Tuesday, October 9, 2012

Equal Opportunity, not Equal Outcomes

Link: http://www.realclearpolitics.com/video/2012/08/11/ryan_our_rights_come_from_nature_and_god_not_from_government.html

This is a sentence that is important for MBA students to understand. This is an excerpt from a speech that MBA students should be aware of ---> The concept of Equal Opportunity versus Equal Outcomes.

As controversial as Paul Ryan is, he sure makes you think hard. I give that much to him. These are important words quoted below, in order to understand Conservative thinking:

"America is just more than a place. America is an idea. It's the only country founded on an idea. Our rights come from nature and God, not from government. That's who we are. That's how we built this country. That's what made us great. We promise equal opportunity, not equal outcomes".

My interpretation is that the Conservatives do indeed want everyone to succeed, and do not want anyone in particular to suffer. Anyone who succeeds is welcome to the club, irrespective of your background. However, the promise is that of equal opportunities (that is why America is called as the "land of opportunities"), not that if you fail, you will get a helping hand. Of course they do believe in charity and goodwill, but that has to be voluntary, and not be forced by paying higher taxes.

The Conservatives stress that America is different from Europe or USSR. America does not believe in Communism or Socialism. The rich cannot be forced to give up their money - they will only do so out of charity - for they have earned their money by hard work or smartness.

The only problem I see is that this does not guarantee those with less privileges the equal opportunity to succeed. The only problem I see is that Conservatives are not making it possible for equal opportunity even. The game is rigged to favour the wealthy and the corporates. The wealthy want the system to be this way, not to hurt the poor, but to get more of the pie - a LIMITED pie - and that is what makes this a zero-sum game.

However, in terms of Classical Economics, or Pure Economics, the concept of "Survival of the fittest" and "Equal opportunity, not equal outcomes" makes perfect sense.

Here below is another interesting link (this is a must read, check it out!):

In a lamp assembly factory, for example, equality of outcome might mean that workers are all paid equally regardless of how many lamps they make. This can be contrasted with a payment system such as piece work, which requires that every worker is paid a fixed amount of money per lamp. The relationship between equality of opportunity and equality of outcome is an important controversial topic in politics and economics.


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