. And I should say that it's, it's a little curious in that, this is third in his list of priorities, so it's, it's way down in the hierarchy. And, in terms of the attention Rawls has received, this has had more attention than anything else. So what we're about to do now most people who've only heard a little bit about Rawls, this is the little bit that they've heard, okay? And he has a principle for distributing income and wealth that actually he didn't come up with. It's, it's an old principle of welfare economics, which used to be called Maximin. M-A-X-I-M-I-N. Not maximum, maximin, right? Short for maximizing the minimum share. Maximize the minimum share. Rawls calls it the Difference Principle, but it's the same principle. And I'm going to explain I'm going to to explain it by reference to this chart, but I'll also explain it verbally as we go along. Okay. So this is similar to the charts we used when we were looking at different varieties of utilitarianism Principle and all that. So, imagine a world of two people this so you've got person A is going up the y axis, and person B is going along the x axis. And we're not, we're not talking about utilities here. We're talking about primary goods, and in particular we're talking about money, okay? because we're talking about income and wealth with this diagram. And suppose the status quo is x up there. So A is better off than B, right? What Rawls says is basically, draw a line, a vertical line straight through the status quo south until you hit perfect equality, which is that point m, and then turn right, okay? So you get a kind of what he, what sometimes people refer to as an L-shaped indifference curve, okay? And the idea is suppose, suppose you moved from that status quo point x to point y. That would be an improvement for Rawls, because the condition of the person at the bottom would have improved, okay? In this case, its the condition of B, right? B's better off, A's worse off, right? But you don't know whether you're going to be A or B by, you're behind the veil of ignorance, right? So if you said, behind the veil of ignorance, would we support the move from x to y? You'd say, yes. Okay? And even a move from x to f, over far on the right there would actually switch who the worst off is. You would still affirm it, because moving from x to f improves the condition of whoever turns out later when the veil of ignorance is lifted to be at the bottom. And just, just as in the other examples we've talked about, you, your blindness behind the veil of ignorance means you, you're really not interested in which person it is. You just assume you're going to be the worst off person, okay? So, there's another assumption in here which it's worth making explicit, which is that he's assuming we're pretty risk averse, right? He's assuming we're pretty risk averse because he's saying, look out always for the condition of the person at the absolute bottom. You might say, well why be that risk averse? And his, his answer to that is, well which true, we're talking about societies and conditions of moderate scarcity, but one of the things we know is that there's no necessary relationship between the level economic development in a country and the actual distribution. So it may be the case that even in wealthy countries, some people are starving. You, there's no guarantee in a wealthy country that some people won't be starving. Well, you better think you're going to be the starving one, right? You have, it's the, it's the only rational thing to assume, right? No matter how wealthy the country is that your, if, if there's the serious possibility that some people starve, which there is, we have no reason to assume that there won't be. After we don't know whether there's a welfare state, unemployment insurance or anything yet, right? You better just assume you're going to be that starving person. Yeah? >> Well that raises, that raises a concern regarding his priorities, income and wealth. the, the kind of the, the kind of category that would directly relate to whether you starved or not is third on the list. And first on the list is sort of freedom and opportunity. What is an increase in opportunity to somebody who's dying of starvation? Why is it ranked higher? And why is the ability to starve or not so low on the list? >> So that's a good question. And it's actually a good critique of Rawls in that, you would say, if he really thinks we're that risk averse, you're exactly right, what good is, what use is the freedom of speech to somebody who's about to starve to death? And he doesn't actually have a very good answer to that. I think it's, it's a valid critique of Rawls, and so it's, it's, it's sharp of you to have made it. It's not a deep critique in the sense that we could reorder the principles, right, and still carry on. So, and some people have said, so Rawls, this is, this is a very moderate Rawls. You could make him more, a kind of more socialistic Rawls by saying exactly like you just said, and saying, well then we should change the lexical ranking of these primary goods and, and the difference principle. The maximin principle should actually trump other things. So it, it's a, it's a fair criticism. And, but as I said, it doesn't, it doesn't get, it's not a criticism of it, it, it's not fatal to his whole enterprise, it's, but it might suggest some reordering within it, yeah. So but any, anything else that, that strikes either of you about this, these assumptions about risk? >> Yes, for, for me what's puzzling is that if we adopt this line of thinking, and basically taking away from the rich and giving to the poor and injecting the money to help poor, would we really do that at cost of the economy? This is going to be really bad for the economy, and harm the economy- >> Okay, so- >> Will we still do this? >> Those are good things to bring up. What does it remind you of that we've done in the course already? >> Bentham? >> Yes, Bentham. Remember the Bentham's distinction between absolute and practical equality where Bentham says, yes, redistribution in principle would make a lot of sense, yeah, for different reasons in Bentham's case. But then he basically says the pie would shrink so much the rich will burn their crops before giving them to the poor and so on. So if you're really going to get a tiny marginal increase at the bottom, at some huge cost to the economy as a whole would it really be worth doing? I mean after all, this was the critique of the Communist systems that, that yes, they were egalitarian, but they had such, it came at the price of such incredible economic inefficiency that really wasn't worth having, right? I think that's a valid critique as well. And what Rawls says about that is, well, yeah, you know maybe the, the, the probability of being at the bottom is low, but, but the costs of being at the bottom are high. So it's, it's, there's a grave risk at being at the bottom. He tries to weasel out of this at one point by saying, well I think, I, John Rawls, think that there be a kind of multiplier effect. That if you help people at the bottom, that will help the people at the next level, that will help the people at the next level, that will help the people. This is a kind of almost Keynesian idea that you stimulate the miend at the bottom and it has ripple effects through the economy. You look troubled by that. >> Trickle up economics? >> Exactly. Kane, you, in that is the Keynesian argument, they kind of trickle up. And Rawls, so he says, it's a sort of awkward and he says, I think that's what would happen so that they wouldn't be this huge cost. But even if, even if it didn't happen, I, I would still affirm this. So he's just sort of putting this out there to kind of blunt the criticism, but it, you know, who, who, says there are these Keynesian multiplier effect? And actually, also, if that were true, it makes the differences between Rawls' idea and utilitarianism much less interesting. Because if, if this chain connection, this trickle up was really true, then everything that was Rawls preferred would also be utilitarian preferred and there would be much less to choose between them. >> Would that mean basically that this would be a way to have only middle class up? So basically lower middle class, upper middle class, in, in that way we'd basically tackle poverty in the society and we just have like- >> Well- >> This better off [LAUGH]? >> Well he's trying to, he's trying to tell that happy story. He's trying to say, if we help the people at the bottom, everybody this rising tide will lift all boats. Kind of trickle up. Of course, the, the problem is that it's the easiest case. And you, you don't test arguments by looking at the easiest case. The harder cases are, what if the way you helped the people at the bottom came at a big, at the cost of a big hit to the middle class, right? And then again, Rawls is going to say, well I'm, I'm assuming the pe, the condition of the people at the bottom is potentially so bad that you will be so risk averse that you can't afford to assume you're going to be the middle class person who takes the hit. But you're going to assume you're going to be the person at the bottom. And it has the implication though, that for instance, if you, it, it can be compatible with very big inequalities. So, if you think about the, the Regan tax cuts in the early 1980s, basically they gave a little bit of benefit to the people at the bottom and a huge benefit to the people at the top, right? But since from Rawls' point of view, all you are, all you look at is what happened to the people at the bottom, you could imagine massive transfers of wealth from the middle class to the top and tiny increases at the bottom. And it would be fine with Rawls. So you can generate odd outcomes with this principle that make Rawls look a little bit silly. But in his defense, what, what he would say is, look, and what he does say is, I'm not talking about every marginal policy choice. I'm talking about the basic structure of society. The basic institutions of society. These are not, this is not a guide for, for the next policy debate. It's a guide for thinking about what are the basic guarantees we should put in place. And I'm saying, the test should be how well it does from the perspective of people at the bottom. So, if trickle down turned out to be true, if the best way to help the people at the bottom is to have an unregulated market economy, I, John Rawls, wouldn't be against it, okay? And so let's compare his principle to the, the others we've talked about so far in the course. again, think of thi, thi, this is a little bit misleading because we have either utility or primary goods on these axis now. And they're, they're obviously different things. So it's, so it's only partially illuminating, but I think it is partially illuminating. You, you could remember we, we had when we did utilitarianism, anything to the right of the 45 degree line from x was better. When, and, and the, when we did neoclassical utilitarianism, it's only in the, in the top right hand quadrant that's better. That hxl quadrant, right? Pareto's superior. Now when we superimpose Rawls' L-shaped indifference curve, we see that his principle partly overlaps with this, but also includes some kinds of redistribution that neither of them would have allowed. And that's because of this focus on improving the condition of the person at the very bottom, right? Yeah? >> If we fuse all three of these. I mean sometimes they're different, sometimes that not. But definitely everything within h, x and l is benefit to society no matter whose system of thought you're thinking of. >> Yes. So that, that is a more succinct way of saying what I just said a minute ago, which is that if it turned out that an unregulated market was the best way to help the people at the bottom, then Rawls would say, do it, right? And, but notice it's an if. This is a cond, a, a conditional, right? now, and I should ex, your question reminds me, I should explain one more thing, which is that, if you read the Theory of Justice, which is a bracing thing to do as I said. It's a, it's a long and difficult to follow book. You get to page 200 and something, and Rawls says at that point words to the effect that he's agnostic about the choice between capitalism and socialism. And when he wrote this, this was during the Cold War, right, 1971. People made a lot of fun of him. They said, why? You know, I read hundreds and hundreds of pages of a book about justice only to be told that the author is agnostic about the choice between capitalism and socialism? Get real! Come on! Right? But Rawls' point, I think, looks a lot better in 2014 than maybe it did in 1971. Because, what his answer is, his answer is, well look, it's not a question of political philosophy, what economic system works to the bot, benefit of the people at the bottom. That is for, for policy political economist policymakers to figure out by trial and error, by trying different polices, by seeing what works. Of course it would be insane to think that you could settle that question as a matter of armchair reflection, which is what philosophers do. What I'm doing is telling you what the test should be. The test should be, is this a system that works to the greatest advantage of the people at the bottom? If it is, yes. If trickle down really does do that fine. But if Keynesianism does it then you should have Keynesianism. And if some kind of planned economy does it, you should have some kind of planned economy. And if it's really a mixed economy, you should have a mixed economy. But those are not normative questions. Those are questions about how, how as a policy matter it's best to work to the, the ben, to create a system that works to the benefit of the people at the bottom. That's the test. So I'm defending the test. I'm not a political economist. I, John Rawls, am not a policymaker and nobody you know, any, anybody who things that your political philosophy should answer that question is just expecting the wrong kind of thing from political philosophy. And as I said, I think, you know, from the perspective of 2014, that looks a whole more defensible view than perhaps was the case in the middle, at the height of the Cold War. So and I, and I think he's pretty convincing on that point. So yeah it's, it's it may be that you're in this, this boring zone on, on the diagram there where all of the principles overlap and there's nothing interesting to choose among them. But it may be that you're not. And that's an empirical question. And then there would be interesting choices to make.
