by Sandy Ikeda
Megan McArdle, blogging about the issue of “fair pay” on Wall Street, in the context of the recent bailouts, makes the following provocative statement:
No one deserves their pay, so I can hardly be angry at the folks on Wall Street for taking what they could get… Trying to make as much money as an employer will legally give you, and making mistakes, are neither legal nor moral offenses. Why isn’t it enough to say, no, thank you, I’d rather not pay you that much money? Why is it also necessary to hate them?
Right. (And I think many people who “hate them” are objecting not to high salaries and bonuses so much as the use of forced redistribution to pay for them.)
One of the commenters, however, says:
Interestingly, after arriving at this same conclusion a few years ago, I ceased being a libertarian and began having a lot more sympathy for the welfare state.
Understandable, since incomes in an unhampered market are indeed arbitrary in the sense that even if you work really, really hard and always play by the rules, there’s still no guarantee that anyone will buy your product. We can choose what we do, but we can’t make people like it.
However, if this really bothers you, as it did the commenter, the welfare state is not the answer. Hayek in The Road to Serfdom addresses this issue:
Inequality is undoubtedly more readily borne, and affects the dignity of the person much less, if it is determined by impersonal forces than when it is due to design. In a competitive society it is no slight to a person, no offense to his dignity, to be told by any particular firm that it has no need for his services or that it cannot offer him a job…. However bitter the experience, it would be very much worse in a planned society…[where] his position in life must be assigned to him by somebody else” (U. of Chicago Press, 1972:106).