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American Ideals In Perspective: The Problem with Private Education and Inheritance

Harvard University
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The perennial economic debate is capitalism vs. socialism. Public discourse seems to have abandoned both ends of the spectrum: There are very few people today who still believe that the market can regulate itself. At the same time, history has not ever presented a successful socialist state. However, the question should not be which economic system is better, but rather: How do we want to distribute economic resources? Should we distribute by class, race, effort, talent, or pure equality? By incorporating John Rawls’s veil of ignorance, it becomes incredibly clear that a meritocracy is the ideal way of allocating economic goods. By extension, this calls into question some things we take today as given, such as private education and tax-free inheritance.

If one intends to make a normative claim regarding how the world should work, then they ought to put themselves behind the veil of ignorance. This is a concept coined by political philosopher John Rawls. It purports that decisions regarding social justice and resource allocation are most fair when made from the Original Position—behind a veil of ignorance which inhibits your knowledge of where you would be in the proposed social hierarchy. This means that one must judge the effects of any policy or decision as it would be felt across the whole economic spectrum. 

If one takes seriously the veil of ignorance, they will quickly realize that an ideological attachment to either capitalism or socialism is much less important than the underlying principles informing our systems of government. The principle of meritocracy, based on effort and talent, is best suited to the innate characteristics of human nature. Take greed for example: People will always look out primarily for themselves and their direct families. One can easily imagine how evolution has entrenched this human trait. Another biological inevitability is that some people will be born with genetic advantages over others. Some children will just be better at mathematics, while others will have to work harder to achieve the same goals. 

By distributing goods in a meritocratic way, we utilize greed to incentivize those who work hard to earn more, but we also take advantage of natural discrepancies in human ability to get the best outcomes for society. At the same time, the meritocratic principle completely refutes class and racially based economic advantages; one should only fall behind if they fail to perform. By taxing the best performers in a capitalist setting, we enable the government to recreate incentives that will continue to reward those who perform. But there are also some elements of a capitalist economy that contradict meritocracy.

A meritocratic world is not a free market world. In a meritocracy, there is room for wealth disparity. But the government must do its best to ensure that the distribution of wealth never goes beyond what is reflective of each individual’s performance. Capitalism is useful in that the market can be used to value the performance of one’s work and reward them with economic goods for that performance. A genius who works 100 hour weeks, for example, will be far wealthier than a less talented person who does not even want to get a job. All of this can be calculated by market prices. The two most obvious tensions between capitalism and meritocracy are private education and inheritance.

Educational disparities at the pre-college level contradict the meritocratic principle because it gives students of inherited wealth an advantage over other children with poorer parents, and it does not speak at all to their genetic talent or effort in school. American students experience a vast range of school quality from primary to high school. At the lower end, the public school system has schools where students use 25-year-old textbooks and are not offered a single AP class. At the other end, you have public schools with elaborate science labs and hundreds of on-campus clubs. Then, there are private schools and charter schools. These all make pre-college educational outcomes incredibly unfair. As a result, millions of brilliant young minds are wasted because they are placed in underfunded public schools. Simultaneously, American elite families spend big bucks sending their children to phenomenal schools, irrespective of whether the children are smart or driven. It also takes an awful lot of time and resources attempting to educate certain wealthy students who might not take advantage of these opportunities. This is directly inimical to the concept of a meritocracy. All children should get the same shot at school. Then let the best go to college, and the worst drop out. Allocate opportunity by performance not wealth. 

If private education, and unequal funding for public schools (through local property taxes and, to a lesser extent, fundraising and donations) were abolished, this would dramatically balance educational disparities across the United States. In the aggregate, this would be good for society. Instead of putting rich kids into the best universities, smart and motivated kids would be in the best universities. Those most willing and capable of taking advantage of these opportunities would become the next generation of world leaders.

Another implication of the meritocratic principle is that inheritance should be heavily taxed, if not completely abolished. Why should a baby born into a rich family have advantages over a baby born into a poor one? Again, this inequality is completely useless to society in the aggregate. Conservatives always argue that nothing is free, so nothing should be free. Yet they are staunch in their opinion that a newborn child should be able to inherit millions upon millions in wealth for free. It is a shameless contradiction. It is true that we want to incentivize adults to work hard so that they can earn money to help their children. However, taxing inheritance and abolishing educational disparities does not destroy this incentive. Adults will still wish to raise their children in nice homes, feed them well, and give them a secure future. But we must do everything in our power to inhibit the creation of structural advantages for children of wealthy parents. 

This may sound radical, but be honest with yourself: If you were really behind the veil of ignorance and had no idea if you were to be rich or poor, would you allow for private education and tax-free inheritance?

These are just two examples of generally accepted economic realities which go completely against the apparent American ideal of rewarding hard work and talent. Yet they alone can show that the economic debate needs a new agenda. It is not socialism versus capitalism; it is class versus effort, or performance versus wealth. If you claim to have an objective view on politics, you must step behind the veil of ignorance. If you do so, you will soon see that allocating economic resources via performance is both most fair and most desirable. So next time you are posed with an economic opinion, ask yourself: How does this hurt or harm those who work the hardest and perform best? The costs and benefits of today define the incentives of tomorrow.