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Equality and Efficiency

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Equality and Efficiency

The Big Tradeoff

Brookings Institution Press,

15 min read
10 take-aways
Audio & text

What's inside?

Capitalist democracy balances human rights and market efficiency – if only it could close the gap between rich and poor.

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Editorial Rating

8

Qualities

  • Innovative

Recommendation

In the 1974 Godkin Lecture at Harvard University, prominent economist Arthur M. Okun addressed a pressing social conundrum: how human rights and the free market mutually inhibit each other. In this book, which revises and expands that presentation, the late economist ventured beyond his field’s customary territory by examining the nonfinancial benefits of an egalitarian society and explaining how the U.S. could move further in this direction. With clarity and wit, he discussed such issues as the nature of rights and of free markets, private versus public ownership, and the difference between equality of opportunity and equality of income. In other hands, these subjects might seem dry and technical; here they do not. The book is more than 30 years old. Therefore, unsurprisingly, some of its assumptions and predictions about public opinion and policy are dated (for example, the projection that U.S. politicians would be unlikely to question Social Security’s success) and the statistics are positively quaint, such as a U.S. national mean income of $14,000. Nevertheless, getAbstract recommends this amazingly still fresh, lucid discussion to policy makers, students of the economy, journalists and socially concerned executives.

Summary

The Characteristics and Purposes of Rights

American "capitalist democracy" appears deeply hypocritical in some ways. On the one hand, all citizens, no matter what their wealth or social status, possess certain basic rights. On the other, "our institutions...prod us to get ahead of our neighbors economically after telling us to stay in line socially." Despite this appearance of hypocrisy, the existing economic and social disconnect is actually a "trade-off," or a compromise. Human rights and the market must stay balanced to maintain prosperity and justice. U.S. rights have five characteristics:

  1. They’re free - You don’t have to pay to speak your mind or call the fire department.
  2. Competence is irrelevant to their exercise - You might be well informed about a policy issue about which your neighbor knows nothing, but you both get to vote on it.
  3. They are not prizes or punishments - You don’t get to vote twice, even if you deserve a public award. However, in some states, felons lose the right to vote.
  4. Even people who don’t need or want rights bear their social and financial cost - Even if your kids attend...

About the Author

The late Arthur M. Okun served as chairman of the President’s Council of Economic Advisors for five years and was a senior fellow at the Brookings Institution. His theoretical work often focused on the classic problem of balancing inflation and unemployment.

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