Dissecting Inequality: A First Conceptual Framework to (Maybe) Solve it

hourglass near heap of american dollars

Inequality – and especially wealth inequality – is an ancient problem that has interested people from all walks of life. It is a pervasive feature of all societies throughout time, to different degrees. Many societies that have tried to solve it have failed, often with devastating consequences to economic progress and human lives. People in intellectual circles, the government and in the broader society discuss the topic of inequality candidly. However, after thousands of years of history we are still apparently no closer to solving it. Could our inability to solve inequality stem from our inability to conceptually frame the problem and separate its components to better visualise its consequences? Despite “inequality” having an obvious instinctive and distinctive negative flavour, inequality is also natural and can have a positive component.

The Natural Side of Inequality

The natural side of inequality comes from aspects that are natural to humans (features, opinions, morals, values, choices, etc). Humans, like all other creatures, show biological variability. This means we are all born with different aptitudes, personalities, levels of intelligence, etc.

These differences translate into different ways of engaging with society, with a plethora of consequences. Highly disagreeable people struggle getting along well with others, leading to them having trouble with authority and following rules; highly agreeable people, on the other hand, can be subject of manipulation and emotional abuse by others. Likewise, intelligent people find the complex academic subjects required to function in modern societies easier than less intelligent people do.

In a society that values these aptitudes differently, like any society who wants to foster certain positive behaviours while condemning negative ones, these differences will naturally translate into differences in income, the number of friends and connections they make, and so on. People also show natural differences in risk aversion, resulting in different behaviours that may or may not translate into rewards.

Different investors, for example, create their portfolios and allocate their money differently depending on their decisions to embrace or reject risk, and how they value certain securities. Some companies are created while others are not, depending on which ones entrepreneurs decide are worth the risk. These companies may or may not be successful, depending on public consumer preferences, demographics, and their varying and variable situations.

Examples of naturally unequal behaviour are plentiful. Consequently, there are economic disparities if these behaviours, and their associated rewards or punishments, are repeated over time. The good news is that humans are pretty good at creating niches to exploit financially, like arts, sports, intelligence, etc. This means there is ample room for many people to thrive using their natural endowments. The bad news is that people far outnumber niches, so not everyone will be equally successful in their chosen niche. But there is nothing people can do to equalise these natural differences.

The Positive Aspect of Inequality

The positive aspect of inequality comes from a concept that we usually use to justify unequal treatment and reward: fairness.

We consider a society is if it rewards behaviours and outputs proportionally. This is why doctors who work more hours than others should be paid more for the extra hours of work. Any endeavour (say, an academic career or business idea) that demands a bigger economic and time investment should reap bigger rewards than one that does not demand such hefty investments, lest we want to discourage people from engaging in said endeavours. You can frame this from a negative perspective as well. For example, society should punish smaller crimes (stealing an apple) to a smaller degree they do bigger crimes (coldblooded murder). A framework of equal consequences for all negative behaviours goes against what most people think is “fair” or “just”.

This proportionality aspect of society understandably and therefore justly translates into unequal rewards and punishments. Unless we want to create an unfair society, which would cause protest or non-compliance, abolishing proportionality is not advisable.

The Negative Aspect of Inequality

The negative aspect of inequality is usually the one we think of when we talk about “inequality” at large. Therefore it is the easiest to visualise: different punishment for equally bad behaviour, different rewards for equally good behaviour, different treatment for equally valuable human life, etc. We understandably and naturally react with outrage even more so when we see disparaging outcomes in opposite directions, like when someone commits a softer crime and gets to go to prison while others commit more serious crimes and avoid jail simply because they have political connections or economic prowess to bribe judges. It’s easy to conceptualise the negative aspects of inequality because they are usually brought up when discussing inequality.

We are also naturally tuned to perceive unfairness, a trait we likely inherited from our mammalian ancestors.

Social outcomes, ideology and assumptions

The problem is that these different aspects of inequality interact in ways that are sometimes almost impossible to disentangle. And policies that will even try to disentangle run the risk of overstepping the line. Are our social circles only a consequence of where we are born or where our parents sent us to school, but not also a consequence of how we decide to interact with others? What policy would have to be enacted to equalise personalities and their social consequences? Aren’t we free, and even encouraged, to punish bad social behaviour? Are we not free to choose who we associate with, or what school we send our kids to?

To make things worse, many people – ideologues especially – assume that differences in equality originate at the point where the data were obtained.

For instance, that an inequality in, say, the workforce participation of a given race or gender in a professional domain is a consequence of that particular domain being racist or sexist, while an alternative – and I’d argue more plausible – explanation might lie on how people choose their career paths in countries where they are freer to do so.

Is inequality in this case a consequence of something good (freedom of choice) rather than of something bad (sexist or racist gatekeeping)? Proper and careful methodology that dissects this question is a first step towards being closer to a definitive answer. Instead of assuming that people choose their degrees due to “sexist” reasons, for example, a carefully designed survey with university students asking why they chose their majors or careers might come closer to the truth. But for that we need to first stop assuming that things are bad because we think they are.

We All Want to Solve Inequality, but we first need to conceptualise it properly.

We all want to solve inequality but invariably run into trouble when devising actions or policies that addresses inequality. This is mainly because no policy can equalise natural differences, personal choices and freedom. And no policy that eliminates fairness or proportionality will have positive effects in society at large.

But most importantly, I would argue, we run into trouble by refusing to conceptualise the problem in its entirety. If you bring attention to these natural and positive aspects of inequality, you will quickly be demonised and painted as a defender of the status quo, beneficiary of the oppressive system we currently live in, and as having no interest in solving the problem of inequality, no matter what your intentions actually are. It is usually those who zealously believe that all inequality can be solved who are quick to criticize anyone who points these natural or positive aspects of inequality, and who demonize any call to broadening the scope as heresy.

But intentions from either defenders or supporters of inequality do not erase the reality of these aspects of life, and even the poorest of people find it unfair that they are not paid more for working more. Even poor people believe in the inequality of proportionality despite not being “beneficiaries” of our current social contracts. It’s only in a fair and proportional society where we all stand to gain from our sacrifices and commitments. Finally, no policy can (or should) equalise all the different decisions we make with our lives, money, friends, etc. That is simply a recipe for totalitarianism.

By not coming to terms with the different aspects of inequality we risk wiping everything clean and throwing the baby out with the bathwater. The first and most important step forward is recognising that not all inequality is born from negative or undesirable aspects of our society, and that there might be a limit to how much equality we can bring to society before starting to destroy it for the sake of our vision. The question then should not be whether we can eliminate inequality or not. It should be: how much inequality can we get rid of before the solution becomes worse than the problem?

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