Summary and conclusions
The Adelman-Morris premise that economic development and equity are incompatible is not supported by the evidence of a strong relationship between equality of rights and the income distribution. The premise that equity requires the denial of individual rights and the affirmation of state control is an oxymoron. What has been overlooked in the literature on growth and equity is the effect of the rights structure on both economic efficiency and on the income distribution. The evidence is that free societies have much larger shares of income going to the middle 60 percent of the distribution than is observed in societies where men are not free to choose. In politically open societies compared to politically closed regimes the share of income to the middle three quintiles is: Q2 (10.7 vs. 8.0), Q3 (16.0 vs. 11.5), and Q4 (22.9 vs. 17.9). In the aggregate the shares to the middle quintiles are 49.6 vs. 37.4. In nations that obey the rule of law compared to regimes in which the rights of the state relative to the individual are paramount the comparisons are: Q2 (11.2 vs. 7.4), Q3 (16.3 vs. 10.6), Q4 (23.0 vs. 17.3). Summing the three quintiles yields a comparison of 50.5 vs. 35.3. In countries that have private property, market allocation of resources, and minimum intervention by the state compared to command economies the shares of income to the middle quintiles are: Q2 (10.8 vs. 8.0), Q3 (16.0 vs. 11.1), and Q4 (22.8 vs. 17.7). Aggregated the shares of the middle class in regimes with high levels of economic liberty are 49.6 vs. 36.8 for regimes with restricted private economic rights.
Equally revealing as a matter of equity is the status of the poor and the rich in free and statist nations. The income share of the highest income group is much larger in nations that repress individual rights than in those where rights are protected. Averaging across the rights measures the share of income going to the highest income quintile is 58.3 percent among the least free nations and is 44.4 percent among the most free, a staggering difference of nearly 14.0 percentage points. Among the poorest members of society choice of the rights regime does not have much of an impact on their share of income. While the share averaged across rights measures is larger in the most free nations (5.7 vs. 5.3), the difference is not statistically significant.3
Economic progress and equity are not incompatible. Nations can move to a less restrictive rights regime and increase economic efficiency, economic growth, and equity. Collectivism is a lubricious path to economic progress and equity. Using Ward's composite inequality index, they correlated the Ward measure with GNP per capita, Gastil's rights measures, and a number of other policy and quality of life variables. They found evidence that choice of economic system (capitalism vs. socialism) had no effect on the inequality measure, but that inequality diminishes with increases in civil and political rights.
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I thank Robert Klitgaard, Philip Porter, Julian Simon, Dan Slottje, George Stigler, Robert Tollison, and Gordon Tullock for comments on the initial draft of the paper.
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Scully, G.W. Rights, equity, and economic efficiency. Public Choice 68, 195–215 (1991). https://doi.org/10.1007/BF00173828
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DOI: https://doi.org/10.1007/BF00173828