Inequality and the Wheel of Fortune: Systemic Causes of Economic Depri vation

Flora Gill

No 203, Working Papers from University of Sydney, School of Economics

Abstract: This paper synthesises elements drawn from standard economic theory, the concept of 'cognitive dissonance' and ethics. It puts forward a case for maintaining an extensive welfare state. The argument is based on the concept that an individual's fate is based, not on a series of independent random draws, but rather on what is described as 'path-dependent fortune'. In addition, limits on human capacity to identify the merits of individuals independent of social prejudice and preconceptions interact with this path-dependence. The end result is that inequality tends to feed on itself. 'Equality of opportunity' alone cannot remedy this situation. The systematic 'accumulation of disadvantage' on the part of some individuals provides the basis for a moral argument for government interview, both in the provision of a range of basic needs and in labour market training.

Date: 1994-07
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