Monday, May 30, 2016

Minimax capitalism

The second principle of justice enunciated by the late John Rawls involves the maximin rule (or difference principle). It states that social and economic inequalities should be arranged so that "they are to be of the greatest benefit to the least-advantaged members of society".

As an extrapolation, a maximin society would be one where the incomes of the least disadvantaged rises the most. So which are the maximin societies?
This gets amplified when we see the trends for income growth at the top of the income ladder, which is most likely to be a mirror image, but with the orders reversed and magnitudes scaled up significantly, especially in countries like the US. For another example see the trends with hourly minimum wage.
What is it about American capitalism that makes it so much inegalitarian, so much of a minimax society, than any other capitalist society? And given that the country has one of the lowest inter-generational mobility among developed economies, it is not even as though it is a meritocracy. 

But for all these flaws, it continues to remain the "land of opportunities", if only for those equipped with the skills to be able to compete and embrace them. In other words, it remains the go-to place for the elites. No wonder then that Andrew Sullivan calls the rise of Donald Trump as an "extinction-level" even for American democracy and liberal order. 

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