Rawlsian Philosophy Revisited
Growth, the Environment, and Asteroid Cities
Imagine you had the power to create a society from scratch. Once you create it, you have to live in it, but you could be anybody. You might be born rich or poor, you could be any race or gender. You might be born with a severe mental disability—or be the heir of a leading business family.
That’s roughly the scenario that twentieth-century philosopher John Rawls describes in his book, A Theory of Justice. Rawls is a common poster boy for the left. Bill Clinton gave him a medal. Jacobin magazine praised him, arguing that his thought experiment requires socialism. The argument is that you’d be afraid you’d lose the birth lottery and end up poor or otherwise badly off, so you’d even things out for everyone with massive redistribution. Rawls himself says inequality should only be permitted when it benefits the least well off in society.
But does Rawls’s philosophy imply socialism? Of course, those with a strongly held belief in liberty have moral objections to redistribution. But there’s something else to consider. What if there was no way, in Rawls’s scenario, of knowing when you would be born? In the society you’re setting up, maybe you’d be born right away, but probably you’d be born generations in the future. There are far more people who are yet to be born than there are people alive right now. So you’d want to make a great society for people living in the future—not just people living right now.
The best way to create a good society for people living in the future is economic growth. Over time, compounding economic growth makes everyone better off than before, especially the least well off. As Tyler Cowen puts it: “We do face ethical dilemmas in our world, but the only way we can possibly resolve those is to sustainably increase the pie for everyone over long time-frames.” So, if you’re operating as a utilitarian within Rawls’s framework, you’d probably want to take care of the least well-off today in a way that doesn’t slow down growth or break economic incentives.
That rules out large-scale redistribution. Examples of the failure of economies that don’t protect property rights abound. Mexico’s growth flatlined for a decade after the Mexican Revolution of 1910. China only started growing after Deng Xiaoping introduced market-based reforms to the communist country starting in the late 1970s. To take a much more moderate example, Sweden got rich as a free-market country and, after raising taxes during the 1960s and 70s, saw its economic growth rate drop to a percentage point below the rest of Europe.
One percentage point doesn’t sound like very much. But due to the effects of compounding, the differences that result from a percentage point of economic growth become staggeringly large over time. Compare the United States to Mexico from 1820 to 1950. Per capita GDP in the US grew by about 1.6 percent per year. In Mexico it grew by only about 1 percent annually. That’s only a little more than half a percentage point of difference. But by 1950, average Americans were almost eight times richer than their great-great-great-grandparents, while the average Mexican citizen was only three times richer. In Mexico in 1950 nearly half the population could not read and the life expectancy was 50, while in the US only 3 percent of people couldn’t read, and the life expectancy was almost 70.
People living two hundred years ago probably thought they had it pretty good. The industrial revolution had begun, and many were better off than their parents’ generation. But from our vantage point their living conditions look miserable—no air conditioning or indoor plumbing, primitive medicine, uncomfortable and slow travel. More than 40 percent of children died before the age of five, while the life expectancy was less than 40 years. It would seem cruel to condemn anyone to live like nineteenth century people did.
If we can maintain economic growth in our societies across the next two hundred years and fight to ensure regulations don’t block innovation, we will see similarly shocking improvements in quality of life. Our way of life will seem just as backwards and inhospitable to our descendants as our great-great-great-great grandparents’ lives do to us. Settling for even a slightly lower rate of growth makes a radical difference.
When we try to imagine what life could look like a hundred years from now, in a world of continued, compounding economic growth, we have to think bold. Many of the things we take for granted today would necessarily sound wacky to someone in the nineteenth century. Imagine trying to describe a nuclear submarine or a Boeing 747 to someone in 1821, let alone virtual reality or the Internet. Attempts to imagine the future will sound like crazy science fiction, too—that is, until they come true.
In a future world where economic growth has made our society a hundred times richer than it is now, many of the problems that confront us today will seem quaint. Take the example of the environment. After an initial industrial phase, richer countries find it much easier to be greener. As an extreme example, the two greenest countries in the world, Luxembourg and Denmark, are also among the very richest. More growth and more wealth means a greener world.
Vanquishing the threat of climate change is only barely beyond our grasp today, and it’s growth that will bring it fully into reach. Barring any major breakthroughs, it’s estimated it would require about 3–4 percent of current world GDP to fund sufficient carbon capture and sequestration to contain climate change. But we have to meet this challenge while maintaining growth—which means allowing the creation and allocation of great wealth by skilled entrepreneurs and investors. That shouldn’t be a problem: With sustained economic growth, carbon capture will become easily affordable, as the necessary amount shrinks to a tiny fraction of our total wealth. In an economic climate where innovation is rewarded, cost-cutting improvements could bring the cost of solving climate change down even faster. Maybe the trade-off between economic growth and the health of the environment isn’t a trade-off at all.
Plentiful, cheap energy and raw materials will generate massive improvements in infrastructure. We’ll build roads, buildings, and tunnels at a fraction of the time and cost. Consider the revolution sparked by cheaper twentieth-century construction methods and imagine that happening on top of what we have now.
We’ll be able to transform our surroundings. Energy-intensive desalinization will become commonplace, making large tracts of previously uninhabitable land on Earth able to support large populations. This won’t just happen on Earth, either. Private islands will go out of style in favor of private terraformed asteroids, as space travel becomes quicker, safer and more frequent. A new Las Vegas will rise from the desert sands of Mars, as terraforming technology renders the red planet into a lush oasis. The middle class will be able to afford their own private amusement parks or enormous mansions underwater or in new Martian subdivisions.
Today it costs $55 million for a ticket to stay on the International Space Station (ISS). Most of that cost comes from the rocket and high costs imposed by the government-administered ISS. Private space stations would cut these costs down to a small fraction. Energy breakthroughs will reduce the cost of launching a rocket. Economies of scale and competition between firms will set in as traffic increases, knocking another order of magnitude apiece off the cost. Then, consider a society where the median person is 40 times richer than today, just as the median person is 40 times richer today than in 1800. Hopping into space could cost no more than a low-cost airline ticket.
Maybe the most impressive achievements will come through a transformation of healthcare. Getting the right care will become massively easier for the vast majority of people thanks to automated diagnosis and surgery. Methods will be developed to keep the physical and mental toll of aging at bay. With revolutionary treatments for Alzheimer’s and cancer, 3D-printed organs, and new cognitive-science techniques to preserve high brain function, it will become common to see ninety-year-olds surfing at Half Moon Bay. In mental health, completely personalized therapy and pharmacology massively available at low cost will dramatically expand the frontiers of self-actualization. It will be easy to access the right interventions that will allow individuals to reach peak performance in their work and personal lives.
This will be true of education, too. In a world of sustained growth, even the poorest children in society will receive teaching that is higher in quality than what the richest children, with the most educational resources at their disposal, receive today. As a result, this society will be more interesting. The art and writing it produces will be better informed, more incisive, and more impressive.
Rawls’s moral and utilitarian philosophy challenges us to build a society where everyone can thrive. But we have to meet this challenge while maintaining growth. It’s dangerous to think that we are at the “end of history”. We have to resist the temptation to rest on our laurels, to assume current conditions are as good as they can get. In 1820, many felt they were living in the wealthiest society in history, and they were right. But if they had not made the right trade-offs and adopted the right policies to allow for disruption and growth, such as the radical expansion of corporate charters, our world today might look very different.
What’s actionable about this philosophy today? For one, a leaner and more adaptive regulatory state boosts economic growth, while outdated and arbitrary regulations cause stagnation. The U.S. regulatory code is currently over 100 million words long and contains over 1 million restrictions, with each state enforcing another 100,000–200,000 in their respective codes. Thousands of outdated, bureaucratic or outright crony rules are on the books today, like one banning foreign companies from dredging canals for shipping, or rules preventing competitors from starting innovative new hospitals and clinics to bring down costs. These rules have likely slowed US growth by at least 100 basis points a year over recent decades. One estimate puts the regulatory drag on the US economy since 1949 at 2 percent a year.
To put it in terms popular in certain circles, maintaining compounding economic growth is an equity issue—so fixing the regulatory state is an equity issue, too. So is preventing the capital gains tax rate from rising out of control to encourage capital reallocation to higher-return, higher-growth projects, and other policies tied directly to the rate of growth of our economy.
We have to remain humble when considering the state of the world today compared to the inspiring wonders of the future. Rawls’s philosophy offers an important moral framework—but applying it wisely requires valuing both people today and those living in the future world our descendants will inherit. If we embrace the values of a free society and growth-minded frameworks, there is no limit to the lives our children and descendants will enjoy, or to what humanity will achieve.