If we start by asking whether we can reduce inequality while still enhancing market efficiency, we are assuming that ultimately we want to continue enhancing market efficiency; or at least we don’t want to push inequality-busting policies beyond the point at which efficiency would begin to erode.
Life is not a zero sum game, which means that there is no such thing as an ‘economic pie’ that sprung fully formed from the Earth, with no further input required from us than to divide it up equally between ourselves. But for those who find it helpful to think about life as a giant pie, the point is that the pie is not of pre-fixed and immutable size. Sometimes it's bigger, and sometimes it's smaller. Size varies constantly according to inputs and outputs. The bigger the pie, the better off everyone is. With a fixed amount of wealth, everyone would have to worry about fighting for the biggest portion or at least ensuring that nobody has a bigger portion than others. When the size of the pie depends on economic activity, there is no fixed quota of success, so there's no need to be afraid that those who succeed will 'use up' all the success and leave none for others.
The modern market economy depends upon voluntary exchange between people selling what they have to offer and buying what they need. Workers sell their problem-solving skills and ability to get things done, and employers pay them a wage in return. That’s the beauty of the market. Alas, markets are not very effective in ensuring that everybody ends up with the same amount of stuff.
In an ideal world, we would all fly free without ever running the risk of encountering an ill wind, and we would build our dreams without having to worry that they might come crashing down.
The idea of income security means having confidence in your ability to earn a living and make your way in the world; the confidence that barring sickness or disability or some random Act of God such as a zombie apocalypse, you will always find work for your hands to do.
Many people don’t like the term ‘human capital’. They think it demeans human beings and makes them into something less than what they are, like physical capital or finance capital, turning people into chattels that are to be bought and sold in the market like so many widgets.
Scholar, Writer, Friend