| Well of course "fair" is a normative question, but it is one that there are usually some common themes about. For example the "equal opportunity" American ideal doesn't match up if the greatest predictor of your economic success is not your intellect, hard work, creativity, etc. but rather the income of the family you were rather arbitrarily born into. For example: http://www.portfolio.com/views/blogs/market-movers/2009/04/2... "The truly amazing thing to me is that parental income isn't just crucial in getting to college, and getting through college -- its effects linger on, basically, in perpetuity. One of the most remarkable findings from the Pew Charitable Trusts' Economic Mobility Project is that a child from a family in the top income quintile who does not get a college degree is more likely to wind up in the top income quintile himself than a child from a family in the bottom income quintile who does get a college degree" A large part of this is due to public policy and there are clear examples of many European countries where changing public policy produces less arbitrary income inequalities. As the developed world transforms into a more knowledge based economy which requires large long-term investments in yourself to really compete, income inequality will only grow between those that can make the investments and those that can't. I'd also be careful to consider how the market pays people as necessarily being "fair" until you look at after-tax income and the institutions that help determine that price. There are many different ways to setup a distribution of resources in a society and there are many different ways to setup markets (property rights, laws, public services, regulation, taxes etc.). As such we should consider the fairness of our human created rules and institutions; the particular results they create are just indicators. Of course whatever people are paid is "appropriate" as long as it follows the system of rules we have setup. The "appropriate" results would be very different if we changed how the system was setup. |
An alternative explanation is that wealth doesn't beget wealth, but rather those with the characteristics which lead to the acquisition of wealth also beget offspring with the same properties. This isn't necessarily unjust, as Yglesias states, but rather an artifact of the reality of genetics, upbringing and their effects on productivity. If so, to achieve the "equal opportunity" you seek, you must wipe away these differences in both genetics and upbringing, in which case, just call me Harrison Bergeron.