OKLAHOMA LAW REVIEW
At the other extreme, libertarians start from the premise that free-market outcomes reflect the free and voluntary trades made by relatively equal market participants.12 Pure libertarians argue that the free market’s distribution of economic resources is inherently just and that the government has no right to interfere with it. Not surprisingly, libertarians generally argue that individuals should be allowed to keep whatever income and wealth they acquire in the marketplace. Moreover, most libertarians doubt that government intervention would actually make society better.
Almost everybody actually falls somewhere in between these two extreme positions. Those with an egalitarian bent usually concede that differential rewards are needed to ensure adequate productivity, and those with a libertarian bent typically concede that some minimal amount of redistribution is needed to help the truly disadvantaged. As already mentioned, government tax and transfer policies currently reduce household income inequality by about 20%.13
To be sure, it seems unlikely that a convincing moral argument can be made for any particular level of redistribution. There is simply no magic 90/10 or 80/20 ratio that defines the theoretically and morally “correct” level of inequality.14
As the current after-tax, after-transfer distribution shows, however, there is a fairly strong consensus in favor of at least some government policies to reduce economic inequality. Moreover, we are always debating government policies that would achieve additional redistribution.
We are especially interested in government policies that can both improve the rewards from work and promote greater economic justice. Improving the rewards from work would encourage more people to work, and their added productivity would increase the size of the economic pie. We could then achieve greater economic justice by making the shares of that larger pie more equal.
The key here is to design government policies that encourage work and work effort, and we have already begun to do so.
See supra fig.6 (representing the libertarians with the light gray bars).
See id. Compare the free market distribution (light gray bars) with the after-tax, after-
transfer distribution (dark gray bars). 14. See id. (representing a hypothetically just distribution with the black bars).