How can you determine whether a policy or piece of legislation is fair — and should fairness be the criterion for deciding whether or not to adopt it?
At the risk of appearing to attack a concept that is revered in public and private decision making alike, I would like to propose that “fairness” — at least as a standard for setting and enacting public policy — be dumped. I suggest that we adopt a better policy standard instead. Wisdom would be my choice, since fairness often misses the mark as its proxy.
As it’s usually applied, one way in which fairness seems to get its legitimacy is by insisting that all parties be treated with equal status, or as equal stakeholders, in a policy decision. Education policy exhibits a lot of this. Another is that, somewhat paradoxically, allowing special treatment for one interest group subsequently requires that we offer special treatment for all like interest groups on an equal footing. The treatment of firms under North Carolina’s economic development policy and tax incentives are examples in this category. Several arguments suggest themselves in this regard.
With so many claims for policy attention — in dollars, legislation, programs, bailouts, etc. — competing against one another for resources from government, it is really difficult to know what a fair approach to satisfying these claims really is. The idea that we must treat all claims as equally valid, in the interest of preserving fairness, also has the potential to introduce all kinds of distortions into our thinking and our policy decisions.
In North Carolina we have seen a succession of tax incentives offered by state and local governments to entice companies to locate here. But in fairness, once we do that for one firm, we are compelled logically to justify why we should not offer incentives to others. Pleas and promises that offer the same sorts of return in exchange for the same sorts of concessions are extremely difficult to discriminate between, based upon claims that appear to be equally valid. So the (initially somewhat limited) incentives policy in North Carolina has begun to morph toward full-scale competitive corporate welfare and corporate rent seeking, funded by taxpayers.
Even if this kind of industrial policy — with state government essentially picking winners — produced its promised economic results — and these policies repeatedly do not — the unintended consequences are real. Families move and relocate, unrecoverable investments are made, and alternatives that never materialize, and therefore can’t be measured, are foregone.
The difference this kind of policy has made to current revenue collections, possibly to budget shortfalls, and to spending priorities in North Carolina, however, is real even if unseen. More important, the difference it has made to family incomes, budgets, tax liabilities, and government services is also real, and in the current environment likely to become increasingly painful. The difference it has made in real and perceived notions of how public policy operates has eroded confidence in the ethical qualifications of those in political leadership.
Fairness in policy, often enacted as equal access to special-interest privileges, or as a claim to equality of results, nonetheless remains very appealing. In part, this is because it is also judicious, and we respect the decision of a capable judge. But judicious means “subject to judgment call,” in policy circles made by our legislature. This is problematic when a policy decision puts the interests or rights of different groups at odds with one another.
As in our industrial and other policy areas, what is politically or economically expedient for some party in the discussion is often what is enacted. Of near-term interest to many Americans, given the aging American demographic picture, is health care policy and America’s health care future. What one group of Americans would consider supremely fair in health care, given their time, patriotism, pay-in, and other factors, another might well see as an increasingly useless drain on the system.
What seems like one’s fair share — speaking again of results — of the economic or public policy pie is ultimately a judgment call made by someone. And to satisfy everyone’s claims via policy may imply, metaphorically, cleaving a functioning system — very different from an inert “pie” — into terminal pieces. Truly, not fair.
Dr. Karen Y. Palasek is director of educational and academic programs for the John Locke Foundation.