Notes to Submission to the Productivity Commission Inquiry into the ...

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Poverty caused by a lack of endowment of itself is not sufficient reason for governmentinvolvement. One form of this argument is based on a principled view that governmentredistribution of income involves an element of arbitrary compulsion which is immoral,while another form is based on the economic assertion that government redistribution isless efficient than voluntary redistributions.Nozick 3 combines the two arguments in arguing that social justice is less about theequitable distribution of society’s production and more about fair and transparent ruleswithin an institutional framework of transferable private property rights. This view treatsthe poverty which results from impairment either as one of the myriad unexceptionalunfortunate quirks of happenstance, or as something which is most effectively managedby voluntarism through charities rather than through governments.An alternative perspective views social justice in terms of the distribution of productionand argues a case for equalising the distribution of the economy’s product either directlyby redistributing income through taxes and subsidies or indirectly by equalising theopportunity to earn income by enhancing endowments through public investment ineducation and health.The latter perspective has several variants but few have directly addressed the “disability”problem. The Rawlsian 4 social contract of individuals behind a veil of ignoranceimplicitly addresses disability in concluding that society is better off only if the least welloff are made better off, subject to maintenance of maximum liberties for all. Nussbaum 5argues that the Rawlsian position is problematical with respect to people withimpairments who are not equal participants in the social contract because of the powerimbalance which results from impairment. (In the extreme, there is nothing to precludethe possibility that risk loving social contractors could decide - without the acquiescenceof excluded social contractors with impairments - that people with impairment should beleft to die or to live in dire straits 6 ). Nussbaum, together with Sen 7 , puts people withimpairment at the centre of the social justice question, and argues with Sen in favour of a“capabilities approach”.The capabilities approach “uses achievements (such as the ability to meet basic needs byconverting goods) rather than actual goods or utilities as the means for comparing wellbeing.To focus upon an individual’s opportunity to purse her/his objectives, one mustconsider not only those primary goods possessed by that individual but also the relevantpersonal characteristics governing the conversion of primary goods into the individual’sability to promote his/her ends 8 .Thus,3 Nozick, Anarchy4 Rawls, Social Justice5 Nussbaum, Tanner Lectures6 Singer7 Amartya Sen pursues the capabilities approach partly as a result of his analysis of economic development,index number and aggregation and his consequent rejection of the utilitarian approach to social well-being.8 Welch12
“A person who has a disability may have a larger basket of primary goods and yethave less chance to lead a normal life (or to pursue her objectives) than an ablebodiedperson with a smaller basket of primary goods. Similarly, an older personor a person more prone to illness can be more disadvantaged in a generallyaccepted sense even with a larger bundle of primary goods” 9 .By this approach, a wheelchair user with a substantially higher income than anotherperson can nevertheless be worse off in terms of material well-being if they need to payfor a wheelchair and personal assistance, taxi fares instead of a bus and if they pay morefor goods and services than they other would. “The capabilities approach is concernedwith evaluating an individual’s advantage in terms of ‘actual ability to achieve variousvaluable functions as a part of living’. Both Sen and Nussbaum use this approach toenable comparisons of well-being and inequality, and to begin to define a ‘threshold ofcapabilities’ to determine a citizen’s entitlements from government. For Nussbaum andSen, well-being is only increased when everyone has available to them a minimum basketconsistent with their individuals characteristics to enable them to function as autonomousindividuals.Economics ApproachThe traditional economic approach is predisposed to take endowments as given, and toallocate resources in a way which maximises utility subject to the given endowments, andto then redistribute the resulting allocation if the first round distribution is consideredsocially undesirable.The “disability problem” is seen as one where individuals may have fewer products(lower incomes) as a result of any impairment which affects the actual or perceived speedand/or mobility with which tasks can be performed. Thus, economic analysis wouldexpect that a person who is “medically” impaired would earn lower income than others if• they take more time to achieve tasks than other workers and/or• require more complementary inputs (including space, equipment and/or the timeof other workers) to achieve the same task as other workers and/or• they are discriminated against on the basis of their impairment and/or• they are discriminated against because an employer believes that the person with aparticular impairment is slower or involves greater expense than other workers.The first two effects may be classified as productivity effects while the latter effects arediscrimination effects. While the economist “as citizen” may accept that the lowerincome resulting from both productivity and discrimination effects may be “unfair” andmay justify special consideration, the economist “as economist” has little in the way ofunambiguous criteria for evaluating either the nature or the magnitude of the specialconsideration called, particularly when a redistribution program has undesirable“secondary” efficiency effects.9 Sen13
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