How should wealth be distributed among the people of a nation, and to what degree should government intervene in this process?
This is one of the weightier moral questions on which most college students take a strong stance.
On one side, there are those who claim that free markets and a purely meritocratic mechanism for distributing wealth are the keys to just and efficient distribution. One party earns what the other is willing to give. In opposition, others believe that a completely deregulated market is dangerous and exploitative and should be kept in check by an authoritative body.
Admittedly, the idea of a free market and purely meritocratic society is very appealing. It encourages personal responsibility and an ownership of efforts, and finally an equitable share of reward based on these notions. If you want something, you must earn it.
People like to use this idea to refute the raising of the federal minimum wage, or the entire concept of minimum. These individuals see the federal minimum wage as a hindrance to a more efficient market. Instead, the market should be allowed to organically distribute wealth as it sees fit. It’s an intuitive idea, but it puts far too much faith in mankind’s consideration for others.
The free market is fair, since all people have access to the same infrastructure upon which success can be built, and all that remains is one’s motivation and hard work, right? As it turns out, this is not true.
The free market makes poor assumptions, such as an equal access to benefits and opportunities among all people, as well as man’s natural tendency toward efficiency and fairness.
First, America’s history of profound inequality immediately debunks the idea of equal opportunity. Although these barriers to opportunity are becoming less prevalent over time, resulting from improving attitudes toward gender roles and minorities, they are still a factor.
Second, markets with absolutely no regulation simply do not work toward fairness, and subsequently become inefficient. As stated by political philosopher John Rawls, “the invisible hand guides things in the wrong direction and favors an oligopolistic configuration of accumulations that succeeds in maintaining unjustified inequalities and restrictions on fair opportunity.” This invisible hand is human nature.
Wealth and opportunity tend to pool, rather than disperse, and money makes its way into the hands of a powerful few. This is how we have operated for the entirety of our existence on this planet. Barriers begin to surface, and the average person’s slice of the world’s resource pie becomes disproportionately smaller.
The idea of “freeing the market to determine all wages,” effectively abolishing the minimum wage, would not result in a more equitable distribution of wealth based on an individual’s use value.
An ethical meritocracy implies a level of selflessness that simply does not exist in this country. Remove the floor for federal wages, and corporations will push down pay as far as possible, as they do with most other expenses.
In order for a meritocracy to be fair, it is absolutely essential to mitigate the unintended downsides of the free market by regulating wages.
Events such as the 2008 economic crisis occur when humans, who are notoriously short-sighted, speculative and greedy, are able to operate with little governmental intervention. Financial institutions were willing to make irresponsible bets for the sake of short-term profits, as well as provide misleading information about toxic assets in order to rid themselves of liability at the expense of others.
The existence of any underlying social contract is a direct acknowledgement of our tendency to harm one another in our self-motivated pursuits. The point of a government, then, is to disincentivize harmful behavior.
Even so, many will argue that some people win and some lose — that’s life. Well, true, but taking on this viewpoint, and using it to support a market that favors the few, is rather apathetic and dispassionate. If your worldview favors the strong and adaptable while being morally disinterested in the plight of the disadvantaged, then a separate moral discussion is needed.