Allocation And Distribution

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I want to approach my thesis in this chapter by way of an important distinction: that between the allocation and the distribution of resources. The allocation of resources has to do with how they are used; the distribution has to do with who uses them or benefits from their use.12 The Mineral King Valley, as a matter of allocation, could be used as a ski resort, kept as a wilderness, or exploited in some other way. Some individuals or groups would be made better off as a result; some would be made worse off; the decision, in other words, would have distributive or redistributive effects. The resort, for example, would benefit skiers at the expense of hikers; it would be good for property owners in Tulare County but bad for property owners in Sun Valley. Some might argue in favor of the Disney project because it would produce tax revenues to support social welfare programs for the poor. This would be to argue in favor of an allocation because of a beneficial distributive effect.

Some economic theorists who write about the environment assume that natural resources should be allocated in the way that maximizes a theoretical construct variously labeled "potential Pareto improvement," "Kaldor-Hicks efficiency," "consumer surplus," "net WTP," "utility," "benefit," "economic value," and "preference satisfaction." For a given allocation, of course, questions of justice, fairness, or equality may arise with respect to the distribution of costs and benefits. In general, economists concede that ethical or political choices may have to be made concerning these distributive effects.13 (Some theorists argue more consistently that once we stipulate WTP as the measure of value, we should use it to tell which distributive principles are worth more than others, for example, by determining WTP for more or less equity.)14 Many theorists suppose that the best way to produce wealth and the best way to divide it are separate issues best decided separately; they urge us, therefore, not to make an allocative decision on the basis of its distributive consequences.15 Efficiency should guide the allocation of resources; wealth can then be redistributed to address poverty.

Analysts who argue along these lines tend to collapse all discussion of regulatory policy into questions concerning efficiency in the allocation of resources and equity or fairness in the distribution of wealth. They argue, for example, that the allocation of fossil fuels should be left to the market, properly regulated for externalities. The inequalities that result may then be remedied, for instance, by a windfall profit tax used to help the poor pay their heating bills.16

Not all policy problems allow a neat separation between issues of allocation and issues of distribution; for example, any social transfer of wealth to the poor could distort the cost of labor and thus lead to an inefficient allocation of human resources. Many policy analysts speak, therefore, of a "trade-off" between equality and efficiency. They recommend, however, that policy makers use those two values to justify whatever decisions they make with respect to environmental and regulatory policy. Decisions that cannot be explained as attempts to allocate resources more efficiently, then, must be explained as attempts to distribute wealth more fairly.

Although some writers like to emphasize a trade-off between efficiency and equality, it is useful to recognize that these concepts complement each other and that the conflict between them, insofar as one exists, is largely overstated. Analysts who believe that efficiency is an important social value do so, in general, because they conceive of the social good as the satisfaction of preferences, weighted by their intensity, however arbitrary or contingent these preferences may be. Philosophers who emphasize the claims of justice or equity too often do not disagree with this conception of the good but may rely on it. When the good is conceived in this way - when it is assimilated to preference taken as it comes and measured by WTP - then it is unsurprising that a conception of the right, that is, a conception of justice, should be prior to it. Some have argued that an adequate philosophy of right has yet to be written: one that shows how we should balance a conception of justice with a more appealing or more persuasive conception of the good than the notions of efficiency, WTP, and preference-satisfaction imply.17

Many well-known writers (Ronald Dworkin is an example) argue that a conception of equality should be the criterion of public policy.18 Others argue that the efficiency criterion should be the principal guideline. Most of the statutes and regulations that govern social policy, particularly for natural resources, public safety, and the environment, however, have fairly specific goals, like improving mine safety or protecting endangered species. These concerns of public policy stand on their own and do not need to be supported by criteria or guidelines established by a priori philosophical or economic arguments.

What characterizes the debate between the "efficiency" and "equality" positions is not the touted conflict between them but the extent to which each is plausible only in comparison to the other. Both adopt the same vocabulary and conceptual framework; each assimilates all values either to essential human rights or to arbitrary personal preferences. They agree that any claim that is not based on a right must, then, simply state a preference or reveal a want.

Those who advocate the priority of equality find worthy opponents in those who defend the priority of efficiency.19 They debate at length and without any apparent sense of tedium the extent to which rights "trump" interests because (1) rights go to the essence of free agency and personhood or (2) rights are justified, at a higher level of analysis, in relation to interests.20 Once discussion takes off at this level of abstraction it becomes irrelevant to officials and others who need a vocabulary adequate to the particular and often contingent moral, aesthetic, historical, scientific, and legal considerations that matter in health, safety, and environmental policy.21

Congress, by rescinding the Disney lease, for example, made a decision based on aesthetic and historical considerations such as the argument that a majestic million-year-old wilderness is aesthetically or objectively better than a commercial honky-tonk. Congress responded to the opinions citizens backed up with arguments in public hearings and not to the wants individuals might back up with money in a market or the rights they might assert in court.

To speak bluntly, the problem with efficiency and equality as principles of social policy is that they are basically subjects of academic study; in other words, they have the smell of the lamp about them. Each approach assumes that academic experts, notably economists and philosophers, by practicing deep thinking, will discover the fundamental truths about Man, Civil Society, and the State from which the goals of social regulation may be derived. This assumption is false. The goals of social regulation are based in historically contingent public values that influence legislation, court decisions, and the actions of many local boards and panels. Experts with Ph.D.s in economics and related fields may suppose that democracy has become obsolete to the extent that they can measure the good as WTP; similarly philosophers may be eager to impart to the world their conceptions of justice. Indeed, I have been privileged to serve on committees in which economists, ecologists, and philosophers are convened in the odd belief that these panels are representative as long as they are interdisciplinary. It might be better to get a focus group together of citizens whose names are selected at random from the telephone directory.

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