Welcome to our Ethics Review Forum of Kristi A. Olson ‘s The Solidarity Solution: Principles for a Fair Income Distribution (OUP), reviewed by Tom Parr. Below, you’ll find a description of the book, along with a condensed version of Tom’s review. Kristi’s response to Tom will appear in the comments below.
From OUP’s blurb:
Kristi A. Olson asks: What is a fair income distribution? She rejects equal income shares: equal pay undercompensates workers in dangerous and onerous jobs. The envy test, which takes both income and work into account, fares better. Yet, a distribution in which no one prefers someone else’s circumstances to her own-as the envy test requires-is unlikely to exist, and even when it does exist, the normative connection between envy and fairness has not been established.
After critiquing existing answers, Olson invokes the idea of mutual justifiability: when someone claims that her situation should be improved at someone else’s expense, she must be able to give a reason that cannot be reasonably rejected by a free and equal individual who regards everyone else as the same. To give the answer bite, Olson distinguishes two types of envy. Reasons based on personal envy can be reasonably rejected; reasons based on impersonal envy cannot.
Olson then tests the solidarity solution against the theories of Ronald Dworkin, Philippe Van Parijs, and Marc Fleurbaey and applies it directly to the concrete issues of the gender wage gap and taxation. By providing a new approach to problems of fair resource allocation, The Solidarity Solution establishes philosophical discussion as critical to today’s fight to end economic injustice.
From Tom Parr’s review:
In the United States, the mean annual salary of a cleaner is about $31,000. The corresponding figure for a dentist is about $186,000. Many readers will be inclined to regard this inequality in earnings as unfair. But what could justify such a verdict? Why, exactly, is it unfair for cleaners to take home so much less than dentists?
Part of what makes these questions especially challenging is that there is no obvious common scale on which we can place, and thus rank, the two occupations in terms of their comparative burdensomeness. The tasks associated with the two occupations vary markedly: in many crucial respects, being a cleaner is not at all similar to being a dentist. Determining which is more onerous, and by how much, is therefore particularly tricky.
One response to these problems is to invoke the idea that, if each of us were identically talented, then these facts would pose no special difficulty. On this view, so long as the market operates smoothly such that we can compete with each other on equal terms, then we should regard whatever distribution of income that results as fair. This is because individuals’ incomes would reflect nothing other than their preferences over the type of work in question. In these circumstances, occupations that are regarded as more onerous would command a higher wage or become less burdensome since this would be necessary to induce individuals into these roles.
I am sympathetic to a view of this kind that emphasizes the fairness-serving potential of some markets. But plainly, it does not give us everything we want. After all, as a matter of fact, we are not identically talented. As a result, market wages reflect more than variations in individuals’ preferences. They are also a function of the comparative scarcity of individuals’ talents, whose distribution is arbitrary from the moral point of view.
How might we proceed? In this impressive book, Kristi A. Olson advances a sophisticated and systematic account of fairness in the distribution of income. She calls it the solidarity solution. Its core claim is that a fair wage is the wage that would clear the market in a counterfactual society in which those occupations exist unchanged, the demand for workers in each occupation remains the same as it is here and now, but ‘in which all individuals were equally qualified for all occupational positions’ (41). Accordingly, to calculate the fair wage for dentistry, for example, we must ask: what wage would be necessary to attract into the profession about 110,000 individuals (which is roughly the number of dentists in the United States today), if each of us were equally capable of entering any occupation? Let us stipulate that the answer is $80,000. Since the actual wage in our society comfortably exceeds that figure, then this must be because dentists benefit from the scarcity of their talents. And so, using the solidarity solution, we can condemn dentists’ actual earnings as unfairly generous.
Olson deepens her defence of the solidarity solution by showing that the distribution of income it sanctions satisfies a more foundational requirement of fairness, the principle of impersonal envy-freeness. The central idea is as follows: whether a distribution of resources is free of impersonal envy depends not on how we allocate given bundles of resources to particular individuals. Rather, it depends on how we bundle resources together in the first place (21-22). To be free of impersonal envy, we must divide resources in such a way that, so long as we are able to decide who gets each bundle, no individual must receive a set of resources that she disprefers to some other individual’s bundle. By contrast, a distribution contains impersonal envy if and only if the resources have been divided such that, no matter how we allocate each bundle among individuals, at least one individual will prefer someone else’s lot (21). Accordingly, we can know whether a distribution of resources satisfies the principle of impersonal envy-freeness by examining only the contents of the bundles being allocated, and information about who receives what is wholly irrelevant to that matter.
To illustrate, let us suppose that I must distribute a laptop, some books, and a $100 bill between two individuals, Alexa and Bertie. Let us also suppose that, whereas Alexa prefers any bundle that includes the laptop, Bertie would be content without the laptop only if he receives the books and the cash. Now, if I bundle the goods such that one individual will receive the laptop and the books, and the other will receive the $100, then it is inevitable that whoever receives the latter will end up with a set of resources that they disprefer compared with another bundle. By contrast, if I bundle the goods such that one individual will receive the laptop, and the other will receive the books and the cash, then it is feasible to allocate those bundles in a way that everyone is most satisfied with their lot, namely by giving the former to Alexa and the latter to Bertie. Accordingly, the principle of impersonal envy-freeness demands that I divide the resources in the second way.
Of course, having done this, malice or misfortune may mean that Alexa comes to possess the books and cash, and Bertie ends up with the laptop. Given their preferences, this outcome would be inefficient (25). But since the resources have been divided in a way that satisfies the principle of impersonal envy-freeness, Olson contends that we have eliminated one important source of unfairness.
The appeal of this principle depends on the idea that an individual possesses a special complaint when she prefers someone else’s bundle to the one allocated to her and where it would have been possible to avoid this outcome by dividing the resources in an alternative fashion such that no one would have to suffer that fate. For this to be correct, it must be the case that her complaint would have a different character, and lack comparable force, if she were to prefer someone else’s bundle to the one allocated to her but this were due merely to the assignment of bundles to particular individuals, rather than to how the resources are divided into bundles. To my mind, this is a crucial premise in Olson’s argument and, though she offers some remarks in its support (24-26), her defence of the solidarity solution would benefit from more sustained discussion of it.
Importantly, though, I believe that the solidarity solution suffers a more significant defect. The problem stems from the fact that, if we were to set wages in the way that the solution recommends, then the income of most of our society’s highest earners would decline very dramatically. And as these salaries decline, individuals would lose the incentive to use their talents as they did.
In considering this concern, Olson explicitly acknowledges that we may have reasons to incentivize the productive use of talents (36). But these are reasons of efficiency rather than of fairness, and we should be careful not to confuse the two (6).
However, my worry is that this move strips the solidarity solution of much of its import, for it means that, even if this approach is correct to assume that we can exhaustively explain the demands of fairness using the principle of impersonal envy-freeness, we can say nothing about whether there are decisive reasons to reduce the salaries associated with any given occupation or that they are objectionable all things considered. After all, it may turn out on Olson’s view that, though the salaries of society’s highest earners are unfair, they are nonetheless decisively justified given a concern for efficiency. Because of this, I fear that the solidarity solution proves to be a toothless tiger in the fight against economic injustice.
With this in mind, it pays to focus on one of the rival approaches that Olson considers and rejects, namely Ronald Dworkin’s equality of resources. One of the chief but insufficiently acknowledged advantages of that approach, in comparison with the solidarity solution, is that it specifies a comparatively precise mechanism for integrating the demands of fairness and efficiency, and so provides us with the theoretical resources with which decisively to condemn some individuals’ earnings as objectionable.
Olson presses several complaints against Dworkin’s equality of resources, but the main one targets his discussion of underemployment insurance. In a nutshell, Dworkin holds that, within various limits, we should determine an individual’s entitlement to fiscal support from her government by referring to the decisions that she would have made if she had enjoyed fair opportunities to insure against lacking marketable talents.
Olson alleges that this approach has some counterintuitive implications, namely it will sometimes result in those who work more hours earning less than their co-workers who work fewer hours (72-73). To see this, let us suppose that, if Brigitte and Clara had enjoyed fair opportunities to do so, each would have insured against having talents such that their maximum earning capacity is less than $60,000 annually. Additionally, let us suppose that, as things turn out, Clara’s only option is to work as a medical assistant for $30,000 per year but Brigitte has the additional option of working as a plumber for $60,000 per year. The insurance firm therefore pays out to Clara and not to Brigitte. This much seems straightforward. But now, let us suppose that Brigitte chooses to work as a medical assistant rather than as a plumber. In this case, Brigitte and Clara each earn $30,000 working as medical assistants performing identical tasks, but Clara’s income is then boosted by the insurance pay out that she receives. In turn, this means that Clara may be able to cut her hours, perhaps even considerably, while continuing to earn more than Brigitte, despite performing identical work.
However, I believe that Olson’s analysis overlooks something important. To see what it is, we must dig into the details of the case a little further. Let us start by focusing on the fact that Brigitte, unlike Clara, is able to work as a medical assistant for $30,000 per year or to work as a plumber for $60,000 per year, and that she prefers the former less well paid option. Assuming she is not averse to having a higher income, we can infer that Brigitte must regard plumbing as a much more onerous occupation. But here is the crucial part: if plumbing for $60,000 per year is so undesirable to Brigitte, then shouldn’t we expect this fact to affect her insurance decisions? In particular, if Brigitte is aware that plumbing for $60,000 per year is a possibility, then why insure merely against having talents such that her maximum earning capacity is less than $60,000 annually? Doing this exposes her to considerable risk, in the event that she is able to become a plumber. Given Brigitte’s preferences, it would be rational also to insure against having talents such that the occupations available to her involve performing especially onerous tasks, even if the salary associated with these roles exceeds $60,000 annually. The general thought, then, is that insurers’ decisions, and so their eligibility to claim compensation via the insurance scheme, would reflect both their preference for income and their preference to avoid certain kinds of work. One problem with Olson’s analysis, I think, is that it neglects the italicized clause, which enables a response to the objection that Olson develops.
Though I have some reservations about the conclusions, Olson’s defence of the solidarity solution certainly remains formidable. Clearly, it warrants much more sustained philosophical scrutiny than a brief review of this kind permits.