Sunday, July 22, 2012

The 300 Batting Average Analogy to Economics

There are libertarians who have said that people inherit their wealth and also inherit their ability to earn wealth as a result of the genes they are born with and the socio-economic class into which they are born. Here I am thinking of Nozick's Anarchy State and Utopia, and Milton Friedman's Free to Choose. Their argument is basically that life is not fair, but using redistribution to equalize what everyone inherits would be no more fair than leaving alone the unfairness of some people inheriting good luck and others inheriting bad luck.

I reject this argument that life is not fair and you inherit good luck or bad luck. My analogy is to baseball as a model of life. On any given at-bat, whether the batter gets a pitch is a matter of luck combined with skill--skill to hit the baseball, and luck as to whether the pitcher made a perfect pitch or not, and whether there were fielders who happened to be positioned in the place where the ball landed or not. But over the course of the entire baseball season, when most batters get 600 at-bats, the good luck and bad luck evens out. Thus, a 300 batting average is considered the result of skill, not luck, even though each individual at-bat has results coming from a mixture of skill and luck.

By analogy, some people are born with good health, good genes, and into wealthy families. Some people are born into poverty, and are born with health issues or brains that don't function exceptionally well. But I believe that over a 30 year period, from age 1 to age 30 or from age 10 to age 40, a person's choices are going to combine with their luck to produce their overall situation. A poor person who makes good choices and chooses to work hard and be a good employee will take advantage of the few opportunities that luck hands to him. And over a 30 year period, even those people with bad luck will be given a handful of good opportunities, in all likelihood. Similarly, over 30 or 40 years a person born into good luck could waste and squander his wealth if he consistently makes bad choices. Business is a fierce competition and technology and business methods are always changing, so the person born into wealth will be forced to make good choices or else sustain long-term losses.

In order for us to say that free market capitalism is ethical, I think that as a philosophical matter we must be able to say that the rich earned their wealth and ethically deserve to be rich, and the poor who rely upon the welfare state have made mistakes and should make better decisions which would enable them to become economically self-sufficient. If a person's wealth is the result of mere good luck or bad luck then we cannot say this. If wealth is the result of luck then there is no economic argument from fairness against socialist redistribution. But, along the lines of the 300 batting average, I argue that as a matter of statistical mathematics the good luck and bad luck in a person's life will even out over 30 years or 40 years, and a person's wealth will tend to be what they earned, what they deserve, the fruit of their labor and result of their choices, which is a fair and just way to assign wealth and poverty in a society.

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