can wealth be fair?
Can citizens in western societies strive for wealth at the same time society tries to be ‘fair’? Let me give you a few situations, and in each case think whether society is being ‘fair.’
- A college graduate, well-educated about personal finance and the economy, decides to burn through everything they earn right now, saying “Why save for later? I’ll have fun now and hell with consequences.” Should society be responsible for his medical care and living expenses when he is 70 and can no longer work or care for himself adequately?
- A child is born with 50 different health problems (heart, congenital diseases, you name it). The cost of keeping that child alive is monumental, exceeding even the most generous insurance benefits. The cost of keeping that child alive cripple not only the family but put a strain on the local doctors, etc. who effectively donate their time to treat her. What if the cost of keeping that child alive until she’s 25 will be astronomical, and that cost could immunize or treat hundreds or thousands of children who need it? What obligation does society have to help this child at the expense of others?
- Taxes on earned income in America (wages, etc.) are significantly higher for the middle class than for someone in the lower class (more than 40 percent of the US population pays no income taxes. That seems fair. However, someone who lives off earnings from investments may pay 15% or less on their earnings, significantly less than a middle-class married couple. Is it fair that the middle class pays a disproportionate share? And would it be fair to tax the rich more, but not tax the poor more?
Those are just a few examples of how a wealth-building society can be unfair. You have your own reactions to the scenarios above. Here are mine:
- I detest this attitude. His attitude will take money out of my pocket when he is older. But in western society, particularly in the US, the care and treatment of the elderly is often left to the state. Should we have means testing for the elderly? “You didn’t get a decent job with good health insurance and keep your health up in your younger years, so to hell with you now that you’re old and have heart trouble? Live on the street because you didn’t save up?” As much as we might growl that in a moment of anger, I doubt anyone is prepared to see senior citizens sleeping on the streets.
- I knew a child like this. She was a lovely, happy and intelligent child who suffered from an incurable genetic condition that meant her chances of living to be a teenager – much less an adult – were minimal. I knew her years and years ago and I have no idea what happened to her. The logical line to take would be to say “no, society has to follow the principles of the herd and Darwin and leave the hindmost” or “the needs of the many outweigh the needs of the few, or the one,” but unless you a serial killer, devoid of emotion, it is impossible to meet children like her and not imagine society moving heaven and earth to care for her. Even if the chances of her living to be an adult are slim, she deserves her chance at whatever life she can have. My higher insurance premiums that may have resulted from that? Please.
- I am routinely infuriated by taxes. I am, however, not an adherent to the “no taxes” philosophy; a society that provides public services like police, postal services, libraries and a military has to raise revenues. They may not be spent wisely, but I can’t throw out the $800 screwdrivers with the public libraries – there will be good and bad. But I do realize that the unfairness in the system – the loopholes, the weak taxation on rich people – may not benefit me now but it will when I am financially free. I plan to be one of the people living off my investments, earning no wage income and avoiding my fair share of taxes. So if I want to build wealth, why should I rail against this system? I intend for it to benefit me in the end. So I throw myself into battle against my 1040 again this year, struggling forward in anticipation of crossing the financial finish line. If I finish it – against the relatively daunting odds, considering I have no singing talent, ball-shooting ability or parents named Hilton – will I become a “raise my taxes to even things out activist”? Er, no.
Fairness is an overused (and misused) word. There is no fairness in a free, capitalist society, nor – when you stop to consider it – does anyone want COMPLETE fairness. Inequalities in the system are what allow wealth to be built, or care to be given to the exceptional, or even to allow for the occasional idiot. A fair society would not allow elderly poverty, but it would not allow for financial freedom, either. It would not have plastic surgery for starlets, but it would also not have medical treatment for children dying of expensive incurable diseases. A fair society would increase the burden of taxation on everyone. Human society being what it is, the concept of fairness will always remain just that – a concept. And maybe that’s not such a bad thing.
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I had a teacher once who would always say “‘Fair’ is just another four-letter F-word”… but he was talking about grading things, so I didn’t like him very much.
I’ve thought about the same issues you bring up here, and came to the conclusion, we don’t really want society to be ‘fair’, in this sense. If it were so, people would be stuck in a cycle of poverty, the rich would get richer, the poor get poorer, and those people that need our help the most would get marginalized and devalued for the sake of ‘fairness’.
Good post.
I agree. If we wanted a “fair” system we’d be a socialist or communist country, not one founded on capitalism. But that’s not to say that we should give up the fight and let abuses of the sytem go by with impunity. We know that there will always be new instances of $1500 toilet seats or young people who destroy their minds, bodies, and futures with drugs and alcohol and will never become contributing members of society but they are the exceptions, not the rule. For each Casey Serin, there are thousands of honest, hard-working real-estate investors. Britney Spears and Paris Hilton, again, are exceptions. With all the media attention given to characters like these, it’s easy to develop a warped perception of how “unfair” things really are.
I disagree with you a bit about the medical funds and time spent keeping very sick people alive. It’s hard to advocate letting even the sickest children die, so let’s consider the issue in terms of old people.
Few people would advocatethat society (i.e. each and every taxpayer) spend $20 million dollars on a series of surgeries to keep a 98 year old car crash victim alive. But where’s the line? What about spending $5MM or $2MM? I think it helps to consider what the sick person would be willing to spend if he/she actually had to pay for the medical care, even assuming even that they had vast financial resources. Say that 98 yr old actually had $20MM in the bank. Do you think he/she would rather blow it all to potentially stay alive for another year, or go ahead and die and leave all that money to family and/or charity? Almost any rational person would choose the latter.
If people had any idea what their medical treatments actually cost, few would ever be willing to pay for many of them – which of course would drive down costs. But instead the government and insurance companies cloud the whole system and pay for the excess. I dont’ think they should do that except in very select cases. And it’s not just about the crazy costs of keeping people alive who should simply be allowed to die. I also don’t want my insurance premiums to continue to skyrocket so that millions of people can opt for expensive lifetime medications to prevent things like allergies and indigestion just so they can keep their pets and live off fast food.
I have mixed feelings about this post. I don’t think a fair system can exist. There will always be exceptions to rules and someone finding a loophole.
Meg does have a valid point on the problem with the health care industry. Since this isn’t my blog, I will just say that the health care industry will have to undergo a complete renovation in order to decrease prices (not just announcing the prices to the masses).
The case of the 98-yr-old with $20M is interesting. I would throw out the idea that that person *would* actually spend that money trying to stay alive. Someone who has that amount of money has spent a fair amount of time amassing such wealth. They wouldn’t want to give it up so easily. If any of us were so readily willing to part with a large sum of money (at any stage of life), we wouldn’t spend so much time and effort on investing/saving for retirement.
And I’d also argue that insurance premiums, people’s bad choices, and the cost of health care are not necessarily correlated.
And just a last note – I actually find all the situations fair (not sure about the last one, but definitely the first two).
It’s more important to me to err on the side of ensuring people don’t go without unfairly than ensuring that people don’t take more than their fair share.
I do think there needs to be a grown up debate about when the cost of medical treatment is too much – and that’s even more important in the UK because of our state funded medical care.
As to the health car issue – I think it is very dangerous when we start attaching price tags to human lives, but I certainly understand how it can happen. I just wish it didn’t have to be that way.
In terms of the tax and fairness issue I think that we do have a system that is fair in some respects, but not every respect. As was pointed out, the reason that our tax system is bad but not unbearable is that one day we could benefit from it too. It would be entirely different if our system allowed no mobility because it was based on some arbitrary, unalterable phenomena – like who our parents are or what our natural hair color is. That would definitely constitute an ‘unfair’ system.
My boss used the “fair” word when explaining why I couldn’t attend a free workshop related to our industry that was 5 blocks away from work. He said it wasn’t fair to the other people who are working hard and slaving away inputting the content. He said it wasn’t fair that I wanted to advance when he himself didn’t know what opportunities were available to him.
The workplace isn’t fair. People get promoted who don’t deserve the extra boost. Some get bonuses and earned every cent. If the workplace was fair how would we ever get things done. I don’t know if that makes any sense. Just my 2 cents.
I wrote a response to this on my blog: http://www.hereverycentcounts.com/2008/01/question-of-day-can-wealth-be-fair-from.html