Equal opportunity in the free society – Guest Post by Sanjeev

Dear All, continuing the series of guest posts by Sanjeev Sabhlok, one of FTI’s founder members, this one deals with equal opportunity and its implications for governance and for society. Read on.

EQUAL OPPORTUNITY IN THE FREE SOCIETY

by Sanjeev Sabhlok

Everyone must be equally free. On that everyone is agreed. But the fact that this equality of freedom translates to equal opportunity (EO), a major plank of the liberal platform, is an area of considerable contention and calls for careful consideration.

The erstwhile Swatantra Party committed, as the first of its 21 principles , to “equality of opportunity for all people without distinction of religion, caste, occupation or political affiliation”. Similarly, the Liberal Party of Australia believes “in equal opportunity for all Australians”. But wherefrom do these conceptions about EO arise, and what exactly do they mean?

Meaning of equal opportunity
The most important connotation of EO, on which there is general agreement, has to do with political equality – things like equal citizenship, universal franchise, the uniform application of laws, and absence of discriminatory obstacles to achieving higher (public) office. But as Friedrich Hayek noted, this conception does not mean “that … the chances of the different individuals [will] be made the same.” EO does not imply equal prospects, leave alone equal outcomes. It is an enabling provision, with prospects and outcomes squarely determined by the efforts and demonstrated ability of each citizen.

The second part of EO is the social minimum – a connotation not at all agreed to by all people who advocate liberty. I side with Hayek and most classical liberals on this matter. Thus, Hayek noted in The Road to Serfdom that the (free) society assures everybody of “some minimum of food, shelter and clothing, sufficient to preserve health and capacity for work”. It must be noted that providing for a social minimum must be considered by a government only after adequately providing for defence, police, and justice. In my terminology, EO is a second order function.

It is worth mentioning that the social minimum outlined above has nothing in common with John Rawls’s difference principle which asks “social and economic inequalities are to be arranged … so that … they are to be of the greatest benefit to the least-advantaged members of society”. Rawls’s principle leads to illiberal outcomes and severely distorts property rights. In my view, his is a step towards socialism.

The equal opportunity social contract
But you could ask: Why is the conception of social minimum above not merely another socialist ruse for cross-subsidising the poor? Surely we are not responsible for others (for we didn’t bring them into the world). So why are we being asked to take on responsibility for their existence, even if it is set at a frugal level?

In response, note that equal freedom is meaningless to a sick and starving person or illiterate tribal. If our body and brain doesn’t function or we can’t think critically, we can’t be free. Everyone in the free society must therefore be minimally healthy and possess some basic knowledge.

But consider now the imperatives of our strategic (enlightened) self-interest. A moment’s reflection will show that EO is in our long term interest because it leads to a stable and aspirational society.

We know that our life energy springs from Nature. Therefore, at some point the laws of the jungle could well apply to us. The poor man who steals bread to feed his starving family, or kills a rich man who has denied him even a menial job, thus taking him to the brink of existence, is governed at that moment only by the brutal laws of nature. To construct a moral society we must get away from this precarious ‘state of nature’. We must create incentives to prevent amoral behaviour.

The problem is that Thomas Hobbes’s whimsical Leviathan allowed the rich to gain enormously at the expense of the poor. But this supercilious sovereign soon bit the dust with the beheading of Charles I. Out of this defeat (and the subsequent Glorious Revolution) arose the Equal Opportunity Leviathan where equal political freedom was assured more widely, and individual powers better balanced. Indeed, Kaldor and Hicks show us clearly that if we want stability then those who gain from the social contract must compensate those who lose. Buchanan and Tullock (Calculus of Consent, 1962) and other theorists have also thrown useful light on this matter. Robert Axelrod, in The Evolution of Cooperation, showed us how a tit-for-tat rule (balance of powers) leads to stability and cooperation.

The EO society with a social minimum thus acts as a strategic balance-of-powers society in which petty criminals, Naxalite revolts, and beggars sprawled on footpaths are absent because all of them have been empowered to make an honest living. It is important to emphasise that this contract is not motivated solely by the fear of the rich being attacked by the poor. There are untold benefits for everyone from having a healthy, well-educated citizenry. And, of course, we all gain deeply by ridding society of poverty. EO is really good for our soul.

This (EO) society is particularly stable (and optimal). The rich can reap the rewards of their efforts without the state confiscating their wealth. The poor prefer it because merit and hard work are rewarded, thus enabling their upward mobility, even as they can take shelter, if the need so arises, under the social minimum. The EO society thus motivates everyone to work hard (and ethically) to achieve their highest potential.

An equal opportunity package
The EO package has to start with an EO law to eliminate discrimination in opportunities for public office on grounds of religion, caste, sex, physical handicap, economic status, domicile, and the like. This law must necessarily abolish affirmative action and subsidies for religious groups, as both these things violate EO principles by discriminating on the basis of religion and caste, and by going well beyond the requirements of the social minimum (which is applicable to the basic physical and education needs of the poor, not to their desire for religious pilgrimage).

The social minimum (insurance) package includes universal school education delivered through private channels funded by the state in the form of top-up vouchers determined by parental income and assets. Health insurance vouchers as appropriate (not direct health care provided by government!), and emergency care entitlements, come next. Finally, the incomes of the poor are topped up through a negative income tax scheme (NIT) to eliminate poverty without distorting work incentives.

This social minimum has to be paid through an actuarially fair premium raised through taxes, with all calculations made public. My preliminary calculations show that NIT would eliminate poverty in India by redirecting existing (and ineffective) subsidies directly to the poor. For good quality school education some supplementation will be needed through borrowings, but these can be recovered through higher taxes from the well-educated citizens of the future.

In closing, it is important to note that delivering EO will need the resolution of numerous public choice, moral hazard, and public administration problems, some of which I will discuss in the coming months.

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Sanjeev can be contacted at sabhlok AT yahoo.com

Past posts by Sanjeev:

How can anyone make a living from selling slices of coconut?!

Unbridled Capitalism? – Guest post by Sanjeev Sabhlok

What is Freedom? – by Sanjeev Sabhlok

Why bother with politics? – Sanjeev Sabhlok

*** UPDATE ***

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