Free, Coerced, and In-Between

John Kay has written a good column reflecting on Wilt Chamberlain, Lloyd Blankfein and the fact that we're happy to allow athletic superstars their fortunes but begrudge investment bankers theirs. Both outcomes result from voluntary market processes, so isn't it illogical to be content with one but not the other? No, says Kay, it makes sense.

He clarifies what makes an income distribution just or fair. As any liberaltarian would tell you, it's not (or not only) about outcomes: the process that yields the outcomes also matters. But then you have to bear two things in mind. First, the choices driving the process don't fall neatly under the headings "free" (yielding a presumably just outcome) and "coerced" (yielding a presumably unjust outcome). That's "a spectrum, not a sharp distinction". Second, let's not forget that remuneration committees are making choices with other people's money.

Most people share Nozick's intuition that process and rationale, as well as outcome, are relevant to our judgment of the fairness of income distribution. We are less grudging of the riches of successful entrepreneurs and talented sports people than the wealth of heirs and kleptocrats. But most people also have a well-founded intuition that, when it comes to bankers' bonuses, an inquiry into process and rationale does not make them any more defensible.

I think that's a case of British understatement.

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