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The widening gap

MERITOCRACY AND ECONOMIC INEQUALITY: Kenneth Arrow, Samuel Bowles and Steven Durlauf - Editors; Oxford University Press, YMCA Library Building, First Floor, Jai Singh Road, Post Box No. 43, New Delhi-110001. Rs. 595.

MOST OF us prefer a world in which things are more equally distributed to one in which they are not. But this kind of general egalitarian concern is not very helpful unless we are clear about the thing that we want to equalise across people, because equality in one respect means inequality in another. Given equal opportunities, different individuals end up with very different levels of well-being. While some people are good at converting opportunities into desirable outcomes, others are not. Welfare-state programmes have attempted to diminish inequalities in incomes and access to such basic services as education, health care, and so on. To judge which of the programmes is advisable, one needs to understand what sort of equality can be a moral ideal. It is, however, hard to judge which economic differences between people are morally justified.

Why should equality be thought desirable, in the first place? Answers to this question would help one to see why certain kinds of inequalities are deeply disturbing, while others may be permissible. Economic inequalities that are produced and accentuated by the system of reward according to merit would perhaps be tolerated by most of us. Certain skills fetch very high prices in the job market because of high demand for them.

The widening gap in living standards between, say, IT professionals and sales assistants does not command much concern. But what kind of society would it be if people are eventually sorted into roughly three groups - a privileged professional and technical elite, a low-paid overworked class of sales assistants and blue-collar workers, and a vast majority who are unable to find jobs or even incapable of productive employment? What kind of justification of economic inequality does, reward according to merit, provide?

A related question is: what role is played by genetic inheritance as opposed to social influences in the distribution of economically relevant abilities and intergenerational transmission of economic status? These complex ethical questions are at the core of the book under review. In this remarkable collection of essays leading scholars in the economic, social and biological sciences have sought answers to these and other related questions. Even though the essays are primarily motivated by the American experience, the depth of scholarly inquiry that characterizes them has gone much beyond the concrete, and has definitely pushed forward the frontiers of moral theories.

Income inequality in the United States has steadily increased during the 1980s and 1990s. There has been an increasing gap in earnings between those with high and those with low levels of education. Does it represent a rising return to cognitive ability or formal education? If the latter is true, there is reason for optimism that those with low wages can be educated or trained for higher-wage jobs. But if the former is true, education or training can do very little in raising the earnings of the less able. Thus, the answer has important consequences for policy. Five essays have sought answers to this question on the basis of extensive state-of-the-art research. In the process they deal with issues like the connection between schooling and subsequent earnings, adequacy of IQ as a measure of cognitive abilities, and inter-racial differences in achievements. Overall, the evidence presented in the essays seems to suggest that educational policies do have the potential to reduce existing and growing inequalities.

Is the growing inequality a natural consequence of a system of reward according to merit? Amartya Sen has discussed the fundamental problems of a meritocratic system by making a distinction between the incentive argument and the "desert" argument. If paying a person more induces him or her to produce more desirable results, he/she should be paid more - this is the incentive argument. It does not assert that the person "deserves" to get more. Think of a blackmailer. You have to pay him a huge sum to "induce" him to hand over some compromising material. This does not imply that the blackmailer "deserves" to get that money. This distinction gets blurred in a meritocratic system. And if you are quite adapted to the system of rewards according to "merit", you tend to believe that the rewards are "owed" by the society to the "meritorious" persons. In meritocracy the goals are often chosen according to the interests of more fortunate groups, favouring outcomes that are more preferred by "talented" and "successful" sections of the population. But this is because merit is defined in a particular way. Sen rightly observes that there is no universally acceptable definition of merit, and therefore its relationship with inequality very much depends on how we choose to define it.

In Western democracies the concept of equality that finds maximum support is equality of opportunity. Ideally, opportunities should be equalized "before the competition starts". But defining "equal opportunity" itself is notoriously difficult. John Roemer argues for a particular version of equality of opportunity and advocates redistribution of educational resources between Whites and African Americans in the US context.

Controversies on IQ tests are mainly around the so-called heritability question. It had been argued earlier that there was little point in intervening to reduce the average Black-White intelligence difference (as measured by test scores) because of high heritability of IQ. But studies show that cultural heritability is not significantly different from genetic heritability. And more importantly, heritability tells us nothing about the effectiveness of different social policies on a trait.

When groups are separated by significant cultural distance, it would be wrong to identify group IQ differences with group intelligence differences. Two chapters deal with these issues. And the last three chapters explicitly deal with policies to reduce inequality - interpersonal as well as intergroup.

Readers of this book would definitely be impressed by the high quality of the discussion throughout.

The 12 essays by 24 contributors are all rigorous, rather demanding intellectually.

The contributors have, nevertheless, succeeded splendidly in what they set out to do - bringing scientific methods to bear on issues of interest to policy makers.


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