The Positional Fallacy

The Positional Fallacy

The Positional Fallacy

Moneybox
A blog about business and economics.
Feb. 7 2012 6:09 PM

The Positional Fallacy

Something I think it's important to say about the question of to what extent the poor are "deserving" is that conservatives often engage in a fallacy about positional goods. If you arrange your society such that 5% of the population is going to occupy some extremely unpleasant social roles, it may well be the case that the specific people who come to occupy those roles do so for specific behavioral reasons that are outside the scope of what we'd commonly call "bad luck." Had those people made different, better life choices they would not be the ones occupying the bottom rungs. But someone else would be! If the Federal Reserve is extremely successful in preventing bouts of wage inflation but only sporadically successful in preventing extended periods of mass unemployment, then some large class of individuals is going to suffer wage and income stagnation. If you examine the suffering people and compare them to others who are doing better in life, you may say "well if only those losers had acted more like the winners they'd be better off." But this doesn't really speak to the justice of the underlying social arrangements.

Someone or other is destined to be the "marginal worker" in any labor pool, and if the central bank conducts this kind of asymmetrical stabilzation policy then marginal workers are going to be screwed. If everyone had more human capital or a better work ethic then average living standards might be higher, but someone would still be victimized by a bad arrangement of social institutions. (Liberals, for the record, oftentimes commit a kind of inverse fallacy where they don't recognize that, by definition, we can't all reap the benefits of insider-outsider labor market institutions). When you're looking at hierarchical social institutions the question to ask is whether the hierarchy and its structure are necessary or somehow beneficial, not merely whether the sorting of people into different slots on the hierarchy proceeds fairly. Oftentimes the answer is that, yes, the hierarchy is serving an important function. Nobody would watch the NFL if it didn't have one winner and a whole bunch of teams that miss the playoffs. It's really true that in this case the best question to ask is whether the winning teams "deserve" to win or not. But the starkly pyramidal structure of professional sports is not a great model for society at large.