Rawls, the Difference Principle, and Economic Inequality

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Pacific Philosophical Quarterly 79 (1998) 368–391 0031–5621/98/0300–0000© 1998 University of Southern California and Blackwell Publishers Ltd. Published by

Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and350 Main Street, Malden, MA 02148, USA.

ABSTRACT: Rawls’s theory of justice has been criticized for allowing individ-uals by their own voluntary choice to make themselves members of the ‘leastadvantaged’ class and thereby eligible, albeit undeservedly, for the benefitsmandated by the Difference Principle. I argue, first, that this criticism over-looks the fact that the Difference Principle applies only to the lifetime expec-tations of representative persons and, second, that it is possible to implementthe Difference Principle (and the social minimum) through policies that donot create work disincentives or require making objectionable moral judg-ments about who is and who is not deserving of assistance.

1. Introduction

According to Rawls’s theory of justice, once the requirements of the FirstPrinciple of Justice – the Equal Basic Liberties Principle – have beensatisfied, and once Fair Equality of Opportunity exists, then the DifferencePrinciple comes into play. This principle requires that the basic structureof a society be organized so that all social and economic inequalities max-imize the lifetime expectations of the society’s least advantaged members(where those expectations are measured in terms of social primary goodssuch as income and wealth).1

But who are the ‘least advantaged’ in Rawls’s theory? In A Theory ofJustice, Rawls does not attempt to provide a single, precise definition of theleast advantaged. Instead, he proposes defining the least advantaged either

RAWLS, THEDIFFERENCE

PRINCIPLE, ANDECONOMIC

INEQUALITY

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WALTER E. SCHALLER

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© 1998 University of Southern California and Blackwell Publishers Ltd.

as those with income and wealth less than that of, say, the average unskilledlaborer (that is, by reference to some particular social position), or as thosewith “less than half of the median income and wealth.”2 In “A KantianConception of Equality,” Rawls suggests defining the least advantaged:

very roughly, as the overlap between those who are least favored by each of the three mainkinds of contingencies. Thus this group includes persons whose family and class origins aremore disadvantaged than others, whose natural endowments have permitted them to fareless well, and whose fortune and luck have been relatively less favourable, all within thenormal range … and with the relevant measures based on social primary goods.3

Finally, in “Social Unity and Primary Goods,” Rawls writes: “the leastadvantaged are defined as those who have the lowest index of primarygoods, when their prospects are viewed over a complete life.” They “are,by definition, those who are born into and who remain in that groupthroughout their life.”4

Several critics of Rawls’s theory have argued that Rawls allows individ-uals voluntarily and deliberately to make themselves members of the leastadvantaged class and thereby eligible for the benefits mandated by theDifference Principle – benefits they do not deserve. Richard Arneson, forexample, asks us to imagine four people, two of whom (Smith and Black)are graduates of elite law schools. While Black chooses a lucrative careeron Wall Street, “Smith opts for the life of a bohemian artist” (whichArneson describes as ‘hand-to-mouth subsistence, work as play’).5

Johnson and Jones, on the other hand, having much less fortunate startingpoints in life, choose to be an unskilled laborer and a Bohemian artist,respectively. Arneson argues that, according to Rawls, Smith is one ofthe least advantaged, which seems counterintuitive, especially when he iscompared to Johnson (the unskilled laborer) who is poor because he hasfew marketable skills. Unlike Smith, Johnson is one of the deserving poor.Arneson writes:

If inequalities that are not voluntarily chosen are the primary subject of justice, then prin-ciples of justice scanning society for inequalities ought to register as problematic the inequal-ities in the opportunity sets faced by Black and Smith on the one hand and by Johnsonand Jones on the other. If there emerges an inequality in the lifetime primary goods shareenjoyed by Smith as compared to what Black gets, or by Jones as compared to Johnson,these are not the sorts of inequalities with which the theory of justice is primarily concerned.6

I shall call this the Argument from Voluntary Choice.In his article, “Discussions Defining the Least Advantaged,” Roy

Weatherford raises two related objections to Rawls’s account of the leastadvantaged.7 To illustrate his objections, Weatherford imagines a sadcharacter named Reginald P. Gosnell who, although he is “born to com-fort” and is “physically attractive and both luckier and brighter than

370 PACIFIC PHILOSOPHICAL QUARTERLY


average,” nevertheless “refuses to apply himself at school and is a habitualtruant”; “he ends his life suffering the ravages of social diseases and seri-ous addictions, living in poverty in the worst part of town.”8

1.1 THE MORAL DESERT OBJECTION

According to Weatherford, Rawls puts forward two incompatibleaccounts of the least advantaged. In A Theory of Justice, the least advan-taged are defined “solely in terms of their current economic condition,”whereas in “A Kantian Conception of Equality” (KCE) Rawls presentsa moralistic, desert-based account which defines the least advantaged interms of the three contingencies (natural endowment, social circum-stances, luck) that have brought them to their present state and whichtherefore make them the ‘deserving poor.’ Thus, in Theory, “to say thata person is one of the least advantaged is just to say that x is poor, whilefor the new conception in KCE it is to say that x is poor for reasons, F,G, and H.”9

Weatherford argues that on the Theory account Reggie qualifies as oneof the least advantaged (because his income is so low) but not accordingto “A Kantian Conception of Equality” (because Reggie is not one of the‘deserving poor’). Weatherford appears to regard the KCE account assuperior (albeit with certain reservations) because it “accounts for howone came to be” one of the least advantaged and thus makes it a matterof moral desert.10 The KCE account excludes the ‘undeserving poor.’

1.2 THE INTRUSIVENESS OBJECTION

But if membership in the class of the least advantaged is determined byone’s reasons for being poor (as Rawls suggests in KCE), then it will benecessary to determine which persons are morally culpable for theirpoverty and which are not. This would be not only difficult to do butalso quite intrusive and judgmental, according to Weatherford.11

Since the contingencies are logically independent, we will need three search procedures: onefor family origin, one for natural endowment, and one for luck and fortune. Each of thesefactors requires a great deal of personal information to test its application to an individual.If we established a bureau to identify the new class of least advantaged, it would have tobe far more judgmental, since in each case it would have to decide if a person really hadbeen unlucky, if he was really stupid or just lazy, and so on.12

2. The Difference Principle and the Least Advantaged

How valid are these criticisms of the Difference Principle? I shall arguethat these objections overlook the fact that the Difference Principle applies



only to representative persons – to the ‘least advantaged representativeperson,’ or LARP – not to named individuals, and so it does not havethe objectionable implications alleged by the critics. Contrary to the sug-gestion of these critics, the Difference Principle is not supposed to besensitive (or responsive) to the special needs of particular individuals.13

2.1 VOLUNTARY CHOICE AND THE LEAST ADVANTAGED

Turning to the Argument from Voluntary Choice, it is important that theDifference Principle applies only to the lifetime expectations of the leastadvantaged representative persons:

[E]xpectations are defined as the index of primary goods that a representative man canreasonably look forward to. I assume that it is possible to assign an expectation of well-being to representative individualsholding these [social] positions. This expectation indicates their life prospects as viewed from

their social station (emphasis added).14

In the first instance, therefore, the Difference Principle does not requirethat any particular person’s lifetime expectations be maximized, onlythose of the least advantaged representative person. Smith’s prospects,viewed from the perspective of his ‘social station’ – as a law-school grad-uate – are far above the national median; they are not the prospects ofone of the least advantaged. The same point applies to the dissoluteReginald P. Gosnell. Weatherford says that Reggie was “born to comfort”and is “both luckier and brighter than average” and that he is now livinga wretched life as the result of his voluntary choices. The prospects orlifetime expectations of persons like Reggie – people with his intelligenceand family background – are far from bleak.

Second, even in Theory Rawls does not, contra Weatherford, define theleast advantaged (representative person) in terms of ‘current economiccondition.’ Although Rawls does mention the possibility of defining theleast advantaged “with no reference to social position” but simply in termsof income and wealth, nonetheless what is to be maximized are the lifetimeexpectations of the representative person. Even if we allowed (for the sakeof argument) that Smith and Reginald are among the least advantaged,it does not follow that their lifetime expectations or income must beincreased at all. The Difference Principle does not require maximizing thelifetime prospects of all individuals who are among the least advantaged;it only requires maximizing the prospects of the representative least advan-taged person. Policies are easily imagined that would benefit the typicalleast advantaged person but not people like Smith and Reggie (perhapsbecause they choose not to take advantage of those policies). (That theDifference Principle applies only to representative persons is one reason



why it needs to be supplemented by a guaranteed ‘social minimum’ whichaddresses the basic needs of individuals. See note 30 below.)

Third, the Difference Principle applies to the lifetime expectations offuture as well as present-day LARPs.15 Policies that would maximallybenefit the present-day LARPs might worsen the prospects of futuregenerations of the least advantaged (by reducing the savings rate, forexample). So even if it were true that the best way to maximize the lifetimeexpectations of the present generation of least advantaged persons is bygiving them cash grants, that is not necessarily (or obviously) the beststrategy for improving the lifetime expectations of the least advantagedof future generations.16

In short, since the Difference Principle applies to the lifetime expec-tations of representative persons in all generations, it is not vulnerable tothe Argument from Voluntary Choice. For Rawls, a person’s ‘lifetimeexpectations’ are determined not simply by his choices (e.g., whether towork or not) but by what persons with his natural endowment and in hissocial circumstances can reasonably expect over a lifetime (where this isdetermined by the typical choices of similarly-situated and similarly-endowed people). It is therefore hard to see why Arneson thinks thatSmith (the law-school graduate turned poor Bohemian artist) is one ofthe least advantaged according to Rawls. Even by Arneson’s own under-standing of the least advantaged (drawn from Rawls’s account in “SocialUnity and Primary Goods”), Smith does not belong. Arneson writes:“According to Rawls, the worst off class in society comprises thoseindividuals who both (1) are born into that class whose members havethe smallest share of primary goods and (2) remain in that class through-out their lives.”17 If we suppose that Smith had been born into a wealthyfamily (thus strengthening the intuition that he is not one of the ‘deservingpoor’), he satisfies only the second of those two conditions. If we suppose,alternatively, that Smith was been born into a poor family, went to lawschool on a scholarship, and then turned his back on the law (therebysatisfying the second condition), Arneson would have a better example.For it would certainly seem that Smith has (and has had) enough advan-tages that, despite his background, he is not one of the least advantaged.But Rawls would not disagree. The fact that Smith was able to completelaw school (and college prior to that) indicates that his disadvantagedfamily background did not prevent him from being able to capitalize onhis above-average natural endowment. Even if he had chosen not to attendlaw school, his lifetime expectations would presumably have been above-average because of his intellectual abilities. In short, if Smith is poor (interms of his ‘current economic condition’), it is not because of any of thethree contingencies – natural endowment, social circumstances, and luck– that Rawls declares are “arbitrary from a moral point of view.”18 Thereis, therefore, no reason to suppose that Rawls must classify Smith as oneof the least advantaged.19



Finally, in Political Liberalism Rawls says that leisure can be considereda primary good. Persons who choose not to work, or to work only part-time, preferring instead to surf off the coast of Malibu, and who therebyhave a very low income, do not necessarily have low lifetime expectations;their lives are rich with the primary good of leisure.20

2.2 MORAL DESERT AND INTRUSIVENESS

Would implementing the Difference Principle require policies that areunduly intrusive and judgmental? Would it require (as Weatherfordargues) determining who is morally deserving of assistance and who isnot? Consider the implication Arneson draws from the idea that Smithand Jones (who is as poor as Smith but lacks Smith’s social and educa-tional advantages) are not equally deserving:

Nor should the redistributive institutions of a just society treat the two bohemian artists,Smith and Jones, on a par – for example, with respect to income tax policy. Redistributivepolicies, insofar as they aim to promote equality, should strive for equality in the initialopportunity sets that persons enjoy.21

But I see no reason for thinking that Smith should be taxed at a differentrate from Jones or Johnson (the unskilled worker not by choice) if theyhave the same income (or expenditure).22 For one thing, the DifferencePrinciple is concerned only with lifetime expectations, not with annualincome. As long as there is no practical way to tax lifetime earnings assuch (let alone lifetime expectations), there is no justification for taxingSmith and Jones at different rates just because of differences in theirlifetime expectations, despite their having (let us suppose) identical annualincomes.23 (And if only expenditures or consumption were taxed, thenJohnson and Black might have very unequal incomes but pay the sametaxes because their level of consumption was the same.)

Or suppose that one way of raising the lifetime expectations of theLARPs is through a statutory minimum wage. Again, I see no reason forsupposing that only ‘deserving’ individuals should be covered by suchlegislation, that employers should (ceteris paribus) be able to pay peoplelike Smith wages lower than they pay more ‘deserving’ employees. Forone thing, if Smith could earn more than the minimum wage if he sochose (and if he could so choose) but he prefers low-wage work, why doesthat make him any less ‘deserving’ of a guaranteed minimum wage? Tobe sure, he is not in danger of being exploited (as Jones and Johnson are)since he has the skills to command a higher wage; nevertheless, Smithmay have good prudential reasons to choose such labor (low-wage jobsare often ‘easy entrance, easy exit’ jobs). Second, if high-skilled workerswere not covered by minimum wage laws, then (a) it would be necessaryto determine on a case-by-case basis who was high-skilled and who was



not (and was thus in need of legal protection) and this would be undulyintrusive, and (b) there would be the danger that skilled workers likeSmith would be preferred by low-wage paying employers since they couldbe hired more cheaply than low-skilled workers (who would have to bepaid the minimum wage).

In addition, remember that Rawls is a skeptic about desert. His argu-ment that no one deserves his or her natural endowment or family back-ground is purely negative: it is meant to rule out appeals to (moral)deservingness as justification of inequalities in the distribution of primarygoods.24 It would therefore be perverse, from Rawls’s point of view, toargue that Smith should not be covered by minimum-wage legislationbecause he is ‘undeserving’ of such protection.

Much of the worry about ‘undeserving’ individuals (such as Reginaldand Smith) receiving unmerited benefits appears to rest upon the assump-tion that the Difference Principle will be implemented via unconditionalincome transfers such that if Smith were one of the least advantaged, hewould be entitled to a handout the same as any ‘deserving’ member ofthe least advantaged group (such as Johnson).25 But even if we grant thatSmith is not deserving of any handouts, it does not follow that the‘undeserving poor’ (like Smith) should be treated differently from the‘deserving poor’ (like Johnson) by all policies designed to satisfy theDifference Principle. In some cases there may be pragmatic reasons notto distinguish the ‘deserving’ from the ‘undeserving’ poor (e.g., it may betoo expensive, or too intrusive). In other cases – e.g., minimum wage legis-lation, or employment subsidies (which I shall discuss below) – where noone receives ‘something for nothing,’ it does not seem unfair for the ‘unde-serving’ poor to benefit from those policies.

2.3 EX ANTE VERSUS EX POST EXPECTATIONS

Should the idea of ‘lifetime expectations’ be understood ex ante or expost? In Realizing Rawls, Thomas Pogge argues that since the parties inthe original position could not be indifferent to how poorly their livesmight turn out, expectations should be defined in an ex post fashion,except in “cases of voluntary exposure to risk,” when expectations shouldbe determined ex ante:

My conjecture, then, is that when the lexical ordering of the principles applies, first-principlegoods and opportunities should always be defined in an ex post fashion, while all othergoods should be defined in an ex ante fashion for cases of voluntary exposure to risk andin an ex post fashion otherwise.26

(Pogge focuses on involuntary risk-taking in justifying an ex post perspec-tive, but he could equally well have focussed more generally on bad luckand misfortune – the third contingency cited by Rawls.)



But if the least advantaged are defined as representative persons, thereis no need to choose between an ex ante and an ex post perspective. Forrepresentative persons, there is no distinction between expected and actualoutcomes. The primary goods expectations of an actual person are whatan average or ‘representative person’ would acquire over a lifetime. (I takeit that this is what Rawls means when he talks about the expectations ofrepresentative persons being properly ‘aggregated.’)27

Pogge worries in particular about cases in which people gamble awayall their assets. Their expectations, he says, should be determined ex ante(prior to their winning or losing). But there is less of a problem here thanPogge supposes. Even if the wealthy lawyer Walton loses all of her finan-cial assets in an exuberant Las Vegas weekend, she does not therebybecome one of the least advantaged. Since her lifetime expectations aredetermined by her natural endowment and social background, her gam-bling losses worsen her ‘current economic condition’ but they do notnecessarily diminish her ‘lifetime expectations’ sufficiently (even from anex post perspective) to make her one of the least advantaged (for herearning power presumably has not been diminished).28 (True, her expectedlifetime wealth has been diminished, but that is unlikely to be sufficientto drop her into the class of the least advantaged, given her continuedability to practice law.)

On the other hand, suppose that the indigent Kramer one day wins $20million in his state’s lottery. Does that affect his ‘lifetime expectations’?(Suppose for the sake of argument that the Difference Principle appliesto individuals and not just to representative persons.) If the likelihood ofwinning his state’s lottery was one in one million, then his ‘expectedwinning’ was only twenty dollars. From an ex ante point of view – thepoint of view that Pogge suggests for this kind of case – his situation hasnot changed: he is poor. But this misses the fact that, ex post, he is amultimillionaire. To adopt an ex ante perspective on voluntary risk-takingmisses the fact that his actual economic condition has changed drastically.In determining what individuals are entitled to, therefore, neither an exante nor an ex post perspective alone is adequate. The fact that Kramer’sactual lifetime share of primary goods is far above the average is surelyrelevant to determining his entitlements after he wins the lottery (thus, apure ex ante perspective is inadequate), but it is also relevant that priorto winning the lottery he was poor (a fact that is overlooked from an expost perspective). Pogge is right to say that people care about how theirlives actually end up, not just what they can reasonably expect, but theyalso care about how their lives are going from moment to moment. Whatthis shows is that the Difference Principle, because it is addressed solelyto lifetime expectations, cannot be the sole criterion for what individualsare entitled to at any particular point in their lives.29



3. Implementing the Difference Principle and the Social Minimum

Because the Difference Principle requires maximizing the lifetime expecta-tions of the least advantaged representative person, I have argued that itis not vulnerable to the Argument from Voluntary Choice or to theIntrusiveness and Moral Desert Objections. The (lifetime) expectations ofrepresentative persons are negligibly affected by the choices made bysingle individuals. But in Political Liberalism Rawls says that guaranteeinga ‘social minimum’ could have lexical priority over even the First Principleof Equal Basic Liberties.30 It might therefore be thought that the Problemof Voluntary Choice reappears in the case of the social minimum.

Rawls says little about how the social minimum is to be implemented,beyond mentioning the possibility of a negative income tax, but the prob-lem with guaranteeing everyone a minimum income – especially an incomeat or above the poverty line31 – is the danger that it would have severework disincentives. The more income to which individuals are entitledwithout working, the fewer hours they will tend to work; reductions intheir labor force participation will in turn reduce overall productivity,thereby also lowering the tax base and tax revenues.32

Nevertheless, the social minimum is a necessary component of Rawls’stheory of justice. Even if the lifetime expectations of the least advantagedrepresentative person are as high as possible (as required by the DifferencePrinciple), in the absence of a social minimum the actual (annual,monthly) income of some individuals fall below the poverty line (becauseof illness, unemployment, disability, loss of spousal earnings, etc.), evenif their lifetime expectations are above-average.33 To focus exclusivelyupon lifetime expectations risks disregarding how poorly individuals mayfare during some segment of their life. The role of the social minimum,therefore, is to ensure that no one’s basic needs cannot be satisfied.

Recent writings on welfare reform and income inequality contain avariety of proposals for guaranteeing a social minimum (a minimumincome) and for raising the income of the least advantaged (as mandatedby the Difference Principle) without creating serious work disincentivesor running afoul of any of the other objections discussed above, in partic-ular, the Argument from Voluntary Choice. The underlying goal of manyof these proposals is, in the words of David Ellwood, to “make workpay,”34 not to provide an alternative to work. Rather than regarding thesocial minimum as an unconditional income guarantee (an entitlement),they propose programs that would enable more people to work and towork at jobs that pay enough to support a family at or above the povertyline. In many cases, their goal is to create incentives to work so that indi-viduals (and families) can be self-supporting.35 In the remainder of this



section I shall briefly describe several such programs. My purpose is notto defend the adequacy of any one program (or set of programs) in termsof the Difference Principle and the guarantee of a social minimum;instead, my intention is to suggest that, from a policy point of view, thereare ways of addressing the objections raised by Arneson and Weatherford.

3.1 It is sometimes argued that the minimum wage should ensure thatanyone who works full-time and year-round is able to earn more than apoverty-level income. In The Forgotten Americans John Schwartz andThomas Volgy argue that the minimum wage should be high enough toenable a single individual (without children) “working moderately longerthan the standard workweek (say, forty-five hours a week) to attain self-sufficiency” and that ‘self-sufficiency’ requires about 150 percent of theofficial poverty budget.36

But many economists argue that the minimum wage has poor ‘targetefficiency’ – its benefits are not largely limited to low-income families –and it may even cause a loss of low-wage jobs.37 In his book RewardingWork: How to Restore Participation and Self-Support to Free Enterprise,Edmund Phelps argues that a system of employment subsidies would besuperior to the minimum wage as a means of raising the income of low-wage workers. Workers who would otherwise earn, say, only $4.00 perhour should receive an additional $3.00 per hour (through a governmentsubsidy paid to their employer) for a total wage of $7.00 per hour (andan annual wage of about $14,000 for full-time, year-round workers).Higher wages (up to perhaps $12.00 per hour) should be subsidized to alesser extent. On Phelps’s illustrative subsidy schedule, hourly wages of$7.00, $6.00, and $5.00 would be supplemented by a subsidies of $1.12,$1.65, and $2.29 per hour, respectively. At the top, an hourly wage of$12.00 would be subsidized $0.06.38

Phelps argues that “from a social standpoint, work is now seriouslyundervalued by the marketplace, especially at the low end where the private reward to employment has fallen to a dangerous level.”39

Distinguishing between ‘private productivity’ (how valuable employeesare to their employers) and ‘social productivity’ (the benefits to societythat result from increased employment among low-wage workers and theunemployed), Phelps argues that “there are external benefits for the restof the citizens from one’s ability to support oneself and to exerciseresponsibility as a citizen, community member, parent, and spouse.”40

Because it responds only to private productivity, the market does notproperly value the work of low-wage (low-skilled) workers: “these wagesdo not take into account the benefit to the rest of society from employingeach additional low-wage worker.”41

Employer subsidies would have several positive effects. First, and mostobviously, they would increase the income of low-skilled workers.



Individuals whom private employers would be willing to pay only $4.00per hour (or about $8,000 per year) would earn $14,000 if they workedfull-time, year-round. (The official poverty line for a family of three in1994 was about $12,000; for a family of four, just over $15,000.)

Second, wage subsidies would increase the number of jobs for low-skilled workers as well as the work force participation of low-skilledworkers – the least advantaged – especially if the minimum wage wererepealed (as Phelps favors).42 Jobs for which employers were unwilling topay the minimum wage could be filled by workers who had been unwillingto take those jobs at the lower ‘market rate’ but who would be willing totake them at the higher, subsidized rate.

3.2 On Phelps’s sample subsidy schedule, families with two or morechildren might still remain below the poverty line, especially if only onemember is employed. (It is also doubtful that the minimum wage can behigh enough to support a single worker with children.) Additional benefitsfor single parents with children would then be necessary. According to the Child Support Assurance System (CSAS) proposed by IrwinGarfinkel, non-custodial parents would be required to pay – via payrolldeduction – a percentage of their income for the support of their children.In cases where the non-custodial parent’s contribution fell below a certainlevel (e.g., $2,000–3,000 for one child), the state would make up the differ-ence. All single parents would be eligible to participate in this program;it would not be limited to the poor.43

3.3 In Starting Even: An Equal Opportunity Program to Combat theNation’s New Poverty,44 Robert Haveman argues that the current social-welfare system should be replaced by five complementary programs. Inaddition to employment subsidies and a universal child support system,he argues for:

(1) A universal demogrant between one-half and two-thirds of thepoverty line for families (or tax units), adjusted for family income.This would be a refundable tax credit which would provide aminimum annual income even to families with no earned income.

(2) A standard benefit retirement program which would provide allworkers at retirement with a benefit package above the poverty line;in addition, tax-favored private annuities would encourage andenable people to supplement the uniform retirement benefits guaran-teed to everyone.

(3) A universal personal capital account for youths which would provideeach eighteen year-old with a personal capital account which couldbe used for education, medical care and insurance, job training, orsaved for retirement.45



The above proposals seek to ensure that all working-age persons havean opportunity for at least an above-poverty level income without therebycreating significant work disincentives. Phelps argues that wage subsidieswould not decrease work effort (the number of hours workers are willingto work) since the subsidy is paid to the employer, not the employee, andonly for full-time workers. Workers would have no incentive to choosejobs that pay $4.00 per hour over jobs that pay $7.00 per hour just becausethe subsidy for the latter job pays them only an additional $1.12 whereasthe former is subsidized by $3.00 per hour. In this respect, a wage subsidydiffers from the Earned Income Tax Credit (EITC) which is reduced (ata rate of about $.20 on the dollar) as the person (with two children) earnsmore than $12,650 (in 1997). Since the EITC is tied to annual income,not to hourly wages, how much one is eligible to receive is sensitive tohow many hours one has worked (holding hourly wages constant).

Garfinkel’s child-support system would not create a work disincentivefor the single (custodial) parent since the amount she receives would notbe income-tested; it would not be reduced if she worked, or worked morehours or at higher pay, although it would be taxed (see note 32 above).

One can imagine other policies that would increase wages, especiallyfor low-wage workers: increasing the percentage of the work force thatis unionized, for example. Lawrence Mishel and Jared Bernstein calculatethat between 1983 and 1987 unions raised the wages of union membersin the lowest income quintile by 28 percent and the wages of members inthe second lowest quintile by over 16 percent. Unionization increased theaverage wage of all workers in the bottom two income quintiles by 6.6percent and 4.9 percent, respectively, and in the middle quintile by 6percent. (In 1989, a blue-collar union worker’s total hourly compensationpackage was nearly 68 percent higher than that for a non-union blue-collar worker.)46 Mishel and Bernstein estimate that (controlling for expe-rience, education, region, industry, occupation, and marital status), unionmembers (or workers covered by collective-bargaining agreements) earnednearly 20 percent more in 1991 than their non-union counterparts.47 Theyconclude that “unionization is a force that moderates the wage gapbetween high-wage and middle-or low-wage workers.”48

In “How Much Has De-unionization Contributed to EarningsInequality?” Richard Freeman argues that had union density in 1988remained at its 1978 level (between 1978 and 1989 the percent of the non-agricultural work force that was unionized dropped from 25 percent to16 percent), the wage differential between white-collar and blue-collarworkers would have been 4–5 percent less than it actually was (and 1–4percent less between college and high-school graduates). Freeman arguesthat “40 to 50 percent of the rise in the white-collar premium and 15 to40 percent of the rise in the college premium are attributable to the fallin union density.”49 (Unionization as a way to benefit low-wage workers



is obviously immune to the Argument from Voluntary Choice and toWeatherford’s objections about deservingness.)

Furthermore, a higher rate of inflation could be tolerated for the sakeof a lower unemployment rate. Economists Rebecca Blank and AlanBlinder write: “Inflation redistributes away from the fourth quintile towardthe lowest quintile”; in contrast, “high unemployment redistributes incomeaway from the bottom two quintiles and toward the top quintile.”50

Employment subsidies and the minimum wage (as well as strengthenedunions), because they link benefits to work, reflect Rawls’s idea of societyas a cooperative venture for mutual advantage.51 On the one hand, thesociety seeks to ensure that all able-bodied citizens are able to be self-sufficient through work; on the other hand, those who are able must bewilling to work as a condition of receiving certain benefits. Rawls neednot argue that those who are willing to work are therefore ‘deserving’ ofreceiving an above-poverty income in return. He could simply appeal tothe idea of reciprocity:

the difference principle expresses a conception of reciprocity. It is a principle of mutualbenefit … [I]t is clear that the well-being of each depends on a scheme of social cooperationwithout which no one could have a satisfactory life … [W]e can ask for the willing cooper-ation of everyone only if the terms of the scheme are reasonable.52

If there are people (like Smith) who could be self-sufficient but choose notto be, then their poverty is the result of their voluntary choice; it is not thefault or responsibility of the basic structure. (I have said nothing about thedisabled, the mentally handicapped, etc., only because they do not raisethe problems posed by Arneson and Weatherford. I do not mean to implythat they should be treated the same as, and are entitled to no more than,individuals who are indisputably able to work and be self-supporting.)

It might be argued that (some) universal programs (and the demograntproposed by Haveman in particular) are inconsistent with the aboveargument from reciprocity. If able-bodied individuals like Smith choosenot to work (except in ways that provide inadequate income), then theidea of reciprocity is flouted if they are nonetheless guaranteed any incomeat all. Smith does not deserve any assistance. In response, remember firstthat Rawls is skeptical about the idea of deservingness. If some combi-nation of policies – perhaps including a universal demogrant – were moresuccessful than any other in raising the lifetime expectations of theLARPs, the Difference Principle would be satisfied. That principle doesnot require policies that benefit only the least advantaged; it is unlikelythat any redistributive policy will benefit only the least advantaged (orall of the least advantaged). (Recall also that Rawls initially states theDifference Principle as requiring that social and economic inequalities beto ‘everyone’s advantage.’)53



Second, universal programs avoid the intrusiveness objection. Since every-one is eligible, there is no need to try to determine who is ‘deserving’ andwho is ‘undeserving.’ In the case of employer subsidies, there would be noneed for intrusive investigations whether a worker really was ‘low-skilled’or why her skills were so low. Smith as much as Johnson would be eligibleto receive subsidized wages (if they chose to work full-time and year-round).But it is of course the universal demogrant (and perhaps also Haveman’sproposal of a personal capital grant) that raises the question of deservingnessmost acutely (since both are unconditional). Even setting aside his desert-skepticism, two responses are open to Rawls. The first is to argue that theparties in the original position would conclude that everyone should beguaranteed some income regardless of their ability or willingness to work.(But I would suspect that this matter is too specific to be addressed in theoriginal position. How much a society could guarantee each of its citizenswould depend upon such contingent facts as the wealth of the society andits place in the global economy.) The second is that the argument for thedemogrant (and personal capital account) is purely empirical and practical:it is the best way to solve a problem that must be solved (namely, how mosteffectively to implement the Difference Principle). If it turned out that theLARPs were made worse off because too many people chose to live offtheir demogrant (and if the personal capital account did not result in, forexample, increased economic productivity), then the demogrant would needto be reduced (or even eliminated). But, to conclude this point, nothing inRawls’s theory appears to prohibit conferring unearned or ‘undeserved’benefits on individuals like Smith; the only question is whether doing so isin the best interest of the least advantaged representative person.

There is thus no justification for Weatherford’s worry that “we willneed three search procedures: one for family origin, one for naturalendowment, and one for luck and fortune”54 – procedures likely to beoverly intrusive. Social-science research should be able to determinewhether a given policy (or set of policies) not only raises the wages ofthose with incomes less than half the median but also increases the lifetimeexpectations (or even just the starting wages) of, say, persons with onlya high-school diploma or of persons from families with incomes less thanhalf the national median (or both). In short, it should be possible to deter-mine whether various programs at least partially fulfill the requirementsof the Difference Principle without intrusive and perhaps expensive‘search procedures’ and without the necessity of making impertinentmoral judgments about individuals (and their ‘deservingness’).55

4. Conclusion

Rawls’s Difference Principle and the guarantee of a social minimum are not susceptible to the Argument from Voluntary Choice or to the



Intrusiveness and Moral Desert Objections. Since the Difference Principlerequires maximizing the lifetime expectations of representative persons,it implies nothing about what specific individuals are entitled to. It istherefore not possible for individuals simply by their voluntary choicesto make themselves eligible for benefits they do not ‘deserve.’ The ‘lifetimeprospects’ of individuals are determined by such things as their educa-tional attainment (as a proxy for ‘natural endowment’), not by the specificchoices that determine their ‘current economic condition’ (as Weatherfordput it).

The social minimum differs from the Difference Principle in beingaddressed to the needs of individuals, not representative persons.Nevertheless, properly-designed income-support programs would be ableto ensure that able-bodied citizens have the opportunity to satisfy (atleast) their basic needs. Given the heterogeneity of the reasons why indi-viduals would need such assistance, it is implausible that any one programwould alone be satisfactory. In some cases (e.g., the disabled), cashassistance would be most effective. But in other cases, where individualsare able to work but lack the skills to earn a decent wage, programsdesigned to ‘make work pay’ (e.g., employer subsidies) would appear tobe a more effective way to raise the income of those individuals withoutcreating serious work disincentives. These could be supplemented wherenecessary by other programs (e.g, assured child support, universal healthinsurance, a personal capital grant).

The Difference Principle requires that inequalities be to the maximaladvantage of the least advantaged (now and in the future). The appro-priateness of the programs discussed above is to be judged, therefore, bytheir success in raising the lifetime expectations of the least advantaged,not by the extent to which they benefit all and only those who are ‘deserv-ing’ of assistance. Obviously, the more a program encourages people notto work, or to work fewer hours, or to bypass educational opportunities,the less effective it is likely to be in maximizing the lifetime expectationsof the least advantaged. Nothing is gained by increasing the number ofpeople who are unable to be self-supporting. For that reason it is necessaryto take account of any proposed policy’s impact on the choices that the‘more advantaged’ are likely to make if that policy is implemented. Butthe primary motivation for doing so is not a moralistic concern aboutdesert (as Weatherford argued in reference to the KCE account of theleast advantaged) but simply a pragmatic interest in the effectiveness ofthe policy in benefiting those who have the worst lifetime prospects becauseof one or more of the three contingencies that Rawls says are ‘arbitraryfrom a moral point of view.’ Suppose that employment subsidies, forexample, were an effective way to raise the lifetime expectations of low-skilled workers. If the wages of some law-school graduates were subsidized(because they chose low-skilled jobs), that would not be inherently



objectionable. It would therefore be necessary neither to interfere withindividuals’ free choice of occupation nor to make invidious judgmentsabout deservingness (requiring objectionable violations of privacy).

Department of PhilosophyTexas Tech University

NOTES

1 I shall not discuss the problem of inequality of wealth, although in the United Stateswealth inequalities are far greater than income inequalities. In 1993, the average net worth(including home equity) of households in the bottom income quintile was $4,249 (7.2 percentof total net worth); for the richest income quintile, average net worth was nearly $119,000(44.1 percent of the total); for the second lowest income quintile $20,230 (12.2 percent oftotal net worth) (“Asset Ownership of Households: 1993”, Current Population Reports,P70–47, US Department of the Census). See also Lawrence Mishel and Jared Bernstein,The State of Working America, 1992–93, Economic Policy Institute Series (Armonk, NY:M. E. Sharpe, 1993), pp. 254–5; Edward Wolff, “How the Pie is Sliced: America’s GrowingConcentration of Wealth,” The American Prospect, No. 22 (Summer 1995), pp. 58–64.

2 “One possibility is to choose a particular social position, say that of an unskilledworker, and then to count as the least advantaged all those with the average income andwealth of this group, or less. The expectation of the lowest representative man is definedas the average taken over this whole class. Another alternative is a definition solely in termsof relative income and wealth with no reference to social position. Thus all persons withless than half of the median income and wealth may be taken as the least advantaged seg-ment. This definition depends only upon the lower half of the distribution and has the meritof focusing attention on the social distance between those who have the least and the averagecitizen. Surely this gap is an essential feature of the situation of the less favored membersof the society,” A Theory of Justice (Cambridge: Harvard University Press, 1982, p. 98).

3 “A Kantian Conception of Equality,” Cambridge Review (1975), p. 96.4 “Social Unity and Primary Goods,” in Utilitarianism and Beyond, Amartya Sen and

Bernard Williams (eds.) (Cambridge: Cambridge University Press, 1982), p. 164.5 Richard Arneson, “Primary Goods Reconsidered,” Nous 24 (1990), p. 443.6 “Primary Goods Reconsidered,” p. 443. “[M]embership in the least advantaged class

appears to be settled purely in terms of the amounts of primary goods that individuals enjoyover the course of their lives, rather than the amounts they have the opportunity to enjoy.This would appear to identify Smith in the example above as a member of the least advan-taged class – implausibly, in my view” (p. 444). If this were taken literally (instead of asapplying only to representative persons, as I shall argue below), it would be impossible todetermine whether an individual was one of the least advantaged until the time of his death.See also “What Do Socialists Want?” Politics and Society 22 (1994), pp. 549–67; reprintedin Equal Shares: Making Market Socialism Work, Erik Olin Wright (ed.) (London: VersoPress, 1996).

7 Roy Weatherford, “Discussions Defining the Least Advantaged,” in Equality andLiberty, J. Angelo Corlett (ed.) (New York: St. Martin’s Press, 1991), pp. 37–45.

8 ibid., pp. 40–41.9 ibid., p. 42.

10 ibid., p. 38. Weatherford writes (about the KCE account): “Moral desert has returnedto Rawlsian liberalism, introduced into the standards for identifying the least advantaged,who then serve as the touchstone and reference mark for assessing social changes” (p. 43).



11 ibid., p. 42.12 ibid., p. 42.13 Is this an objection to Rawls’s theory? I would argue that the Principle of Need, not

the Difference Principle, is supposed to be sensitive to the particular needs of specific individ-uals. To get ahead of my argument, adults who are able to work and be financially self-sufficient should ordinarily be expected to work; individuals who are unable to work – whoare disabled, mentally ill, etc. – should have at least their basic needs taken care of, even ifthat requires more resources than, say, the least advantaged representative person (who isable-bodied) is entitled to.

14 A Theory of Justice, pp. 64, 95; cf. 92, 93. “In applying the two principles of justice tothe basic structure of society one takes the position of certain representative individuals andconsiders how the social system looks to them. The difference principle … requires that …social and economic inequalities must be in the interest of the representative men in all rele-vant social positions. The perspective of those in these situations defines a suitably generalpoint of view” (pp. 95–6).

Arneson also takes notice of this fact (“Primary Goods Reconsidered,” p. 443) but it doesnot seem to moderate his objections to Rawls, which consistently involve examples ofindividuals (and how their voluntary choices affect their lifetime expectations). I am arguingthat the problem of voluntary choice is largely avoided because the Difference Principleapplies to representative persons; it in effect abstracts from the choices that individualsmake. If most lawyers chose to be public defenders, to practice public-interest law, or tobecome local politicians, then the ‘lifetime expectations’ of lawyers would be much lowerthan they are now.

15 A Theory of Justice, p. 285.16 Nevertheless, it is true that, as a result of his (voluntary) choice, Smith is poor. In terms

of his current income and wealth, he surely falls below one-half of the median (to pick oneof Rawls’s proposed criteria for the least advantaged). What I shall argue, however, is thatthis fact does not support the objection to the Difference Principle, namely, that it rewardsthe ‘undeserving’ poor. For the Difference Principle itself says nothing about what Smithas an individual is entitled to. Since the object of the Difference Principle is to improve thelifetime expectations of both present and future LARPs, we have grounds for understandingRawls’s discussion of the least advantaged in Theory as consonant with his later discussions(in KCE and in “Social Unity and Primary Goods”). Since ‘current economic condition’does not determine who is one of the least advantaged, it is not true that individuals canmake themselves members of that class simply by refusing to work.

17 “Primary Goods Reconsidered,” p. 442; cf. Rawls, “Social Unity and Primary Goods,”p. 164.

18 A Theory of Justice, p. 72.19 While I think it is clear that Rawls would deny that Smith is one of the least advantaged

and therefore does not constitute an objection to his account of the least advantaged or tothe Difference Principle, Weatherford’s example of the dissolute Reginald P. Gosnellpresents a more complicated case. For one thing, despite having a privileged ‘starting point’in life, Reggie’s life has turned out quite poorly. He is plagued by drug addiction, homeless-ness, disease, etc. Nevertheless, I do not think that Mr. Gosnell’s case poses any difficulttheoretical problems for Rawls (however difficult it may be to determine how such personscan be helped, a problem not peculiar to Rawls’s theory). Even if we say that Reggie is notone of the least advantaged because he has negligently squandered his natural and socialadvantages, it does not follow that justice prohibits him from receiving particular benefits(e.g., drug rehabilitation). Realizing that few people are perfectly prudent, Rawls couldargue that the requirement of a social minimum should include the provision of assistance(e.g., medical care) to people who would otherwise be unable to return to being self-supporting. (We might think of such assistance on the model of medical insurance whichprovides benefits even when the injury is our own fault.)



In arguing that Smith’s academic credentials show that he is not one of the least advan-taged, I am not suggesting that it is educational attainment per se that determines one’slifetime expectations. Rather, academic achievement is evidence of one’s ‘natural endow-ment.’ (Educational accomplishment can thus serve as one proxy for, or measure of, one’s‘natural endowment.’) I am indebted to Timothy Hinton for forcing me to clarify this point.

20 Political Liberalism, pp. 181–2. Arneson also points out that Rawls now includes leisureas a primary good, but he denies that that is sufficient to differentiate Smith from Johnson.“Notice that the Smith–Jones–Johnson–Black case developed above still stands as a counter-example even if leisure is added to the list of primary goods. The force of the counter-example is to insist that distributive justice should be concerned with the inequalities in theopportunity sets that individuals face, rather than with what use presumably rational individ-uals make of their opportunities” (“Primary Goods Reconsidered,” p. 444).

I take Arneson’s objection to be that even if leisure is a primary good, Jones and Johnsonhave fewer opportunities than do Smith and Black. But notice that Johnson does not havethe same opportunity for leisure that Smith does. Adding leisure to the list of primary goodsthus does not enhance Johnson’s lifetime expectations for primary goods.

Suppose Smith chose to practice law one month per year and to paint recreationally theother eleven months. He might then have the same annual income as Johnson but his (oppor-tunity for) leisure would be much greater (since Johnson lacks the opportunity to surviveon part-time work). Therefore, even if Smith and Johnson have the same income, we havegrounds for distinguishing between them since Smith’s (opportunity for) leisure (and thusfor leisure plus income) is much higher than Johnson’s.

This argument rests on the assumption that becoming unemployed (or underemployed)does not necessarily increase one’s amount of leisure. (See Theory, pp. 181–2, no. 9.) IfJohnson suddenly lost his job, his share of primary goods would diminish even though hewould enjoy a great increase in ‘free time.’ Smith has eleven months of leisure because hecould work full-time (as a lawyer) if he so chose. (Arneson could make the same point interms of opportunity for welfare: if Johnson’s preference for work is stronger than his prefer-ence for leisure, then being unemployed does not increase his welfare as long as he lacksthe opportunity to be employed.)

21 “Primary Goods Reconsidered,” p. 443.22 See A Theory of Justice, p. 279. Rawls indicates a preference for a flat or proportional

expenditure (or income) tax over a progressive income tax (except perhaps when the latteris necessary “to preserve the justice of the basic structure with respect to the first principleof justice and fair equality of opportunity, and so to forestall accumulations of propertyand power likely to undermine the corresponding institutions.” For a discussion of themerits of an expenditure tax, see Edward J. McCaffrey, “The Political Liberal Case Againstthe Estate Tax,” Philosophy and Public Affairs 23 (1994), pp. 281–312; “The Uneasy Casefor Wealth Transfer Taxation,” Yale Law Journal 104 (1994), pp. 283–365.

23 If Smith were taxed on his lifetime earnings ability or potential – on his ability to earna corporate lawyer’s salary, for example – then he would be effectively deprived of the free-dom to choose a different, less lucrative vocation since he would be forced to earn at leastsufficient income to pay the taxes on his potential income. Such a tax would obviouslyviolate a basic liberty – the free choice of occupation (Political Liberalism, p. 308).

Conversely, it would be strange to think that ‘overachievers’ – those whose earningsgreatly exceed the lifetime expectations of people with their particular natural endowmentand family or social background – should be taxed at the lower rate that their actual incomewould warrant.

24 A Theory of Justice, pp. 102–4.25 Arneson defends cash assistance on the ground that it allows the recipients the greatest

flexibility: “Any liberal egalitarian theory of justice will surely be predisposed to favor redis-tributive transfers that aid the needy by way of cash transfers rather than any type of aid



in kind. Cash is a maximally flexible asset that limits least the uses to which a recipient canput the aid she is allotted. Other things being equal, cash transfers should do better thanin kind aid both on the score of providing greater freedom to beneficiaries and providinggreater increases to their well-being” (“Egalitarianism and the Undeserving Poor,” Journalof Political Philosophy 5 (1997), p. 347).

While there is no denying that cash is a maximally flexible resource (although Arnesonimmediately admits that one cannot buy a job), nevertheless there are compelling argumentsagainst relying heavily upon cash assistance to implement the Difference Principle and thesocial minimum (see note 32 below). For one thing, it creates (significant) work disincentivesthe higher the benefit level. Moreover, it is unlikely to bring about significant redistributionof income. According to Andrew Hacker, if all incomes over $200,000 were taxed away, thiswould generate new revenue of $103 billion. If that money were distributed to families withincomes less than $35,000, each family would receive (only) $2,173. Hacker concludes: “Soother ways will have to be found to achieve greater equality in incomes and earnings. In theend, there is no substitute for increasing productivity, which would in turn increase economicgrowth. Of key importance is improving labor skills at every level, which will very largelydepend on raising the quality of education from kindergarten through graduate school”(“Unjust Desserts?” New York Review of Books (March 3, 1994), p. 24). Therefore, if directcash transfers can play only a small role in the implementation of the Difference Principle,distinguishing the ‘deserving’ from the ‘undeserving’ poor is not so great a problem.

Economists argue economic growth is crucial but not sufficient. In It Takes a Nation: A New Agenda for Fighting Poverty (Princeton: Princeton University Press, 1997), RebeccaBlank writes: “Wages rose for workers at all wage levels in the 1960s. Each one percentexpansion in the economy over the 1960s was associated with a $2.18 increase in weeklywages after inflation for workers in low-income families” (p. 55). From 1961–69, the econ-omy grew at an average annual rate of 4.3 percent after inflation. During that period, thepercentage of the US population living in families below the official poverty line droppedfrom 22 percent in 1960 to 13 percent in 1970 (p. 54). “Almost all analysts ascribe most ofthis steep decline in poverty to the rapid economic growth that occurred during this period.The war on poverty that occurred in the 1960s was largely fought by the engines of economicgrowth” (pp. 54–5).

But during the 1980s, growth did little to reduce poverty because wages did not alsoincrease. From 1983 to 1989, the economy grew at an average annual rate of 3.7 percent,but during this time “a one percent expansion in the aggregate economy was correlatedwith a $.32 decline in weekly wages for the poorest 10 percent” (p. 56). Workers with theleast education were hurt the most. Mishel and Bernstein report that between 1973 and1991, the average hourly wage of high-school dropouts declined by nearly 23 percent (andby 17 percent from 1979–89); for high-school graduates, it declined over 16 percent overthe 18-year period. Even for college graduates it declined 10 percent (over both periods)but their average hourly wage was still nearly twice the wage of high-school dropouts (TheState of Working America, 1992–93, p. 162). In contrast, Blank reports that in 1994, “menwith post-college degrees experienced a 22 percent increase in their wages since 1979” (ItTakes a Nation, p. 61).

Workers with the least education were also affected the most by unemployment. In 1994,both men and women without a high-school diploma had unemployment rates of 15–16percent compared to about 8 percent for those who were high-school graduates and only3 percent for the college graduates – “the result of what economists call ‘frictionalunemployment’ – job switching and job search that would occur in any labor market (ItTakes a Nation, p. 58, 59).

26 Realizing Rawls (Ithaca: Cornell University Press, 1989), p. 122.27 A Theory of Justice, p. 98.



28 This is not to say that if Walton ended up homeless and destitute as a result of hergambling binge, it would be unjust for her to receive any benefits (as a means of enablingher to re-establish her career, for example). My point is only that her gambling losses donot necessarily place her among the least advantaged. That she is therefore entitled to nobenefits on the basis of the Difference Principle does not imply that it would be unfair forthe society to confer any ‘undeserved’ benefits on her.

Pogge might agree with this. He qualifies his defense of the ex ante perspective in the caseof voluntary risk-taking by saying: “Where radical deprivations and inequalities are at stake,we must take the ex post perspective” (Realizing Rawls, p. 122). But Pogge could also arguethat Walton does not suffer ‘radical deprivation’ because (or as long as) she retains herabove-average earning power.

29 Pogge points out that gamblers who win do not pose the same problem as those wholose; the former are seldom among the least advantaged since their actual lifetime shareshave been increased by gambling. I agree, but this does not affect my point that theDifference Principle applies only to representative persons and that the ex ante/ex postdistinction does not apply to them. People who end up in desperate straits as a result oftheir gambling losses do raise certain problems but these are not problems for the DifferencePrinciple. Such people may need assistance during particular periods of their life even ifthey are among the least advantaged in terms of their actual lifetime shares of primarygoods. (Such assistance would need to be structured so as to encourage neither waste norreckless conduct. Arneson discusses both problems in “What Do Socialists Want?”.)

30 Political Liberalism (New York: Columbia University Press, 1993), p. 7: “the first prin-ciple covering the equal basic rights and liberties may easily be preceded by a lexically priorprinciple requiring that citizens’ basic needs be met, at least insofar as their being met isnecessary for citizens to understand and to be able fruitfully to exercise those rights andliberties.” This passage makes it clear that Rawls now conceives of the social minimum asseparate from the Difference Principle. For one thing, it has lexical priority over the EqualBasic Liberties, whereas the Difference Principle does not. Whereas the Difference Principlerequires that the lifetime expectations of the LARPs be as high as possible, the socialminimum has a more limited purpose: to ensure that basic needs are satisfied. (In Theory,Rawls sometimes appeared to suppose that the Difference Principle established the properlevel of the social minimum: “Once the Difference Principle is accepted … it follows thatthe minimum is to be set at that point which, taking wages into account, maximizes theexpectations of the least advantaged group” (p. 285).)

It is quite likely that the social minimum will be lower than the annual income of theaverage unskilled worker (or than half of the median income). Perhaps anyone who worksfull-time and year-round should be able to earn at least $14,000 (recall Phelps’s employmentsubsidy) – well above the poverty line for a single individual – but everyone should be guar-anteed only some fraction of a poverty-line income (recall Haveman’s demogrant of nomore than two-thirds of such an income for working-age individuals).

On the other hand, individuals who are unable to work (e.g., the disabled) could beentitled to a social minimum equal to (or higher than) the income of the average unskilledworker. A fuller discussion of the social minimum would thus need to distinguish amongthe different needs that must be addressed. To speak of the social minimum is probably too simplistic.

Some programs can be seen as (partially) satisfying both requirements. Employment subsi-dies would not only increase the expectations of the least advantaged; they would also tendto ensure that the lowest-paid workers earn enough to be able to satisfy their basic needs.It would therefore be a mistake to assume that the social minimum would be implementedsolely through (unconditional) cash assistance.

Regarding Rawls’s qualification (“at least insofar as … ”), it is worth noting that individ-uals in families with incomes less than $15,000 per year are about three-fifths as likely



to vote as people from families with incomes over $75,000 (Sidney Verba, Kay LehmanSchlozman, and Henry Brady, “The Big Tilt: Participatory Inequality in America,” TheAmerican Prospect, No. 32, May–June 1997, p. 76).

31 The official poverty line was originally based on the amount of money that a familyof four needed for a minimally nutritionally adequate diet. This figure was then multipliedby three (based on a Department of Agriculture survey showing that food consumed one-third of an average family’s income).

The official poverty line, whatever its defects, was not intended to mark the line betweenstarvation and non-starvation. Writing about Mollie Orshansky, who in 1963 first formu-lated the idea of a poverty line, John Schwartz and Thomas Volgy write: “Recall that inconstructing the measure, Orshansky used the proportion of the family budget (one-third)that the average American family spent on food. The frame of reference originally was thebudget and spending patterns not of the poorest families but of average Americans. Thatpractice conveyed a definition of poverty that was tied to acceptable living standards. Peoplewere impoverished, even if they were not starving or destitute, when they had incomesbeneath the amount required to purchase the basic necessities at the most frugal standardof an ordinary family” (The Forgotten Americans (New York: W. W. Norton, 1992), p. 32).

Recent studies show that families now spend closer to one-fifth of their income on food,meaning that the poverty line should be much higher than it officially is. Thus, whereas in1990 the official poverty line was $13,360 (for a family of four), Schwartz and Volgy calculatethat it should have been $22,600 (five times the minimum food budget) (“Social Supportfor Self-Reliance: The Politics of Making Work Pay,” The American Prospect, No. 9, (Spring1992), p. 69). They themselves calculate a “low economy budget for a family of two adultsand two children” for 1990 as being $20,658 (The Forgotten Americans, p. 45). Adjusted forinflation, that would be equivalent to about $25,600 in 1997 dollars.

For an account of the birth of the idea of a poverty line, see Deborah Stone, “Makingthe Poor Count,” The American Prospect, No. 17, Spring 1994, pp. 84–8; Mollie Orshansky,“Children of the Poor,” Social Security Bulletin, July 7, 1963.

32 In Theory Rawls writes: “the government guarantees a social minimum either by familyallowances and special payments for sickness and employment, or more systematically bysuch devices as a graded income supplement (a so-called negative income tax)” (p. 275).The Earned Income Tax Credit (EITC) is probably an example of the kind of ‘gradedincome supplement’ that Rawls had in mind.

In Rewarding Work: How to Restore Participation and Self-Support to Free Enterprise(Cambridge: Harvard University Press, 1997), Edmund Phelps notes that supporters of theNegative Income Tax – such as Milton Friedman – failed to appreciate “what a defect itwas that such a substantial universal payment was not to be conditional on working” (p. 111). Rawls says little about the connection between the social minimum and work. InPolitical Liberalism he states: “So those who surf all day off Malibu must find a way tosupport themselves and would not be entitled to public funds” (p. 182 n. 9). David Ellwoodand Lawrence Summers report that “when income was afforded to youth aged sixteen totwenty-one, there was a 40-percent reduction in the already low employment rate … It ishard to image a policy with more deleterious effects on the long-run well-being of blackyouth” (“Poverty in America: Is Welfare the Answer or the Problem?” in Fighting Poverty:What Works and What Doesn’t, Sheldon Danziger and Daniel Weinberg (eds.) (Cambridge:Harvard University Press, 1986), p. 102).

Christopher Jencks writes: “Except for medical care … none of these benefits should bedefined as a universal right. They should be defined as rewards for work, as social securityis. In America, social-welfare policy cannot afford to be seen as offering the indolent some-thing for nothing” (Rethinking Social Policy (New York: HarperCollins, 1992), p. 234).

In discussing how much non-custodial parents should be required to pay in child supportto the custodial or resident parent, Irwin Garfinkel is extremely sensitive to the effects of



high benefit levels on the incentive to work. In arguing for a universal child-support system,Garfinkel argues that income-testing the benefits (which would be paid by the non-custodialparent and supplemented by the government if that was necessary to assure that some min-imum payment is made to the child) would reduce the work incentive among custodialparents. “To confine the assured benefit to those with low incomes, it must be reduced asthe income of the resident parent increases. But reducing benefits as earnings increase isequivalent to taxing earnings and reduces the reward for work. In contrast, a universalbenefit is not reduced as earnings increase. Thus, universal benefits give the greatest incentivefor low-income months to work” (Assuring Child Support (New York: Russell SageFoundation, 1992), p. 112).

On the other hand, Garfinkel argues that child-support payments ought to be taxed asincome. “Depending upon the existence and nature of state income taxes, making the benefittaxable reduces its value by between 30 percent and 40 percent for the few wealthy peoplewho qualify for it; reduces it by between 20 percent and 30 percent for the more numerous,comfortable, middle-class families who qualify for it; and reduces it by 10 percent to 20percent for the even more numerous, lower-middle-class families who qualify. In short, itis an equitable way of applying an income test” (p. 20).

33 According to the University of Michigan Panel Study of Income Dynamics, from1968–78, ‘major unemployment’ affected 29 percent of married men at least once duringthose eleven years; 22 percent suffered ‘involuntary job changes’; ‘work loss due to illness’affected 28 percent; disability struck 30 percent. Overall, almost half of the men surveyedendured between one and three of eight ‘undesirable events’ (also including divorce, dis-ability, and ‘major decrease in family income’). “One out of every four Americans lived ina household that received income from one of the major welfare programs at least onceover a ten year period” (Greg. J. Duncan, Years of Poverty, Years of Plenty (Ann Arbor:University of Michigan Institute for Social Research Center, 1984), pp. 27, 90).

Analysis of changes in real annual income revealed that “almost 60% had declines in atleast four years” and 40 percent saw their annual income rise or fall at least six times bymore than 10 percent (p. 121). Also, “the longitudinal data from the Panel Study revealthat an astonishing amount of turnover takes place in the low-income population: Only alittle over one-half of the individuals living in poverty in one year are found to be poor inthe next, and considerably less than one-half of those who experience poverty remain persis-tently poor over many years … Fewer than one-half of the population remained in the sameeconomic position from the late 1960s to the late 1970s, while one-third had dramaticimprovements in their economic well-being and one-fifth had dramatic declines” (p. 3).

See also Robert Goodin, “Stabilizing Expectations: The Role of Earnings-related Benefitsin Social Welfare Policy,” Ethics 100 (1990), pp. 530–53.

34 David Ellwood and Mary Jo Bane, Welfare Realities (Cambridge: Harvard UniversityPress, 1994), chapter 5.

35 In emphasizing the primacy of work, it is significant that in 1989 just over half of theemployable poor (aged 15 or over) – which was two-thirds of all the poor (aged 15 or over)– worked year-round; one-third worked year-round and full-time (The State of WorkingAmerica 1992–1993, p. 308). Increasing the work effort of the poor (e.g., by making workmore attractive via employment subsidies) would increase not only their lifetime expectationsbut also the productivity of the economy.

36 The Forgotten Americans, p. 135.37 Citing the work of David Card and Alan Krueger, Bluestone and Ghilarducci argue

that raising the minimum wage to $5.15 (as has subsequently occurred) would result in thetypical working teenager’s wage going up 21 percent. The number of minimum wage jobs would likely decline by about 6 percent. But because of the high job turnover amongminimum-wage workers, the loss in hours worked would be spread among those workers(and not fall predominantly on just a few who would be unemployed). Thus, for a 6 percent



decline in hours worked, most teenagers would enjoy a net income increase of 15 percent(Barry Bluestone and Teresa Ghilarducci, “Rewarding Work: Feasible Antipoverty Policy,”The American Prospect, No. 26, May–June 1996, pp. 40–6).

Card and Krueger have argued that their study of the effects of a 1992 minimum-wageincrease in New Jersey showed no decline in teenage employment (using Pennsylvania as acontrol); in fact, there was a (statistically insignificant) increase in employment as fast-foodrestaurants. For an account of the debate surrounding their study, see John Schmitt,“Cooked to Order,” The American Prospect, No. 26, May–June 1996, pp. 82–5. See alsoDavid Card and Alan Krueger, Myth and Measurement: The New Economics of the MinimumWage (Princeton: Princeton University Press, 1995).

In “The Minimum Wage and Earnings and Income Inequality,” (in Uneven Tides: RisingInequality in America, (Sheldon Danziger and Peter Gottschalk (eds.) (New York: RussellSage Foundation, 1993), Michael Horrigan and Ronald Mincy argue (using 1987 data) that minimum-wage increases “have virtually no effect on income inequality” because“[m]inimum-wage workers live in families that are more or less evenly placed along theentire distribution of family incomes” (p. 252). “Only 15 percent of minimum-wage familiesare families that are traditionally targeted by policies to help the working poor. These arefamilies where the head (and the spouse in the case of two earners) receive the minimumwage. If we add the group of unrelated individuals to the target group, the portion of tar-geted families rises to 32 percent” (p. 269). Rebecca Blank reports that “[o]nly about one-fifth of minimum wage workers live in poor families” (It Takes a Nation, p. 115).

Other economists, however, state that “almost three-fourths of these [minimum-wage]workers are adults; only 26 percent are teenagers. Nearly three-fifths are women, whose fam-ilies are disproportionately in poverty. Over half of all workers who would benefit from raisingthe minimum-wage to $5.15 an hour are found in the poorest 20 percent of all families”(Bluestone and Ghilarducci, “Rewarding Work: Feasible Antipoverty Policy,” pp. 42–3).

38 Phelps argues that such a system of subsidies would cost about $110–125 billion butit would pay for itself through increased productivity and greater tax receipts, reduced crime,lower welfare costs, and lower unemployment payments (Rewarding Work, chapter 9).

39 Rewarding Work, p. 155.40 ibid., pp. 106–7. “The objective of this subsidy is to restore the orientation toward

employment of those who are able-bodied and mentally competent and to make suchemployment the basis for self-respect and self-esteem. Hence those whose productivity levelin enterprises would be negative or merely zero (as measured by the hourly wage cost theiremployers are willing to pay) are not eligible for the subsidy. And undoubtedly many wouldsay that, even among workers whose productivity is positive, there is a productivity levelso low that workers below it would not be capable of the self-development and strengthenedresponsibility that the subsidy program aims to achieve. So the subsidy should be conceivedas applying only to workers whom their employer sees as worth bearing a significant costto employ” (p. 107).

41 ibid., p. 163.42 Rawls also raises the possibility that there are more effective alternatives to the

minimum wage (Theory, p. 277).43 Assuring Child Support, chapter 2. Garfinkel emphasizes that the Child Support

Assurance System is not welfare because it is a universal program and is not limited to thepoor (“Bringing Fathers Back In,” The American Prospect, No. 9, Spring 1992, p. 82).Garfinkel compares it to the Survivor’s Insurance program which was part of the originalSocial Security Act of 1935. In It Takes a Nation (pp. 260–8), Rebecca Blank defends aChild Support Assurance program that (for reasons of cost) covers only low-income singlemothers. But she would also expand the Earned Income Tax Credit program.

As I noted above (note 32), Garfinkel would require that the custodial parent pay incometaxes on the benefits received; this would tend to reduce the net amount that rich custodialparents might receive and make the system more equitable.



44 Starting Even: An Equal Opportunity Program to Combat the Nation’s New Poverty(New York: Simon and Schuster, 1988).

45 Starting Even, p. 169. Haveman suggests that each account should be worth $20,000;adjusted for inflation, that would be over $28,000 in 1997 dollars.

Haveman writes: “The labor market problems that confront disadvantaged workers isprimarily a structural employment problem; joblessness for certain groups exists in spite ofnear full employment for the rest of the economy. The most basic reason for this is theirinherent lack of skills and education – hiring them simply does not generate much additionaloutput and profit for employers. This is compounded by the distortionary effects of thecombination of minimum wage laws, union wage contracts, and the fringe benefits and pay-roll taxes that businesses are required to pay for every worker. These constraints contributeto the labor market disadvantage of the low-skilled” (p. 169).

46 The State of Working America, 1992–93, p. 189.47 Lawrence Mishel and Jared Bernstein, The State of Working America, 1994–95.

Economic Policy Institute (Armonk: M. E. Sharpe, 1994), pp. 166–7.48 The State of Working America, 1992–93, pp. 192–3.49 Uneven Tides, pp. 134, 137.50 “Macroeconomics, Income Distribution and Poverty,” in Fighting Poverty: What

Works and What Doesn’t, pp. 184. Blank and Blinder cite a study which showed that “a 1-percentage-point rise in unemployment decreased the income share of the lowest quintileby .13 of a percentage point while a 1-point rise in the inflation rate increased their shareby a scant .03 of a percentage point … (p. 184). Also, “a 1-point rise in prime-age maleunemployment raises the poverty rate by 0.7 points in the same year. If the rise inunemployment were sustained, the final net effect would be a 1.1-point rise in the povertyrate. Here inflation is found to hurt the poor. But the effect of a 1-point rise in inflation isonly one-seventh as large as that of a 1-point rise in the poverty rate” (p. 188).

Blank and Blinder add the following caveat, however: “High unemployment is, presum-ably, a transitory phenomenon whereas the reduction of inflation that it ‘buys’ is presumablypermanent. Hence the poor should balance the large but temporary losses from highunemployment against the small but permanent gains from lower inflation. Clearly, with alow enough discount rate, even the poor will favor using unemployment to fight inflation.However, the economic behavior of poor people strongly suggests that the discount ratesthey use are extremely high” (p. 189).

51 A Theory of Justice, p. 4.52 A Theory of Justice, pp. 102–3. In defending the idea of employer subsidies, Phelps

argues that even people who can command only a very low wage from a private employernonetheless contribute to the economy – to corporate profits (and thus to tax revenues), tothe gross domestic product, as well as to reductions in the cost of unemployment insurance,welfare, etc. (Rewarding Work, pp. 128–32).

53 A Theory of Justice, p. 60.54 “Discussions Defining the Least Advantaged,” p. 42.55 Weatherford, like Arneson, does at times explicitly recognize this point about repre-

sentative persons. For example: “we should recall that ‘the interest of the least advantaged’is an aggregative concept where an abstract ‘representative man’ is constructed to symbolisethe group in general. Idiosyncratic interests like Reggie’s might well not appear in theinterests of this symbolic construct, so his inclusion in or exclusion from the extension of the class might have no practical effect whatsoever on our social duty” (“DiscussionsDefining the Least Advantaged,” p. 41). I agree with the idea of the LARP as a ‘symbolicconstruct’; however, I do not see that Weatherford’s criticisms reflect the idea just quoted.

Rawls, the Difference Principle, and Economic Inequality

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