Equality of opportunity ¢â¬â a follow-up to Don Arthur

The debate started by Don Arthur (Is bad Peter Saunders a neo-conservative?) has been very interesting and helpful (my particular thanks to Don for developing the distinction between the Hayek and Saunders positions). But as the subsequent discussion has branched out into equality of opportunity (which is the main focus of my interest as a social democrat and my recent Australia Institute paper), I want to clarify my position on some of the issues discussed.

Firstly, I agree with Peter Saunders that Australians do care a great deal about equality of opportunity and that if the community perception should grow that it is all a myth, it could undermine the legitimacy of the policy process. As Andrew Norton says, “it is about how the mass of people perceive their society and their own place in it”

Secondly, my definition of equality of opportunity is not synonymous with what Peter calls ‘meritocracy’

To Peter, a meritocratic society is one where “people’s incomes depend on how hard they work and how talented they are” (Policy Autumn 2004). All it requires is an absence of officially sanctioned or condoned discrimination, a ‘basic’ level of social security and impersonal markets which give equal weight to the individual preferences of consumers, workers and employers and where success is largely determined by an open competitive process.

By contrast, in my AI paper I define substantive equality of opportunity (SEOP) as a situation where everyone is able to develop their full potential irrespective of the original circumstances of their birth and childhood and where a person’s economic prospects are determined overwhelmingly by their own ability and character. This differs fundamentally from meritocracy in two ways.

One is that it takes a longer term perspective. Meritocracy is about ensuring the best person wins at any point in time. But SEOP is also concerned with risk factors and handicaps in early childhood and teenage years. While it too embraces meritocracy, it looks backward at the situation before the competition starts in the labour market (i.e. before the individuals get to the starting gate). That is, SEOP wants to ensure not only that selection for superior jobs is based on objective qualifications but also that all citizens have had an opportunity early in life to become qualified for these superior jobs. It thus looks at opportunities over a lifetime, not just at a point in time.

Another difference between meritocracy and SEOP is that in the former case governments are only expected to minimally intervene to deter overt or covert discrimination. By contrast, under SEOP, governments would be expected to actively intervene to ensure that as children, citizens are not unduly impeded by lack of parental wealth, status and power from achieving their full education potential and as adults, citizens are not impeded by location, inadequate access to training and skill-enhancement, poor access to health and housing or poor networking from achieving their full employment potential.

A policy framework built on SEOP would allow considerable earnings inequality in the market place (before taxes and transfers) because children inherit genes from their parents and grow up with different attitudes to risk and work. But the inequality would not be due to structural factors such as parental resources at birth or inequalities of access to important public services such as education, health care, housing and employment opportunities.

These structural barriers are very important. Some recent research on twins and on adopted children concludes that while heredity defines the limits of intelligence, experience largely determines whether these limits will be reached – and experience in early family environment is at least as important in predicting future intelligence and socio-emotional abilities (such as motivation, perseverance, tenacity and self-discipline) and hence future market success. It is these inequalities of family opportunities early in life, as well as of access to key public goods later in life, which SEOP programs seek to diminish as far as possible.

Thirdly, I accept that perfect equality of opportunity (whether in Peter’s narrow or my broad sense) is impossible to achieve. Indeed I say in my paper that “because of differences in inherited wealth, human aptitudes, luck and location advantages, there will always be some unavoidable differences in opportunities for upward mobility. Nor is full mobility necessarily optimal if it proves disruptive. Realistically therefore, Australia must expect to live with significant deviations from perfect equality of opportunity”.

So the only policy issue is how much closer governments should be trying to get to equality of opportunity. Peter Saunders says “we’ve done enough” (partly because of how he defines meritocracy). I say that there is much more to be done. My argument rests on two grounds. One is the evidence my AI paper assembled of existing inequalities of employment, education, health, housing and public transport in Australia. My second argument is that as the US has lower levels of income mobility than most other developed countries (especially the Nordic and smaller European countries) and as, on current policy trends, we are going down the US path, the outlook for Australian mobility is not reassuring.

But in the end it is all about one’s values.

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Nicholas Gruen
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Nicholas Gruen(@nicholas-gruen)
15 years ago

Fred I think your last throw away line is unworthy of the post. Of course in some trivial sense it’s all about values. But may I suggest that even if it is unstated, there’s a suggestion between the lines in your post and in your writing that your own social democratic preferences are really consistent with central classical liberal values. Now one can claim that those values are just about procedural equality, but at least the liberal tradition from Mill (and Smith for that matter) is freedom for something. And that ‘for’ is human flourishing (as best us poor little mites can flourish that is).

As you know I get skeptical about some social democratic shiboleths (union power for example). My reading of the literature on the failure of so many social programs could lead to all sorts of scepticism. I’m worried about welfare dependency like Peter Saunders. But shouldn’t classical liberals be out there on the barricades with you, with James Heckman calling for the (funding) floodgates to open as far as services to children in danger are concerned? (Of course funding isn’t everything, but surely it’s not the kind of thing that we want to be penny pinching about?)

Fred Argy
Fred Argy
15 years ago

Nicholas, yes I do agree with many of the tenets of classical liberals but where there is an equity/efficiency conflict such as on industrial relations laws I am prepared to water them down to give social justice issues higher priority than they would. That’s not a rational scientific view but a value judgment.

That’s all my last line was about – i.e. how far governments should go in equalising opprtunities must depend to a considerable extent on how one values individual property choice and freedom relative to a fairer share of opportunities. It was not meant as a swipe at anyone. Saunders is just as entitled to his values as I am to mine or you to yours.

Nicholas Gruen
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Nicholas Gruen(@nicholas-gruen)
15 years ago

Yes, but lots of classical liberals justify their stance on the ground of supporting equality of opportunity. Then they should be out there on the barricades doing whatever can be done to help kids in bad circumstances.

Fred Argy
Fred Argy
15 years ago

Let me pursue further our little tete a tete, Nicholas, to allow me to spell out more fully why values are intrinsic to this whole debate.

You rightly say that classical liberals should be out there in the barricades supporting improved services for children. I’d like to think you are right

Joshua Gans
Joshua Gans(@joshua-gans)
15 years ago

Fred

I’m wondering if your last comment be further distilled thus:

1. Social democrats and classical liberals agree there’s a short term trade-off between equality (of opportunity) and efficiency.

2. Classical liberals think the short-run trade-off is steeper than do social democrats (wet liberals), i.e. more efficiency must be sacrificed for a given gain in equity. This is an empirical/analytical disagreement.

3. Even supposing they agreed on the slope of the short-run frontier, classical liberals give a higher weight to efficiency (or, at least, to the kind of economic freedom that results in greater output) than social democrats give, and they think we’ve gone far enough in the equity direction already. This is a value disagreement.

4. Social domocrats think there may not be a long-run trade-off, because the pursuit of equality of opportunity involves investment in human capital, with a high rate of return. Classical liberals are more pessimistic about this (with regard to either the expected return or its variance). This is also an empirical/analytical disagreement.

Just thinking out loud.

Fred Argy
Fred Argy
15 years ago

Thanks James. Your “thinking out aloud” has given me much food for thought.

You are right to distinguish the issue of the slope of the trade-off curve (an empirically verfiable issue) from the issue of the relative weight given to equity and efficiency (where values are clearly involved).

I do think there is a further value judgment lurking out there (i.e. apart from relative weights). It is about the nature of “equity” (opportunity enhancement versus property freedom of choice). In fact ‘freedom’ can have at least three dimensions

Chris Lloyd
Chris Lloyd
15 years ago

Fred,
Could you point me to an accessible electronic paper on the comparison of income mobility across countries?

James Farrell
James Farrell
15 years ago

Chris, you might’ve already seen this How Class Works interactive graphic from the NYT (via the Wikipedia enrty on Social Mobility). If not, it’s worth a look while you’re waiting for Fred’s response.

Tony Harris
Tony Harris(@tony-harris)
15 years ago

Nicholas wants to see classical liberals supporting public funding for specific areas of need – I would nominate carers of multiply-handicapped people.

At the same time I would like to see social democrats out delivering service in person or in kind. Take the US elections, what if a fraction of the time and money put into the campaign was just directed straight at the social problems that the Democrats are supposed to care about?

There are two benefits from the strategy that I suggest – first, services would go straight to the people who need them instead of coming through the bureaucracy and second people who get involved will learn more about the nature of the problems and what is really needed to help in the long term.

Fred Argy
Fred Argy
15 years ago

Chris, I have sent you by separate mail a copy of my recent discussion paper for the Australia Institute which sums up the recent evidence.

One of the secondary references I point to, which is short and crisp, is an article in The Economist (December 29 2004) called “The missing rungs in the ladder”. It has a good summary of the evidence.

If you want something right up to date go to Google and key in Tom Hertz, American University. You will find some of his recent books and articles, including one neat summary of his cross-country findings in a piece dated April 26 2006 called ‘understanding mobility in America’.

This is the best I can do. One thing you need to know about me is that I am still an electronic dunce.