Saturday, December 15, 2012

Chasing Equality

Nothing more do I find more misleading than "we all are born equal". It is a scientifically proven fact that that we are born with different natural talents. Some of us are "left-brained", while some us are "right-brained". Those who realize this sooner than later make good of their lives given the right opportunities while others just try to fit into a sphere which seems to have more space than it actually does. 

As a result of different natural talents, what we see is division of labour where the production process does not take place as a whole but in parts, each part being processed by somebody who has the natural talent or acquired skill for it. With different processes adding different value, the remunerations for different jobs are bound to be different. While this creates inequality of income and the scope for what was called "class-wars" by Marx, it must also be remembered that this is also a necessary condition for dynamism in the market system. Like in any other system, there will always be people in the market who are successful in gauging people's wants & desires and taking risks in that direction thereby making profits (sometimes humongous amounts of that). Sometimes they fail and end up miserably. The important thing is to see how resources (and money) change hands in the economic system as per our, the consumers', needs and preferences.

The problem begins when we are disillusioned by the ideal of equality. It is indeed very easy to dream about a world where nobody owns anything and everybody can afford everything. The tragedy of the commons, however, will always haunt that ideal as it did in the socialist USSR. Greed is an inherent trait in human beings, not to say that it is immoral. If capitalism is run by greedy men, any form government is no different. While it is necessary to have a system of law which guarantees the right to property and to any form livelihood, the government mechanism - regulations & licensing has been a major failure. And to cover up this mess, we hear of things such as the "welfare state" that is built on the socialist model. A welfare state would take money from the rich by taxing them and distribute it amongst the poor, much the same way we donate to the poor out of pity. However, it should be noted that the wealth of nations does not follow a zero-sum rule. It is not distribution but creation of value and wealth which would help in the long run. This is only fostered by free market capitalism which is not just about making profits but also about beneficial voluntary exchange. When people are allowed to exchange commodities & services voluntarily, it results in increase in overall welfare. Sure there are inequalities, but no misery. To leave you with a thought, consider this:

A freeway with cars running at different speeds. Everything's fine. Put a barrier, all vehicles slow down to a constant speed. Congestion. Remove the barrier, the vehicles in the front speed away at different speeds. The jam clears up.