Saturday, April 21, 2012

Fairness: And Others Words

What really is fairness. In today's political debate it is about outcomes. In most other contexts it is about the rules. Fairness means following the rules, not what the winner or loser gets. In a NY Times piece there is a post hoc description of fairness.

The author states:

Economics, by contrast, hasn’t traditionally been much concerned with fairness. Instead, economists have based their analysis on “Homo economicus,” a model human being who is perfectly rational and perfectly guided by self-interest. 

The financial crisis of 2008 made it hard to believe in a world of perfectly rational actors, even when they earn million-dollar salaries and have advanced degrees. Now, a growing body of research is challenging the second part of the definition of Homo economicus — that he is guided purely by self-interest.  

The alternate view was advanced by Armin Falk, a Bonn University economist, at a recent economics conference in Berlin organized by the Institute for New Economic Thinking. It emphasizes the importance of fairness and trust to human behavior. This approach takes as its starting point the idea that we are social animals, driven powerfully by how we fit into our community. 

The definition that they seem to be bringing out is fairness of outcomes and loss of individuality, and communalism. In contrast what has built a competitive entrepreneurial America is a fairness in rules, namely that one cannot steal or bribe to achieve a goal, one cannot steal or kill likewise, that there are rules and then let the players follow them to the end. The end may be quite disparate in results. That is the true nature of fairness.

Fairness is NOT ensuring that no matter how one functions that the end point is the same, that the community is more important than the individual. For it is the individual who takes the risk, who goes out bare into the playing field and attempts to seek a return. If Government will punish that efforts by redistributing what has been gained then why work at all, we should just sit back and watch the system collapse.

She continues:

Some of Dr. Falk’s most recent work takes the question of fairness back into the medical laboratory. He and a team of colleagues asked what the physical impact of unfair pay was, this time as measured by our heart rate rather than brain waves. Experimental subjects who felt they were being unfairly paid showed higher heart rate variability, an indicator of stress that has been shown to predict heart disease. 

Faulty tires and failing hearts are the grim consequences of unfairness suggested by Dr. Falk’s talk. But the new vision he and like-minded researchers are developing of how human beings operate in the economy is actually rather uplifting. We aren’t driven solely by self-interest; fairness and decency matter, too. Kindness and justice turn out to be useful concepts not just at the pulpit or among philosophers, but also as essential tools in the workplace. 

 If you feel you are poorly compensated, then quit and start your own company, this is America not Germany. You can readily do that, at least for a while. Life does not work in some 19th century Utopian commune, they are all failures. Success is driven by many factors and the ability to deal with risk is key. If you cannot do that then go work for the Government, it appears that it is impossible to get fired no matter how incompetent.