HARVARD LAW REVIEW [Vol. 85: Io89 set of entitlements. Wealth distribution preferences are another and thus it is to distributional ds for different entitlement to which we must now turn B.Dis There are, we would suggest, at least two types of distribu 如a which may affect the choice of entitlements distribution of wealth itself and distribution of goods which have sometimes been called merit All societies have wealth distribution preferences. They are, nonetheless, harder to talk about than are efficiency goals. For efficiency goals can be discussed in terms of a general concept like Pareto optimality to which exceptions-like paternalism-can be noted. 0 Distributional preferences, on the other hand, can- not usefully be discussed in a single conceptual framework. There are some fairly broadly accepted preferences-caste preferences in one society, more rather than less equality in another society There are also preferences which are linked to dynamic efficiency concepts-producers ought to be rewarded since they will cause everyone to be better off in the end. Finally, there are a myriad of highly individualized preferences as to who should be richer and who poorer which need not have anything to do with either equality or efficiency -silence lovers should be richer than noise lovers because they are worthier. 1 Difficult as wealth distribution preferences are to analyze, it should be obvious that they play a crucial role in the setting of ntitlements. For the placement of entitlements has a funda mental effect on a society' s distribution of wealth. It is not enough, if a society wishes absolute equality, to start everyone off with the same amount of money. A financially egalitarian society which gives individuals the right to make noise imme- diately makes the would-be noisemaker richer than the silence 20 For a discussion of paternalism, see pp. I113-I4 infra writers like Fletcher, following Aristotle, term distributive justice. The second and third groups, instead, presumably deal with Fletchers "corrective"justice-ro wards based on what people do rather than what they are. See Fletcher, fairness and Utility in Tort Theory, 85 HARV. L. REv. 537, 547 n. 40(1972) ithin the "corrective"justice category our second and third groupings dis- tinguish those preferences which are transparently linked to efficiency notions from those whose roots are less obvious. If there were a generally accepted theory of desserts, one could speak in general terms about the role the third group plays just as one tends to speak about the role of either the first or second group. We do not believe that an adequate theory of desserts -even if possible-is cur rently available. See also pp. II 025#rg HeinOnline 85 Harv. L Rev. 1098 1971-1972
8HARVARD LAW REVIEW set of entitlements. Wealth distribution preferences are another, and thus it is to distributional grounds for different entitlements to which we must now turn. B. Distributional Goals There are, we would suggest, at least two types of distributional concerns which may affect the choice of entitlements. These involve distribution of wealth itself and distribution of certain specific goods, which have sometimes been called merit goods. All societies have wealth distribution preferences. They are, nonetheless, harder to talk about than are efficiency goals. For efficiency goals can be discussed in terms of a general concept like Pareto optimality to which exceptions - like paternalism - can be noted." Distributional preferences, on the other hand, cannot usefully be discussed in a single conceptual framework. There are some fairly broadly accepted preferences - caste preferences in one society, more rather than less equality in another society. There are also preferences which are linked to dynamic efficiency concepts- producers ought to be rewarded since they will cause everyone to be better off in the end. Finally, there are a myriad of highly individualized preferences as to who should be richer and who poorer which need not have anything to do with either equality or efficiency - silence lovers should be richer than noise lovers because they are worthier." Difficult as wealth distribution preferences are to analyze, it should be obvious that they play a crucial role in the setting of entitlements. For the placement of entitlements has a fundamental effect on a society's distribution of wealth. It is not enough, if a society wishes absolute equality, to start everyone off with the same amount of money. A financially egalitarian society which gives individuals the right to make noise immediately makes the would-be noisemaker richer than the silence 20 For a discussion of paternalism, see pp. 113-14 infra. 21 The first group of preferences roughly coincides with those notions which writers like Fletcher, following Aristotle, term distributive justice. The second and third groups, instead, presumably deal with Fletcher's "corrective" justice - rewards based on what people do rather than what they are. See Fletcher, Fairness and Utility in Tort Theory, 85 HARV. L. REV. 537, 547 n.40 (1972). Within the "corrective" justice category our second and third groupings distinguish those preferences which are transparently linked to efficiency notions from those whose roots are less obvious. If there were a generally accepted theory of desserts, one could speak in general terms about the role the third group plays just as one tends to speak about the role of either the first or second group. We do not believe that an adequate theory of desserts - even if possible - is currently available. See also pp. 1102-o 5 infra. lO98 [Vol. 85:io89 HeinOnline -- 85 Harv. L. Rev. 1098 1971-1972
r972 PROTECTING ENTITLEMENTS loving hermit. 2 Similarly, a society which entitles the person with brains to keep what his shrewdness gains him implies a different distribution of wealth from a society which demands from each according to his relative ability but gives to each according to his relative desire. One can go further and consider that a beautiful or handsome man is better off in a society which entitles luals to bodily integrity than in one which gives everybody use of all the beauty available. The consequence of this is that it is very difficult to imagine a society in which there is complete equality of wealth. Such society either would have to consist of people who were all pre- cisely the same, or it would have to compensate for differences in wealth caused by a given set of entitlements. The former is, of ourse, ridiculous, even granting cloning. And the latter would be very difficult; it would involve knowing what everyone's tastes were and taxing every holder of an entitlement at a rate sufficient to make up for the benefits the entitlement gave him. For example it would involve taxing everyone with an entitlement to private use of his beauty or brains sufficiently to compensate those less favor ably endowed but who nonetheless desired what beauty or brains cou If perfect equality is impossible, a society must choose what entitlements it wishes to have on the basis of criteria other than perfect equality. In doing this, a society often has a choice of methods, and the method chosen will have important distribu tional implications. Society can, for instance, give an entitle- ment away free and then, by paying the holders of the entitle ment to limit their use of it, protect those who are injured by the free entitlement. Conversely, it can allow people to do a given thing only if they buy the right from the government. Thus a society can decide whether to entitle people to have chil- dren and then induce them to exercise control in procreating, or to require people to buy the right to have children in the first place. A society can also decide whether to entitle people to be free of military service and then induce them to join up, or to require all to serve but enable each to buy his way out. Which entitlement a society decides to sell, and which it decides to give away, will likely depend in part on which determination promotes the wealth distribution that society favors This assumes that there is not enough space for the noisemaker and the silence lover to coexist without intruding upon one another. In other words, this assumes that we are dealing with a problem of allocation of scarce resources; if were not, there would be no need to set the initial en Mishan, supra note 12. Any entitlement given away free implies a converse which must be paid for. For all those who like children, there are those who are disturbed by children HeinOnline 85 Harv. L Rev. 1099 1971-1972
PROTECTING ENTITLEMENTS loving hermit.22 Similarly, a society which entitles the person with brains to keep what his shrewdness gains him implies a different distribution of wealth from a society which demands from each according to his relative ability but gives to each according to his relative desire. One can go further and consider that a beautiful woman or handsome man is better off in a society which entitles individuals to bodily integrity than in one which gives everybody use of all the beauty available. The consequence of this is that it is very difficult to imagine a society in which there is complete equality of wealth. Such a society either would have to consist of people who were all precisely the same, or it would have to compensate for differences in wealth caused by a given set of entitlements. The former is, of course, ridiculous, even granting cloning. And the latter would be very difficult; it would involve knowing what everyone's tastes were and taxing every holder of an entitlement at a rate sufficient to make up for the benefits the entitlement gave him. For example, it would involve taxing everyone with an entitlement to private use of his beauty or brains sufficiently to compensate those less favorably endowed but who nonetheless desired what beauty or brains could get. If perfect equality is impossible, a society must choose what entitlements it wishes to have on the basis of criteria other than perfect equality. In doing this, a society often has a choice of methods, and the method chosen will have important distributional implications. Society can, for instance, give an entitlement away free and then, by paying the holders of the entitlement to limit their use of it, protect those who are injured by the free entitlement. Conversely, it can allow people to do a given thing only if they buy the right from the government. Thus a society can decide whether to entitle people to have children and then induce them to exercise control in procreating, or to require people to buy the right to have children in the first place. A society can also decide whether to entitle people to be free of military service and then induce them to join up, or to require all to serve but enable each to buy his way out. Which entitlement a society decides to sell, and which it decides to give away, will likely depend in part on which determination promotes the wealth distribution that society favors. 3 22 This assumes that there is not enough space for the noisemaker and the silence lover to coexist without intruding upon one another. In other words, this assumes that we are dealing with a problem of allocation of scarce resources; if we were not, there would be no need to set the initial entitlement. See generally Mishan, supra note 12. 23 Any entitlement given away free implies a converse which must be paid for. For all those who like children, there are those who are disturbed by children; 1972] 1o99 HeinOnline -- 85 Harv. L. Rev. 1099 1971-1972
hARvARd LAW REVIEW If the choice of entitlements affects wealth distribution gen erally, it also affects the chances that people will obtain what have sometimes been called merit goods. Whenever a society shes to maximize the chances that individuals will have at lea a minimum endowment of certain particular goods -education, clothes, bodily integrity-the society is likely to begin by giving the individuals an entitlement to them. If the society deems such an endowment to be essential regardless of individual desires, it will,of course, make the entitlement inalienable. 5 Why, how ever, would a society entitle individuals to specific goods rather than to money with which they can buy what they wish, unless it deems that it can decide better than the individuals what benefits them and society; unless, in other words, it wishes to make the entitlement inalienable? We have seen that an entitlement to a good or to its converse is essentially inevitable. We either are entitled to have silence or entitled to make noise in a given set of circumstances. We either have the right to our own property or body or the right to share others' property or bodies. We may buy or sell our- for all those who detest armies, there are those who want what armies accomplish. Otherwise, we would have no scarce resource problem and hence no entitlement problem. Therefore, one cannot simply say that giving away an entitlement free is progressive while selling it is regressive. It is true that the more"free "goods there are the less inequality of wealth there is, if everything else has stayed the me. But if a free entitlement implies a costly converse, entitlemer not in this sense free goods. And the issue of their progressivity and regi ty must depend on the relative desire for the entitlement as against its conv Egtricay speaking, even this is true only if the money needed to finance the alter- native plans, or made available to the govermment as a result of the plans, is raised and spent in a way that is precisely neutral with respect to wealth distri bution. The point is simply this: even a highly regressive tax will aid wealt equality if the money it raises is all spent to benefit the poorest citizens. and even a system of outdoor relief for the idle rich aids wealth equality if the funds it requires are raised by taxing only the wealthiest of the wealthy. Thus whenever one speaks of a taxing program, spending program, or a system of entitlements as progressive or regressive, one must be assuming that the way the money is spent (if it is a tax)or the way it is raised (if it is a spending program) does not counter the distributive effect of the program itself. C/. R. MUSGRAVE, THE THEORY OF PUBLIC FINANCE 13-I4(1959) The commonly given reasons why a society may choose to do this are dis ssed infra at pp. IIII-I5. All of them are, of course, reasons which explain wh ch goods are often categorized as merit goods. When a society subsidizes a good it makes a similar decision based on similar grounds. Presumably however in such cases the grounds only justify making possession of the good less costly than would be the case without government intervention, rather than possession of the good inevitable. This is true unless we are prepared to let the parties settle the matter on the basis of might makes right, which itself may also be viewed as a form of entitle- ment HeinOnline 85 Harv. L Rev. 1100 1971-1972
HARVARD LAW REVIEW If the choice of entitlements affects wealth distribution generally, it also affects the chances that people will obtain what have sometimes been called merit goods." Whenever a society wishes to maximize the chances that individuals will have at least a minimum endowment of certain particular goods - education, clothes, bodily integrity - the society is likely to begin by giving the individuals an entitlement to them. If the society deems such an endowment to be essential regardless of individual desires, it will, of course, make the entitlement inalienable.25 Why, however, would a society entitle individuals to specific goods rather than to money with which they can buy what they wish, unless it deems that it can decide better than the individuals what benefits them and society; unless, in other words, it wishes to make the entitlement inalienable? We have seen that an entitlement to a good or to its converse is essentially inevitable. 26 We either are entitled to have silence or entitled to make noise in a given set of circumstances. We either have the right to our own property or body or the right to share others' property or bodies. We may buy or sell ourfor all those who detest armies, there are those who want what armies accomplish. Otherwise, we would have no scarce resource problem and hence no entitlement problem. Therefore, one cannot simply say that giving away an entitlement free is progressive while selling it is regressive. It is true that the more "free" goods there are the less inequality of wealth there is, if everything else has stayed the same. But if a free entitlement implies a costly converse, entitlements are not in this sense free goods. And the issue of their progressivity and regressivity must depend on the relative desire for the entitlement as against its converse on the part of the rich and the poor. Strictly speaking, even this is true only if the money needed to finance the alternative plans, or made available to the government as a result of the plans, is raised and spent in a way that is precisely neutral with respect to wealth distribution. The point is simply this: even a highly regressive tax will aid wealth equality if the money it raises is all spent to benefit the poorest citizens. And even a system of outdoor relief for the idle rich aids wealth equality if the funds it requires are raised by taxing only the wealthiest of the wealthy. Thus whenever one speaks of a taxing program, spending program, or a system of entitlements as progressive or regressive, one must be assuming that the way the money is spent (if it is a tax) or the way it is raised (if it is a spending program) does not counter the distributive effect of the program itself. 24 Cf. R. MUSGRAVE, THE THEORY OF PUBLIC FINANCE x3-I4 (1959). " The commonly given reasons why a society may choose to do this are discussed infra at pp. ixzI-i5. All of them are, of course, reasons which explain why such goods are often categorized as merit goods. When a society subsidizes a good it makes a similar decision based on similar grounds. Presumably, however, in such cases the grounds only justify making possession of the good less costly than would he the case without government intervention, rather than making possession of the good inevitable. 26 This is true unless we are prepared to let the parties settle the matter on the basis of might makes right, which itself may also be viewed as a form of entitlement. II00 [Vol. 85 :1o89 HeinOnline -- 85 Harv. L. Rev. 1100 1971-1972
q72] PROTECTING ENTITLEMENTS IOI selves into the opposite position, but we must start somewhere Under these circumstances, a society which prefers people to have silence, or own property, or have bodily integrity, but which does not hold the grounds for its preference to be sufficiently strong to justify overriding contrary preferences by individuals, will give such entitlements according to the collective preference, even though it will allow them to be sold thereafter Whenever transactions to sell or buy entitlements are very expensive, such an initial entitlement decision will be nearly as ective in assuring that individuals will have the merit good as vould be making the entitlement inalienable. Since coercion is nherent because of the fact that a good cannot practically be bought or sold, a society hoose only whether to make an individual have the good by giving it to him, or to prevent him from getting it by giving him money instead In such circum stances society will pick the entitlement it deems favorable to the general welfare and not worry about coercion or alienability; it has increased the chances that individuals will have a particular ood without increasing the degree of coercion imposed on indi viduals. A common example of this may occur where the good involved is the present certainty of being able to buy a future benefit and where a futures market in that good is too expensive to be feasible. 9 27 For a discussion of this inevitable and therefore irrelevant degree of ercion in the accident context, see CosTs 5o-55, I6I-73 a The situation is analogous to that which involves choosing between systems of allocation of accident costs which minimize rapid changes in wealth, througl spreading, and those that do not. Indeed, if the avoidance of rapid changes in wealth is, itself, viewed as a merit good, the analogy is complete. In the accident field a great deal of attention has been devoted to the problem of rapid changes in wealth. See, e.g, Morris& Paul, The Financial Impact of Automobile Acci- dents, IIo U. PA, L. REV. 913, 924(1963). But see W. BLUx h. KALven, PUB- LIC LAW PERSPECTIVES ON A PRIVATE LAW PROBLEM- AUTO COMPENSATION PLANS (r965) 2D A full discussion of this justification for the giving of goods in"kind"is ell beyond the scope of this article. An indication of what is involved may be in order, however. One of the many reasons why the right to vote is given in kind instead of giving individuals that amount of money which would assure them, in a voteless society, of all the benefits which having the vote gives them, is that at any given time the price of those benefits in the future is totally uncertain and therefore, virtually no amount of money would assure individuals of having those future benefts. This would not be the case if an entrepreneur could be counte on to guarantee those future benefits in exchange for a present money payment That is what happens in a futures market for, say, sow's bellies. The degree of uncertainty in the cost of the future benefits of the vote is such, however, that utures market is either not feasible or, what is the same thing, much too costly to be worthwhile. In such circumstances the nonmarket alternative of giving of the good in kind seems more efficient. Many of the merit goods which are, in fact, given in kind in our society-for example, education-share this character HeinOnline 85 Harv. L Rev. 1101 1971-1972
PROTECTING ENTITLEMENTS selves into the opposite position, but we must start somewhere. Under these circumstances, a society which prefers people to have silence, or own property, or have bodily integrity, but which does not hold the grounds for its preference to be sufficiently strong to justify overriding contrary preferences by individuals, will give such entitlements according to the collective preference, even though it will allow them to be sold thereafter. Whenever transactions to sell or buy entitlements are very expensive, such an initial entitlement decision will be nearly as effective in assuring that individuals will have the merit good as would be making the entitlement inalienable. Since coercion is inherent because of the fact that a good cannot practically be bought or sold, a society can choose only whether to make an individual have the good, by giving it to him, or to prevent him from getting it by giving him money instead.2 1 In such circumstances society will pick the entitlement it deems favorable to the general welfare and not worry about coercion or alienability; it has increased the chances that individuals will have a particular good without increasing the degree of coercion imposed on individuals..2 ' A common example of this may occur where the good involved is the present certainty of being able to buy a future benefit and where a futures market in that good is too expensive to be feasible.29 "' For a discussion of this inevitable, and therefore irrelevant degree of coercion in the accident context, see CosTs 5o-55, 161-73. 28The situation is analogous to that which involves choosing between systems of allocation of accident costs which minimize rapid changes in wealth, through spreading, and those that do not. Indeed, if the avoidance of rapid changes in wealth is, itself, viewed as a merit good, the analogy is complete. In the accident field a great deal of attention has been devoted to the problem of rapid changes in wealth. See, e.g., Morris & Paul, The Financial Impact of Automobile Accidents, 11o U. PA. L. RaV. 913, 924 (1962). But see W. BLUM & H. KALvEN, PUBLIC LAW PERSPECTIVES ON A PRIVATE LAW PROBLEM - AUTO COMPENSATION PLANS (1965). 2 A full discussion of this justification for the giving of goods in "kind" is well beyond the scope of this article. An indication of what is involved may be in order, however. One of the many reasons why the right to vote is given in kind instead of giving individuals that amount of money which would assure them, in a voteless society, of all the benefits which having the vote gives them, is that at any given time the price of those benefits in the future is totally uncertain and, therefore, virtually no amount of money would assure individuals of having those future benefits. This would not be the case if an entrepreneur could be counted on to guarantee those future benefits in exchange for a present money payment. That is what happens in a futures market for, say, sow's bellies. The degree of uncertainty in the cost of the future benefits of the vote is such, however, that a futures market is either not feasible, or, what is the same thing, much too costly to be worthwhile. In such circumstances the nonmarket alternative of giving of the good in kind seems more efficient. Many of the merit goods which are, in fact, given in kind in our society - for example, education - share this character- 1972] II01 HeinOnline -- 85 Harv. L. Rev. 1101 1971-1972