Rawls and Utilitarians: Perspectives in Public Policy
We have covered the basics of public policy analysis here. Now we are going to cover some of the perspectives.
This article will cover the more activist perspectives; utilitarianism and Rawls, as well as provide graphical representation towards their policies, and some reviews, critiques, and benefits to each ideology. In a future article, we shall cover the more Libertarian Nozick’s Minimal Government, and the Thaler-Sunstein ‘Nudge’ Theory.
Doing so, you will be able to consider whether a public policy is good or bad for society, as well as being able to define mathematically (in at least three perspectives) said ‘goodness’.
Why would we need to be able to think about public policy? With the upcoming British and U.S. elections, it is good and helpful to be able to really think about policies? Does immigration help or hurt the working class? Would the stoppage of deficit spending actually help the common man? What are the actual effects of money printing on the consumption of the common man in China?
Maths is good for a simple reason; a number has no bias. The way it is collected may, but evidence is generally unbiased. Learning how to interpret these numbers, and learning the strengths and weaknesses of your biases or priorities, will help you be more intellectually honest, as well as informed. In a time of great deceit from our politicians, it is important that we try to see as honestly as possible.
The rule for utilitarianism is simply written:
The greatest good for the greatest number of people.
However, it is not simply applied and it immediately raises two important questions: 1) What is “Good”? 2) Who is included in the “greatest number”?
There are generally three main principles to utilitarianism:
Welfarism: Individual utility, or welfare, is the basis for assigning an ethical value for the utilitarian. E.g. You have less money, ergo, you are less happy than a person with more money.
Sum Ranking: Society should determine the overall net benefits of a policy to society by adding the utilities of all affected individuals. E.g. If 1,000 people are made better off, and 999 are made worse off, and all by equal amounts, we can say that this policy is a net benefit.
Consequentialism: The ends justify the means. E.g. It’s okay to go through hell if the other side is sufficiently good enough.
Even beyond that, there is further divisions of utilitarianism:
Restricted Utilitarianism: General rules should be applied to society for maximum utility; once applied, all individuals must use it even if individual utility suffers. E.g. it is good for society to pay taxes for education; it may not benefit someone individually, but as it is applied to all in society, they must abide and seek to maximise their utility with this restriction.
Extreme Utilitarianism: Every circumstance is different, even applied rules are not binding. E.g. In the above scenario, if it would benefit the individual to seek to avoid paying taxes, then they must do so through whatever measures they believe maximise their utility.
There are, of course, weaknesses for utilitarianism:
1) Consequentialism can often overstep itself, even human rights. E.g. It is worth purging the Jews in Europe to make Nazi Germany more powerful.
2) To take above further, better few suffer extremely to benefit the many. E.g. It is worth purging the capitalists to further the rights of the workers.
3) Rank-sum means that gains to the poor are off-set by losses from the rich. E.g. I give £100 from this guy to this guy. One has gained £100. One has lost £100. Ergo, the end result is 0.
However, only if taken as gross. If taken as a percentage, it certainly doesn’t. E.g.£100 from Bill Gates won’t bother him, but could make or break a poor family’s budget.
4) Welfarism puts material wealth as central to happiness/utility. E.g. A family with less money/assets/wealth/income/etc is less happy than a family with more money/assets/wealth/income/etc.
5) Utility isn’t easily measured. E.g. how do you measure how happy a family is because their country is not a war? How do you measure the difference in the same family in differing circumstances without actually changing those circumstances and testing it?
6) Rank-Sum removes individuality; everyone is the same, and everyone is a mass of humanity when counted together. Individual differences do not matter.
Utilitarian Graphical Representation
The formula looks like this:
Meaning that the total utility of all persons is the utility of that policy, which can be summed up as below:
The Utilitarian Redistribution Rule:
In greater detail, when the Marginal Utility of Income Gained is greater or equal to the Marginal Utility of Income Lost, it should be pursued.
A curved utility function curve (bends outwards) is because behaviour will change (as you tax income, people generally will reduce work hours). We call this a non-neutral transfer (if no change in behaviour, we call it a neutral transfer). You then combine it with a utility line (like in microeconomics).
As we can see above, without redistribution, UP1/2 is at utility level one, but when we redistribute, it goes to a higher level (utility level 2). This is not unlike how trade works between countries in traditional economic thought.
This is an economic graphical argument for redistributive measures; Person 1 above doubtlessly lost income, but the society as a whole has benefitted.
To provide a real example, let us consider a model of Universal Basic Income.
The above graph (Reed and Lansley, 2016) shows that scheme 2 is a far more effective policy at helping people than scheme 1; ergo, we should enact it. It reduces child policy. It helps more people than it hurts. Let’s do it. Easy and simple. Tax rate for the top part of society is 50% though, and would remove other ways to keep your money via tax credits, National Insurance Credit receipts, and the like. A Nozickian or Libertarian or anyone making any kind of money would heavily dislike this system (understatement), but the utilitarian says it helps 80% of society, so the top 20% have to pay for it.
Further Applications in Ideologies
This ideology is very persuasive for a simple reason; it is immediate, it is simple, and it addresses a fundamental sense of unfairness that a lot of people feel, in terms of things such as ‘income/wealth inequality’, or ‘gender differences’. It is also easily applicable to a lot of these circumstances.
It could be used, very simply, to argue for feminism. Change Person 1 and Person 2 to Male and Female, and argue that if the men gave up more rights/money/assets/etc, it would give more to women, and raise the overall level of welfare in a society (as well as being more fair, on the face of it).
It could also be used to argue for communism; the rich have too much, and the workers (or farmers, if you’re Maoist) have too little, and it would improve society greatly to redistribute as much as possible to get the utility level as high as possible, thus benefitting society the most (or so goes the argument).
Another attractive and/or terrifying aspect of utilitarianism is ‘extreme utilitarianism’; the argument that the policy is so important, so vital, and without it fatal to members of society, that it must be implemented even if it should lead to the death or exile of millions, as long as the total utility gained outweighs the losses. It could be used to argue for extreme economic changes for the sake of the environment (see the Green New Deal), or even as a case for launching devastating total war (for example, the defeat of the Nazis at the cost of millions of British, Australian, Indian, and other lives to stop the rise of fascism).
Rawl’s Theory of Justice and Difference Principle
The most famous work of John Rawls wrote “The Theory of Justice”; as a child, he saw the death of two younger brothers from illness (diseases that Rawls himself gave them, sadly) (Richardson, 2007). One description (Dworkins, 1977) of Rawl’s “Theory of Justice” is as such:
Imagine a room full of people. All of them have forgotten who they are, want, position in society, income, etc. Whatever these people can agree are fair principles of justice are truly fair principles of justice.
The idea is to ask people to be self-interested, but without knowing their place in society, they are not separated from everyone else. As such, they must consider both the poorest of society, and the richest, all races, both genders, any age, as they could be any of them.
We already use a part of this theory in our day to day lives. E.g. Imagine a cake. You get to cut the cake for three people; but you choose last. You do not know which slice of cake you will receive, so it would be in your best interest to cut them as evenly as possible. When you cut the cake of society, not knowing which privileges or wealth would be yours, you would likely be much more fair.
So what conclusions does this method yield? Rawl’s calls these the “two principles of justice”. They are principles for a society with a certain measure of economic development; for example, once there is enough to feed and cloth everyone.
Rawl’s Principles of Justice
The first is that everyone shall have the basic political freedoms (The First Principle, as he calls it): freedom to speak, media, to hold property, the conventional liberal liberties, as Ronald Dworkins (1977) calls it. This principle dominates over the second.
The second (The Principle of Priority) is that no inequality, no difference, is to be tolerated unless it is to the benefit of the “worst off” group of society (Dworkins, 1977).
To expand on that second point, any change that is done to benefit the worse off member of society is to be tolerated; to take from the middle class to lift up the lowest part of society, and benefit that group, should well be done.
However, if you should remove political liberties, you must not do it. Liberty must be protected to the full, and then we can consider the economic consequences.
(Maxi-Min) Difference Principle
Rawl’s Difference Principle (Bellinger, 2007):
That all should have equal opportunity, and equal wealth and income, unless the unequal division of goods is to the advantage of the least favoured. Total equality should be the starting point of society.
Also known as the Maxi-Min Principle, as society is measured by it’s least well-off individual. E.g. Imagine a cake of society. Rawls is not concerned with the size of the cake; nor with how much cake each member gets. We now divide this cake unevenly (as all societies are). We should not worry about the people who get large slices; we should worry only about the smallest slice. Society is fairer when that smallest slice of cake is as large as it can reasonably be, and we should strive to make the least ‘well-off person’ more well off.
In response to policies that would redistribute wealth from the wealthy to the poor, Ex-Prime Minister Margaret Thatcher (1990) once said:
“The hon. Gentleman is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy.”
In this speech, she was using Rawlsian language; better that the poor are better off, than focus on the rich at all. Inequality, under Rawlsian ideals, does not matter, as long as the living standards of the poor were to improve.
There is a final large difference between Rawls and utilitarians; Rawls believes that, once the essential rights and liberties are protected under the First Principle, and the lowest of society are protected under the Principle of Priority, that a society that had mutually agreed with each other in values and responsibilities would flourish more than the materialistic utilitarians, as those shared values would lead to shared respect, stability, and social unity (Richardson, 2007).
Rawlsian Graphical Representation
As it is known as the Maxi-Min Principle, we can judge society by it’s least well-off individual. It’s function, therefore, can be seen as such:
For example, if UP1=5, and UP2=10, then SWF=Min=5. As such, it is graphically represented by the L Shape, using the lowest utility value. We can alter this, in this example, by transferring money.
As we can see, we also can see that policies that may improve the life of UP1 can also be done; if doing so would improve the life of UP2. Imagine that UP1 is a capitalist who provides a cheap but amazing good; he gives UP2 a better job, thus raising his quality of life. UP1 will benefit more than UP2, but as it lifts up UP2 as well, it would be agreeable to Rawls.
In this case, Rawls is more sympathetic to capitalism than the more socialist of utilitarians; the market is allowed to become unequal, as long as the poorest in society rise as well.
To provide a more real example, consider again Universal Basic Income.
The above chart whose the effect of UBI schemes on the poorest sectors (the 10th decile of income) in British society (Reed and Lansley, 2016). As we can see above, the third scheme would absolutely reduce the welfare of the poorest in society in the United Kingdom. The second scheme would hurt half of them more than it helps the other half. The first scheme ultimately helps more than it hurts.
Utilitarians would be concerned with the entire society; Rawls would look to see that the poor in society were ultimately helped; with many single pensioners and single parents screwed, it may not pass the Rawlsian test. Scheme 3 certainly fails.
If the policy does not help the poorest in society, why pursue it? That is the Rawlsian Difference Principle for Public Policy.
We have considered perhaps the most famous ethical perspective; utilitarianism, as well as the very influential Rawls and his principles.
Using this, we can see the arguments and framing of the principles involved, as well as provide a graphical visual of how these perspectives work, and how we can expect them to improve the general level of welfare in society.
We have even used a basic example through a UBI example developed by Compass, and by Reed and Lansley (2016) in particular, to examine these perspectives.
The next article shall cover yet another two perspectives; these under the umbrella of Libertarianism (Nozick and Thaler-Sunstein’s ‘Nudge theory’). Whereas these perspectives are very pro-active and justify a lot of government intervention, the next two justify minimal government intervention.
Personally, none of these are more ‘correct’ than any other; but all of them provide different measures of policies, thoughts, and ideas that can be used to evaluate ideas. Every government action should be examined; does it actually help? Who does it help, and who does it hurt? How much, and is it justified?
I believe that none of these ideas are shocking or new to most readers; most people intuitively understand these principles, being little more than explorations into existing concepts of fairness, usefulness, and effectiveness by governments and people alike. I do hope that having them codified can help others explore and consider their interests more deeply.
If you’ve enjoyed reading this, please consider following me on Twitter @LeonDeclis or on Apple News on the Idea Meritocracy channel, or a Facebook page at @IdeaMeritocracyEcon. There is also an RSS feed option on this website for direct updates! Have a nice day!
If you enjoyed this article, you may enjoy a look at the basics!.
If you’d like an example of bad public policy putting ideology over the welfare of the people in the United Kingdom, you may enjoy this!.
If you’d like an example of how public characteristics and policies have caused the U.S. Sino-Trade War, you’d love this!
In all articles, I provide as much information for sources as possible, including links. I encourage everyone reading this article to read deeper, and make their own conclusions. For students, links are here so they can read the original source themselves. Most sources are linked the first or second time they appear in the article.
Bellinger, W., (2007), “The Economic Analysis of Public Policy”, published by Routledge Taylor and Francis, 1st Edition
Dworkins, R., (1977), “Philosophy and Politics with Bryan Magee (1977)”, published on Philosophy and Politics with Bryan Magee, interviewed by Brian Magee, retrieved from https://www.youtube.com/watch?v=hJedzWtu-JM on 15th September 2019.
Reed, H, and Lansley, S, (2016), “Universal Basic Income: An idea whose time has come?”, published by Compass, London, United Kingdom, retrieved from https://www.compassonline.org.uk/wp-content/uploads/2016/05/UniversalBasicIncomeByCompass-Spreads.pdf on 16th September 2019.
Richardson, H.S., (2007?), “John Rawls (1921-2002)”, published by Internet Encyclopedia of Philosophy, retrieved from https://www.iep.utm.edu/rawls/ on 16th September 2019.
Thatcher, M., (1990), “HC S: [Confidence in Her Majesty's Government]”, published by Hansard HC, re-published by Margaret Thatcher Foundation, retrieved from https://www.margaretthatcher.org/document/108256 on 14th September 2019.