Stigler on Shaw on Income Equality
By David Henderson
I enjoyed rereading George Stigler’s 1959 piece “Shaw, Webb, and Fabian Socialism,” which I posted about earlier. Here’s another excerpt:
Shaw and Webb discharged a portion, but only a very small portion. of the duties of a responsible proponent of an egalitarian program. Shaw advanced, in fact, three basic arguments for equality of income. The first was simply that there is no other objective basis for distribution:
[This is Shaw.] Now . . . suppose you think there should be some other standard applied to men, I ask you not to waste time arguing about it in the abstract, but bring it down to a concrete case at once. Let me take a very obvious case. I am an exceedingly clever man. There can be no question at all in my case that in some ways I am above the average of mankind in talent. You laugh; but I presume you are not laughing at the fact, but only because I do not bore you with the usual modest cough . . . . Now pick out somebody not quite so clever. How much am I to have and how much is he to have? I notice a blank expression on your countenances. You are utterly unable to answer the question . . . .
It is now plain that if you are going to have any inequalities of income, they must be arbitrary inequalities.
[Back to Stigler.] This argument cannot be taken as seriously as it was given. Equality is an unambiguous rule of distribution only when it is applied as unmeaning arithmetic, giving equal sums of income to the day-old baby, the adult worker, and the jailed felon. Conversely, a competitive market does determine, not how much more clever Shaw was than contemporary dramatists, but how much more he produced of what people desired.
This is classic Stigler: insightful and terse.
Sometimes when I discuss equality of income in class, I ask the students if someone in prison for murder should have the same income as the average income of Americans. I have yet to find the student who says yes.