There is a type of statement that is often bandied about by those first taking philosophy 101, or perhaps introductory economics or political science. It is also the sort of question that often ends up making an appearance during boozy, late night college discussions. And, strangely enough, it also appears in the writings of certain supposedly mature philosophers and political science, especially those who use the phrase "social justice" with regularity. It is the statement, or the related rhetorical questions, which treats the outcomes of economic interaction as if they were a game, as if the rules were arbitrary.

Before we proceed, let me offer a few examples to make this more clear. Perhaps the best know, and certainly the most frequently heard, version of this statement is the question "Why should actors [or athletes, or singers] be paid more than teachers [or cops or firemen]?" It is also a perfect example of everything wrong with such questions. It treats an economic reality as an arbitrary outcome. It phrases the question such that it sounds as if the outcome is externally imposed. And it asks for a teleological justification of an existential given*. It is especially useful as an example, as it is one of those examples of this sort of thinking that is actually taken seriously enough to sometimes inspire suggestions of remedial actions. While many other examples of such questions (such as some that will follow shortly) are either impossible to remedy without massive economic damage, or else can only be resolved by taking steps others would find either harmful or absurd, this one has an appeal to many, and so it is a popular question among the "social justice" crowd.

Another example enjoying popularity in recent years is "why should some people inherit a fortune while others do not?" or, in the rabble rousing version, "why should there be those who get a head start through inheritance they did nothing to earn, while others get nothing?" These two questions, though they have  not been as prominent recently, certainly were much in evidence a year ago or more, when the "social justice" types were agitating for more aggressive inheritance laws, basically seeking to dispossess all who died possessing more than a pittance. And, as with the previous example, these provide a very good example, both as they were taken seriously enough to inspire some political action, and because they are phrased in such a way that it seems that some are benefiting by an arbitrary decision.

There are others, but not many that have recently had the political influence of those two. I suppose "why should some have access to medical care, while others don't" is a similar sort of quote, as again it suggests an arbitrary restriction of access, rather than a recognition of scarcity as a fact of economics. ("Individual and Aggregate", "Bad Economics Part 18", "Who Will Decide") Other than that example, the ones I can recall are either so far fetched, that even college students know they will not be remedied ("Why do you have all your money at the end of life, when you need it at the beginning?"), or enjoy popularity only among the more radical fringes ("Why should people be able to earn more than they need to live?"). Sometimes a fringe idea will gain some mainstream success (eg. the question about earning more than you "need" -- see "The Most Misleading Word" and "Luxury and Necessity"), but usually only after being toned down considerably. But, for the most part, questions of inheritance, of medical care, of extremely high wages (eg CEOs [ "A Really Foolish Idea", "Greed", "Greed Part 2", "A Little More On CEO Salaries", "Another Bad Idea"], actors, musicians), and other topics that populist agitators ("Protectionism", "Fear of the "Big"", "Beware Populist Deception", "The Wrong Reform"), or left leaning scholars, can turn into questions of "fairness" and "social justice", or "economic equity", will enjoy much success. ("Fairness and the Free Market", "The Inevitable Corruption of Protectionism") All the rest of the questions will likely be left to college students and extremists.

But, what precisely defines the questions I am describing? What do they have in common? I have given any number of examples, but, other than sharing a generally liberal bent and arguing for some sort of fairness, what ties them together?

The problem with such statements is not so much a problem of fact, as it is one of emphasis. Technically, there is nothing wrong with asking these questions, there is nothing logically improper about the questions themselves. However, as they are worded, they are meaningless, or at least imply completely incorrect assumptions, provided we live under something approaching a free market.

You see, the phrasing seems to imply that rules are somehow imposed from without, that "the system" is itself an arbitrary assemblage of rules, crafted by unknown entities, imposed upon the rest of us, a wholly arbitrary construct, and one which can be described as "fair" or "unfair" and for which the question "why" is meaningful.

But a free market is not an arbitrary construct, and the rules are not imposed,but grow organically out of the conditions of reality. For instance, an athlete makes much more than a teacher for reasons which are entirely rational, far from arbitrary, and inherent in the system. You see, people pay others what they consider their service to be worth. That is a reality, as no one would pay more than they thought they received, and if the one providing the service charged too little, he would see demand rise until it swamped him, so he would raise prices until it matched the price the market would bear. As each individual pays what the service is worth to him, then the salary of any employee is simply the product of the average value to each recipient times the number of recipient. And that explains why teachers earn less than athletes. A teacher is actually paid more per customer, if he makes $60,000 for teaching 30 students, he makes $2000 per customer. An athlete can server 10,000,000 and is paid $5,000,000, getting only $.050 per customer. In other words, on a per person basis a teacher is worth 120,000 times what a single athlete is, but thanks to serving so many, the athlete makes much, much more.

But the point of all this is not how the wage is established, but that it is established by the nature of reality itself, not by any imposed rules, nit by any "system". And as a result, it is absurd to talk about whether it is "fair" or "why" it works that way. We might as well ask why things fall at 9.8 meters per second squared or whether it is fair that gravity varies inversely as the square of distance. These are not questions of equity, but of  reality.

The problem is twofold, I believe. First, and foremost, economics has an unfortunate tendency to take "game theory" and accept the premises a little too literally. Now, game theory is a very valid discipline when it deals with individual choices, provided it is used appropriately. However, in many other cases, game theory operates on the premise that all circumstances are mutable. This assumption, adopted to allow academic analysis, is far too often taken literally, and economists come to think of the entire system as arbitrary, a set of rules which can be changed at will. And that is not true.

The second problem is that we have become too comfortable with government intervention. Government, through the use of brute force, can impose any rules it wishes. It cannot escape the consequences of those rules, but it can still impose them. And seeing that, we often think that economics, politics, all human interaction is arbitrary, that any rules can be imposed and that consequences are set by those rules alone. It is what leads to the belief that an omnipotent government can create whatever it wishes. ("The Inherent Disappointment of Authoritarianism", "Greed Versus Evil", "Bureaucratic Management", "The Bureaucratic Mind", "Bureaucracy Revisited", "The Inevitability of Bureaucratic Management in Government Enterprises", "Bureaucratic Management and Self-Policing", "In Praise of Contracts") But, despite that belief, the government is bound by reality just as everyone else. And so, even when it imposes arbitrary rules, the government cannot escape reality.

However, we have somehow confused arbitrary government rules and the rules of nature, and have come to ask whether the second are fair, which is nonsensical. What we need to do is to make clear what is a rule imposed by reality and what is an arbitrary rule imposed by man. Once we do that, a lot of this foolishness will vanish.

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* I will discuss this in more detail later, and so there will be an explanation of this phrase later in the essay. But as I am sure the phrasing confused a few readers, allow me to explain. Some events are simply given, they are as they are because that is what the laws of nature decree them to be. Or because any number of events led up to that outcome. It is senseless to ask "why" in the sense of purposeful cause. You can ask "why is the sky blue" if you are looking for the answer "Rayleigh scattering gives the sky a blue hue under normal daytime conditions", but it is meaningless to ask "why is the sky blue" if you are looking for a motive behind the selection of that color. Similarly, economic circumstances are the outcome of massive interaction of a huge number of individuals. Those individuals each engage in purposeful action, but with some many contributing to the outcome, the system as a whole is effectively impersonal. And so it makes no sense to ask about motives or purpose of the larger trends. It is not a system organized by a single will. Or even under the control of a group of wills. It is the outcome of the interaction of countless wills, most of which cannot tell what the exact outcome of their actions will be, at least not the impact on the system as a whole.

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POSTSCRIPT

There is an interesting aspect of this particular situation. The problems themselves are inherent in nature, yet are treated as if they were arbitrary.The solutions, on the other hand, are often arbitrary, and yet are treated as necessary and unavoidable. Even more interesting, the supposed solutions regularly make the original problems worse, thanks to those same laws of nature, and yet that rarely deters anyone from applying still more arbitrary solutions.