Inequality and Compromise

A basketball team works because players take different roles. Look at a box score --  the point totals are usually very unequal. Some players score points, some rebound, some excel at defense. The player with the most assists rarely gets the attention given to the high scorer – and it gets worse as the season progresses. The star players and the best teams get all the ink and airtime. Yet the team concept works and it performs well. This happens and you don’t hear much about the majority of the players complaining about the excessive treatment afforded to the few.

A marriage often brings together two people who are quite different. One spouse sometimes brings in the income while the other takes care of the household and families. Even when both spouses work one might be the main income earner while the other supplements. This often works very well and it makes no sense that one is jealous of the other’s public accolades.

A person from another planet might observe all this and marvel at the benefits brought by specialization, division of labor, and trade. Working together really works! A person from a completely different planet might, in contrast, worry about the obvious inequalities. Why does one player always seem to sit on the bench? Why does one spouse not go on exciting business trips to Ellettsville Indiana? Why don’t those people demand equal rights?

Some of you have already decided to quit reading. Obviously I must be a person who is totally insensitive to the profound historical and current injustices of discrimination that produce harmful inequality. Let me just say -- that it isn’t so. Trying to convince you that I am not a bigot is not, however, a useful or effective use of my time. Most of you know me and know who I am. What I will try to do – if you are still reading – is just point out that there are times and places when inequality is dead wrong – and other times when it is quite right. And it helps a lot to know the difference. Apparently our politicians either do not know the difference or they do and they think they can fool us.

Basketball teams and marriages are not the same as jobs and business firms. But let’s make no mistake about it – these same ideas hold. A business firm exists because an entrepreneur takes a risk with his own or borrowed funds. Whether it is a new neighborhood restaurant or a multi-billion dollar corporation, the owner or owners begin the process by taking what would have been their saving or spending and applying it to the land, capital, licenses, payola, and other things necessary to start a business. 

Then the firm has to find partners and employees to make the plan work. The government is one of the partners when it supplies infrastructure, police protection, or it gives the firm a tax break. Clearly the business is not going to be a success without employees – from the person who sweeps the driveway to the Chief Executive Officer.

Like the marriage or the sports team, the business firm is a team effort. And like any team effort, we would be fooling ourselves if we did not admit that some activities or decisions will impact some of the partners differently from others. It is traditional for the CEO to get different pay, benefits, and working conditions from the person who sweeps the floor. Furthermore, like most other partnerships, decisions are NOT made in a democratic fashion. The coach is chosen for his or her technical expertise. The coach makes the decisions. Sometimes the star player may not like the decision. Sometimes a bench player may not like it. Sometimes a team member might dislike a decision or a coach enough to quit and move to another team. But much of the time if the decisions seem to be made for the benefit of the team or the organization – people might grumble but they go along with it. Sometimes the grumbling turns into an effective communication that helps the coach understand that changes need to be made. 

Maybe a star player is getting too much attention and that negatively impacts the team. Either a coach makes use of this information and improves the team or the team begins to fail because of poor teamwork.

When the team begins to fail is when we learn even more about its weaknesses. Everything comes under the microscope including the owners, coach, the star players, bench players, and so on. This creates a “season” for focus on every aspect of the team. And that is as it should be. Open and transparent analysis and discussion might lead to saving an otherwise doomed organization.

Call me naïve but this little discussion helps us to think about problems in the US, Europe, and various other places. Whether Obama started this or not – right now we are in the middle of a blame-game that fails to recognize one very plain fact – WE ARE ALL ON THE SAME TEAM. That team has generated new businesses, successful existing businesses, profits, jobs, incomes for the middle class, and more. It has generated all that for centuries despite the very obvious and salient fact – blatant inequality of income, net worth, and other aspects of economic life. We exonerate some of the inequalities and we deplore others.

What makes these days different is the depth and severity of the world slowdown. There were failures in the system and we are now busy trying to figure out how to solve them. In the present negative environment we are not so much really trying to figure out the causes of our problems than we are pointing fingers at each other. Let the damn rich pay for it. Those lazy workers need to work harder. The poor and elderly are dragging us down with their entitlement mentality. Those corporations are rich and selfish.

Can you imagine a good athletic team winning with all those fingers pointing? Italy was smart enough to move to a technocratic (non-political) new government. It may or may not work. But clearly it is an attempt to reduce the finger pointing and have someone come up with a plan to improve the country. Ideally the plan will help the country – the whole team. But we would be naïve to think that the implementation of the plan will have equal impacts on everyone in Italy. So in a highly politically-charge environment it will be hard for people to see beyond the initial unequal impacts to the eventual positive impacts on the country. People will scream that a rising tide does not raise all boats the same. But what Italy and the USA and the rest of Europe need right now is a rising boat.

How to raise the level of the boat – going from sports to boating? Sorry. Anyway this is where some compromise has to be involved. This is not 2005 and it is not 1966. It is a very frightening and frenetic time. It is a time when all parties are going to have to be at the table. Any proposal designed to favor one group at the expense of another is not going to succeed in this environment. Focus should be on the national or team health and not on righting past grievances.  If this were not a moment of weakness then it might be possible to work harder on past inequalities. But that is not the case. The nation is weak and the focus must be on what will make it strong. It will take compromise to achieve this. 

As both the EU and the USA move the world toward another debt crisis we can only hope that our political leaders will understand that political ideology might appear to help their set of “good guys” but will only result in the suffering of all of us. Germany may have to give a little more toward a compromise but let's hope the bargain gives them more of what they want as well -- so long as the solution intends to strengthen Europe. The US will have to accept higher tax revenues but let's hope this is done in a way that the burden of adjustment does not single-out or penalize one group over others enough to risk a further crisis.