Fairness - 0 views
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fairness economy us money wealth debate politics distribution america pdf
shared by Jessica Olsen on 12 Jan 13
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In a competitive market economy the ability of people to obtain goods and services depends, with some exceptions, on the marginal productivity of the resources they hold. The most important resource is a person's ability to work (human capital) but others are ownership of natural resources and capital. Those who hold resources that are highly valued will earn large incomes, whereas those who hold no valuable resources earn little or no income. This unequal distribution of income that a market system produces raises questions of whether or not a market system is fair.
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Fairness is a normative issue, which means that it involves judgments about what is good and what is bad. As a result, economists cannot claim special expertise on this issue. They often rely on arguments from philosophers when they discuss fairness, and they hold widely diverse beliefs. There are, however, some insights from economics that can be useful when one discusses issues of fairness.
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In a world in which everyone had equal abilities but different goals, people will earn unequal incomes.
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If you look at a situation and decide that it is unfair because one person has too much and another has too little, you probably are making a judgment that compares goals. The judgment says that the person with too much is satisfying goals that are less worthy than those of the person with too little. We commonly make this sort of normative judgment; our decision to give money to one charity rather than another indicates that we find some goals more deserving than others. Our decision to give at all suggests that we decide that the goals of someone else are more worthy than our own "selfish" goals.
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Economic analysis suggests that people earn different amounts of income both because they have different goals and different abilities (or resource endowments, to use a more comprehensive but also more abstract term). From this starting point, we can examine a few common judgments on fairness