Equitable Distributions of Income

8 Key excerpts on "Equitable Distributions of Income"

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  A Course in Public Economics

  • John Leach(Author)
  • 2003(Publication Date)
  • Cambridge University Press

    (Publisher)

  The Distribution of Income 360 workers are less well off than their older counterparts. People tend to be net debtors during the early part of their lives, and have positive net assets later in life, so that their asset income is initially negative and positive later. It is perhaps the case that life-cycle effects should not concern us greatly. Arguably, there is no inherent unfairness in these differences because everyone is young once, and with a little luck old once. Consider, for example, the case of university students. They are choosing not to work so that they can enhance their future earning potential. Their poverty is both temporary and voluntary, and a decade after their graduation, they are likely to be earning incomes well above the average. If our measure of income disparity is current income, they are among the poorer segments of society, but if our measure is lifetime income, they are among the richer segments. 23.3 REASONS FOR INCOME REDISTRIBUTION Most, if not all, competitive economies have adopted policies designed to raise the welfare of the least well-off members of society. These policies are generally justified by a belief that extreme differences in economic welfare are unethical. There are instances, however, in which redistribution also improves economic efficiency. 8 23.3.1 Social Justice This rationale applies the Golden Rule to the entire economy. It contends that econom-ically advantaged people should treat economically disadvantaged people in the way that they would like to be treated if their roles were reversed. Social justice is not a matter of preferences, but an ethical imperative, and hence does not appear in any individual’s utility. Rather, it is an overarching criterion for evaluating possible configurations of individual utilities. The most common method for implementing such a criterion is to postulate a Bergson–Samuelson social welfare function.

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  The Ethics of the Market

  • J. Meadowcroft(Author)
  • 2005(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  56 The Ethics of the Market prosperity, the cost of that prosperity may be the ‘social exclusion’ of those who are condemned to a life of poverty at the bottom of the economic ladder (for example, Byrne 1997). It is contended that ‘social justice’ need not require the complete eradication of economic inequality, but rather the limitation of inequalities to an acceptable level. According to Miller (2001, p. 243): [I]n a market economy it will almost certainly be inevitable, and be regarded as fair, that there should be income differentials within firms. But there seem to be no reasons, either of economic necessity or of fairness, for these differentials to be anywhere near as large as they are now in most capitalist systems. For Miller, it is ‘fair for the managing director of a large company to be paid not more than, say, three or four times the wage of an unskilled worker, with proportionate differentials in between’. Similarly, Galbraith (2002) has argued that a proper goal of public policy is to attain ‘sufficient equality in the distribution of income’ [original emphasis] via redistributive taxation. It is argued, then, that it is an appropriate role of the state to limit the extent to which the distribution of income and wealth are determined by market forces, rather than to create strict equality of economic outcomes or to replace the market in its entirety. At first sight, distributional justice would appear to be one ethical criterion where the market must be found wanting, given that it is the case that market forces produce inequalities of income and wealth that bear no relation to need. However, this chapter will show that even though the unequal distribution of income and wealth produced by a market economy bears no relation to need or desert, and is not combined with equality of opportunity, it should nevertheless be considered just because it meets the only relevant moral criterion: procedural justice.

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  God-Conscious Organization and the Islamic Social Economy

  • Masudul Alam Choudhury(Author)
  • 2016(Publication Date)
  • Taylor & Francis

    (Publisher)

  ihsan.

  Distributive justice from the social perspective refers to the fairness of allocation of resources. This attribute contrasts with procedural justice, which focuses on the fairness of the decision-making aspects of the process. The theory of distributive justice propounded by humans draws from the work of Aristotle, who equated justice with a proper ratio of contributions to rewards, where each person receives returns that are commensurate with his investment (Homans, 1961). Homans contends that distributive justice always entails comparison by the parties of the contributions each makes and the reward each receives. The concept propounded by Homans is widely accepted. Equity theory conceives of social interaction as a series of exchanges and just distribution which are both considered as a major dynamic of these exchanges. Social scientists believe that every culture has its own institutionalized system for apportioning resources among its members. Such measures may vary across cultures (Ahmad and Hassan, 2000). As per the above discussions, it is clear that equity is considered as the rational selection of a just distribution and it is the unambiguously dominant concept in many societies in the world. A survey undertaken by Jasso and Rossi (1977) in the USA for discovering norms of distributive justice confirmed that justice should be judged in terms of an individual’s education, occupation, gender, number of children and marital status. They considered justice matching rewards with investments with some adjustment for needs.

  Apart from equity, social scientists have considered other forms of justice like need and equality (Leventhal, 1976). However, there are different forms of ideas of justice from the social perspective. But there are three independent justice norms which are closely linked with the allocation of resources. These are equity, equality and need (Greenberg and Cohen, 1982). These three basic principles are outlined here in relation to the topic that is under discussion.

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  Ethics

  Theory and Contemporary Issues, Concise Edition

  • Barbara MacKinnon, Andrew Fiala, , , Barbara MacKinnon, Andrew Fiala(Authors)
  • 2015(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  This mention of Marx and Marxism reminds us that there is no consensus about what counts as a fair distribution of wealth. Revolutions and wars have been fought in the name of various ideas of economic justice. Equal Opportunity Another viewpoint on distributive justice does not fit easily into either the process or end-state categories. In this view, the key to whether an unequal distribution of wealth in a society is just is whether people have a fair chance to attain positions of greater income or wealth. That is, equality of wealth is not required, only equal opportunity to attain it. (We discussed equal opportunity in connection to civil rights and nondis-crimination in the previous chapter.) We might see the notion of equal opportunity as symbolized by the Statue of Liberty in New York Harbor. The statue sits on Liberty Island, where, historically, new immigrants to the United States were processed. It represents the idea that in the United States all people have a chance to make a good life for themselves provided they work hard. But just what is involved in the notion of equal opportunity, and is it a realizable goal or ideal? Liter-ally, it involves both opportunities and some sort of equality of chances to attain them. An opportunity is a chance to attain some benefit or goods. People have equal chances to attain these goods first of all when there are no barriers to prevent them from attaining them. Opportunities can still be said to be equal if bar-riers exist as long as they affect everyone equally. Clearly, if racism, sexism, or other forms of prejudice prevent some people from having the same chances as others to attain valued goals or positions in a society, then there is not equal opportunity.

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  Principles of Social Justice

  • David Miller(Author)
  • 2001(Publication Date)
  • Harvard University Press

    (Publisher)

  For instance, if we ask people what an ideally fair distribution of income across society would be, their answers may be influenced by their perceptions of the current distribution; or if we ask them what responsibility society has to meet people’s needs, they may draw for their answers on existing welfare practices. Although for these reasons we should always be cautious in the infer-ences we draw from any particular piece of research about distributive justice, by combining the evidence we may still be able to produce a general picture. In particular, when we find convergence in the results of research that falls into different boxes in the micro-macro, beliefs-behav-ior matrix, we should feel confident that we have discovered something about how people understand justice that is quite general and is not tied to a particular form of investigation. My task here will be to try to unearth common elements of this kind. As I indicated in the last chapter, any undertaking of this kind depends upon some prior assumptions about which beliefs and which behavior can be regarded as expressing people’s sense of justice. Having taken principles of desert, principles of need, and principles of equality to be the main constituents of distributive justice, I shall attempt to establish two claims: first, that people’s views of 62 Principles of Social Justice justice are pluralistic, and that very often people decide what a fair distribution consists in by balancing claims of one kind against claims of another; second, that the social context in which the distribution has to be made—or more precisely how that context is perceived by those making the judgment—will determine which principle stands out as the relevant principle to follow. The review that follows does not aim to be comprehensive. In particu-lar, it does not aim to cover two aspects of popular thinking about justice that are very important from a practical point of view.

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  Inequality and Poverty

  Papers from the Second Ecineq Society Meeting

  • John A. Bishop, Buhong Zheng, John A. Bishop, Buhong Zheng(Authors)
  • 2008(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  EQUAL LIBERTIES AND THE RESULTING OPTIMUM INCOME DISTRIBUTION AND TAXATION Serge-Christophe Kolm ABSTRACT The relevant basic principle for overall distribution in macrojustice turns out to be the relevant equality of liberties . This study shows the consequence of this fact for the optimum distribution, taxation, and transfers of income. The liberties in question are social liberty (freedom from forceful interference, basic rights), and the possibilities offered by domains of choice which can provide equal liberty while being different for individuals with different productivities. The method is deductive from the basic relevant concepts. The result is that this distribution consists of an equal sharing of the proceeds of the same labour for all individuals (with their different productivities). The individuals choose freely their total labour (with no other tax). This redistributive structure is Equal-Labour Income Equalization or ELIE. It also has a number of other important meanings, such as: general balanced labour reciprocity (each yields to each other the proceeds of the same labour); equal basic universal income financed by an equal labour of all; and uniform linear concentration to the mean of the distribution of total incomes (including the value of leisure). Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting Research on Economic Inequality, Volume 16, 1–36 Copyright r 2008 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1049-2585/doi: 10.1016/S1049-2585(08)16001-X 1 This result extends to multidimensional labour (duration, education, intensity, etc.), and to partial labour including unemployments. The practical application relies on exemption of overtime labour from the income tax, and a tax credit. This is successfully applied in some countries. This constitutes a new paradigm of optimum income distribution and taxation .

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  Economic Events, Ideas, and Policies

  The 1960s and After

  • George L. Perry, James Tobin, George L. Perry, James Tobin(Authors)
  • 2010(Publication Date)
  • Brookings Institution Press

    (Publisher)

  Obviously, if an allocation has reprehensible distributive consequences but does meet standard efficiency requirements, my use of the term should not be taken to mean that I approve of the result. RAPID ECONOMIC GROWTH 5 —Finally, I illustrate these conclusions with an examination of the dis-tributive implications of the spillovers of innovation. The significance of this example is underscored by my contention that a very substantial pro-portion of GDP is composed of innovation spillovers. Moreover, I show that these spillovers can be considered desirable on balance—despite their efficiency implications. For it is to these spillovers that we must ultimately look if we are to deal with poverty and inequality effectively. The Convoluted Long-Term Path of Income Distribution The recent history of income distribution, and the subjects associated with it, is well known. The early postwar period in the United States was char-acterized by declining dispersion of income in the population. During that period, poverty fell; the share of people living below the poverty line declined from over 25 percent in 1955 to about 11 percent in 1973. Since then inequality has grown significantly, and the proportion of the popula-tion that is impoverished has risen, though it has not returned to its earlier level. All this is associated with a sharp break in the historic trend of real wages, which generally had moved up markedly at least from the beginning of the century until the early 1970s. There is some dispute as to whether real wages have actually declined since then. Those who argue that real wages have not declined claim that the rise in the deflator indices exaggerates the true rate of inflation and assert that real compensation—that is, wages plus fringe benefits—has not been falling. 5 What seems indisputable is that there has been a sharp depar-ture from the historical upward trend. Though wages have recently begun to improve, a return to the old path seems far away.

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  Moral Issues in Business

  • William Shaw, Vincent Barry(Authors)
  • 2015(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  Explain “psychic income” and the other factors that could reduce or increase the 8:1 ratio that Isbister comes up with. 4. Does respect for freedom require society to limit the pursuit of equality? If so, by how much? To what extent is increased equality of income likely to dampen capital investment or reduce economic efficiency? 5. Table 1 outlines what Isbister takes to be an ethically defensible distribution of income. Assess his proposed distribution from the point of view of utilitarianism, liber-tarianism, and Rawls’s theory of justice. 6. Does justice require our society to move toward a more equal distribution of income? How might it attempt to do so? In your view, how equal should the distribution of income be? Table 1 Hypothetical Income Distribution for a Country of 1,000 People Annual Income (in $ thousands) Average Income of Families in Range (in $ thousands) Number of Families Income Earned by Group (in $ thousands) 20 20 100 2,000 20–40 30 50 1,500 40–60 50 50 2,500 60–80 70 220 15,400 80–100 90 310 27,900 100–120 110 220 24,200 120–140 130 40 5,200 140–160 150 9 1,350 over 160 300 1 300 Total 1,000 80,350 Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require CHAPTER THREE JUSTICE AND ECONOMIC DISTRIBUTION 143 READING 3.2 Is Inheritance Justified? D. W. H A SLETT Many people support inheritance because they believe it is an essential and necessary feature of capitalism. After reviewing some facts about wealth distribution and inheritance in the United States today, D.

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