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There has been a flurry of arguments about inequality ever since Bernanke made his remarks on the subject, a few weeks ago. After wading through these arguments - which Mankiw (correctly) sums up as all coming back to Rawls versus Nozick, one concludes that this argument could go on forever because there is little or no basis for rational agreement. But there is a new, more promising way of framing the issue that comes out of left-libertarianism.

Although Rawls in A Theory of Justice developed a complex and elegant argument to show that if self-interested, rational people were engaged in a bargaining game to establish a society they would agree on limiting inequalities to those that benefit the least advantaged group, there are a number of reasons why this argument is not convincing. For one thing, we are not in the position of establishing a society so it is not very relevant (we might very well be willing to accept such a society if we were born into it but that is not the same as being willing to change from our current system to that one). Also Nozick’s counter-argument in Anarchy, State, and Utopia is, I believe, devastating: that such a “patterned” system would require redistribution after virtually every transaction (because it would likely undo the previously acceptable distribution) and would be unjust because it would conflict with any kind of property right or “entitlement.”

Where does this leave us? The predominant view is that this is just one of many examples of our inability to find common ground for values and we simply have no choice but to accept this state of affairs. Others, such as Alasdair MacIntyre (see After Virtue) argue that this is the result of the failure of the “enlightenment project” which, in destroying the traditional religious and Aristotelian context for morality and failing to establish a new one, left modernity with fragments of what was once morality without providing a common ground for values. As a result, our debates about values ultimately rest on personal feelings or opinion and take the form of “my goal is better than your goal.”

You can get a sense of how subjective and unanswerable the issue of inequality is in reading Brad DeLong’s post - What Kinds of Inequality Should We Worry About?

How much should we worry about inequality–on the global level, on the societal level, on the personal level? Answering that question requires that we first answer another question: “Compared to what?” . . . On the personal level, it is also hard for me at least to make the argument that a great deal of political-economic worry should be spent on the problem that some people are richer than others. Some have worked harder; some have applied their intelligence more skillfully; some have been better people; some have been worse people; many more have just been lucky enough to be in the right place at the right time. But are there alternative political-economic arrangements that could make individuals’ relative wealth closely correspond to their relative moral or other merit? I don’t see what they might be.

Now suppose the gap between the Nozick (entitlement) side of the argument and the Rawls (equality) side of the argument could be narrowed or closed by showing that property rights as they now prevail cannot be justified on the basis of entitlement? And what if, in changing these rights to fit what could be grounded in entitlement, it was apparent to all that such a system would be much more equal? Hopefully that would make it possible for left and right to spend less effort in conflict and more working together for the common aim of creating a more equal entitlement system.

That, to me, is what is promising about left-libertarianism. By exposing the faulty arguments underlying current private property arrangements, this school has initiated a much needed debate about property. This debate focuses primarily on the validity of Locke’s assertion, whether the original homesteader of a piece of land becomes its full owner by “mixing his labor” with that land, and whether this justifies current ownership by the homesteader’s decendents. Instead left-libertarians argue, since this land was commonly owned prior to it being homesteaded, there is no reason to think that an individual should gain full ownership simply by mixing his or her labor with it. While practical necessity may dictate that individuals rather than governments control land and other natural resources, that does not mean that individual owner should have exclusive rights or that the government should not collect rent as an agent for others who have been excluded from using this scarce resource.

In the words of C. B. MacPherson (from Property): “The essential principle of property being to assure to all persons what they have produced by their labour and accumulated by their abstinence, this principle cannot apply to what is not the produce of labour, the raw material of the earth. If the land derived its productive power wholly from nature, and not at all from industry, or if there were any means of discriminating what is derived from each source, it not only could not be necessary, but it would be the height of injustice, to let the gift of nature be engrossed by individuals.”

The debate is just beginning. Why now? I will come back to that later.

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