Business Class

Fairness: It’s Not About Redistribution, It’s About Rewarding Merit

Imagine a classroom where there are A students and students that are getting F’s. The teacher recognizes this and decides to average the grades so that there will be grade equality. After the teacher averages the grades everyone gets a C. The students that got F’s are thrilled at their new grade. At least now they have a possibility to pass the class. But how do you think the A students feel? They had studied hard and allocated time to schoolwork. They had answered the questions correctly, but they get a C. The next time there is a test, the averaged results will be even worse. The F students will most likely continue to get low scores since they have no incentive to try to get a better score. After all, they expect the more studious students to raise their grades to passing level, so why try any harder? The A students will realize that no matter how hard they study, they will get a low grade due to the grade averaging. Therefore, they see no reason to work so hard only to get a C, and so, these students will probably also start to get lower scores. The result of this test will be even worse then the previous one. Instead of just the F students doing badly the A students will also start getting lower scores due to a lack of incentive. Overall if this mindset continues, it will eventually yield an overall grade even lower than C.

Consider another example. There is a group of workers, some earning a high wage and others earning a low wage. Someone sees this and says that it’s not fair that there is this inequality in the workers income. He decides to take some of the higher-wage workers’ money and give it to the lower-wage workers. If necessary he will do so with force. The result of this theft and subsidizing will be that the higher-wage workers will be demoralized and lose any incentive to work. The lower-wage workers who are subsidized will feel that they can slack off a bit since they are assured to receive money from the higher-wage workers. This theft and subsidizing will lead to greater inefficiency and less productivity.

In reality this “someone” is the government. It taxes the people and then gives out the money to those whom they wish. It sure doesn’t sound nice when a private individual takes part in this income redistribution. In fact, it sounds like plain theft. If, on the other hand, the government takes part in this affair it is said to be a social benefit. But would you like anyone coming up to you, stealing your money, and giving it to whom ever they think is worthy?

These two example, the students and the workers, are very similar. Both are immoral, both engage in theft, and both lower the overall productivity. In stealing the A students’ good grades and the higher-wage workers’ money both engage in theft, thus making the practice immoral. When the reward for productivity and hard work is punishment, you can expect people to shy away from hard work. People will slowly begin to view hard work and initiative as being detrimental and punishable. As Arthur Brooks said “Fairness is not redistributing wealth, fairness is rewarding merit.”

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