Rawls's Difference Principle in Latin America — Epoche B2
Neither Trickle-Down nor Transfers: What the Difference Principle Actually Demands Two misreadings, not one John Rawls's difference principle is often dismissed as a philosopher's version of trickle-down economics [1] : inequality is permitted so long as the poor eventually get something. That reading is wrong, and correcting it is easy. The harder point, and the argument of this essay, is that the usual correction is also wrong. Having established that the difference principle is demanding, readers commonly conclude that it demands large redistributive transfers to the poor. It does not. It is a standard for the design of the basic institutions of a society, and on Rawls's own later assessment a society that leaves ownership concentrated and corrects the outcome afterwards by transfers cannot satisfy his principles however generous the transfers are [2] . The test case is Latin America, and specifically the large conditional cash transfer programmes of the last thirty years. They are the best-documented attempt anywhere to raise the position of the worst-off by direct payment. A Rawlsian assessment of them is more critical than either the trickle-down reading or its usual corrective would lead one to expect, and the criticism falls under the first principle rather than the second. The principles, and one distinction that is usually lost In A Theory of Justice (1971 [3] ) Rawls asks what principles would be chosen behind a veil of ignorance that hides one's social class, natural talents and conception of the good. He argues for two, in strict order of priority. The first requires an equal scheme of basic liberties for all. The second permits social and economic inequalities only if they are attached to positions open under fair equality of opportunity and work to the greatest benefit of the least advantaged. The final clause is the difference principle . The distinction usually lost is between the difference principle and maximin . Maximin is a rule for choosing under uncertainty: pick the option whose worst outcome is best. Rawls uses it as part of the argument for why parties behind the veil would select his principles, given that they are choosing once, for the rest of their lives, in ignorance of probabilities. The difference principle is not maximin; it is the distributive standard that results. The two are often run together, and the conflation makes the principle look like a rule of thumb about caution rather than a requirement on institutions. Why is it not trickle-down? Because it is comparative and it binds. It does not ask whether the poor are better off than they were, or whether some benefit reaches them eventually. It asks whether the worst-off position is as high as any feasible alternative arrangement of the basic structure would make it. If another arrangement would raise that position, the present inequality is unjust, however much wealth it produces in aggregate and however much of that wealth reaches the bottom. The basic structure, and why the object of assessment matters Rawls insists that his principles apply to the basic structure : the political constitution and the principal economic and social arrangements, taken together and considered over time. They are not a test to be applied to individual policies one at a time. This is not a technicality. Suppose a country adopts a transfer that measurably lifts the income of its poorest households. Assessed alone, the policy looks like exactly what the difference principle requires. Assessed as Rawls intends, the question is different: does the structure that makes such a transfer necessary — the distribution of land, capital and educational opportunity that determines who is poor in the first place — arrange inequality so as to maximise the worst-off position? A transfer can raise incomes at the bottom while leaving that structure untouched, and the two assessments can therefore come apart. Rawls's own verdict on regimes Rawls addressed this directly in Justice as Fairness: A Restatement (2001, §41), where he compares five kinds of regime and asks which could realise his principles. He rejects laissez-faire capitalism, state socialism with a command economy, and — this is the point that matters here — welfare-state capitalism . Only a property-owning democracy and a liberal socialist regime survive. His objection to welfare-state capitalism is not that it redistributes too little. It is that it permits very large concentrations in the ownership of productive assets, and then attempts to repair the resulting distribution at the end of each period by transfers to those who have lost out. Two things go wrong. Concentrated wealth translates into political influence, which corrupts what Rawls calls the fair value of the political liberties: formal rights to vote and stand for office are worth much less to those without the resources to use them, and this failure is a failure of the first principle, which has priority. And a class supported by transfers rather than by productive assets of its own is, in Rawls's description, a group that may come to be seen and to see itself as dependent — a loss in the social bases of self-respect, which he counts among the primary goods. A property-owning democracy, a term Rawls takes from the economist James Meade's Efficiency [4] , Equality and the Ownership of Property (1964), works at the other end. It disperses ownership of wealth and capital, and access to education and training, before each period of economic activity, so that citizens are able to manage their own affairs on a footing of equality rather than being compensated afterwards. The difference in timing is the whole point: predistribution rather than redistribution. Applying this to Latin America Mexico's Progresa, later Oportunidades, began in 1997; Brazil's Bolsa Família followed in 2003; similar programmes spread across the region. They pay cash to poor households conditional on school attendance and health checks. The ev