Is this question biased?

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I had this question on a recent exam in macroeconomics.

30. Gomez argues that we need to increase the nation's output. Chang contends that our top priority should be a more equal distribution of income and output. It can be correctly stated that these two goals are:

A) essentially unrelated.
B) complementary, in that the realization of one will promote fulfillment of the other.
C) competing, because the redistribution of income might impair incentives to work and produce.
D) complementary, because a more equal distribution of income always promotes economic growth.

The correct answer was C) competing, though after careful deliberation I chose A) essentially unrelated. Why?

It is true that redistribution of income, a la socialism, might impair incentives to work, but based on that mere possibility, why would it and increased national output be considered competing goals? What if income redistribution didn't impair the incentive to work, and a socialist country functioned more effectively than a capitalist one?

When I read the correct answer, I had this image of a big oaf yelling, "Compeeeetitive." I wouldn't be surprised if they're trying to brainwash us into believing that competition is the meaning of life.

I think what the professor is trying to get at with this question is that you cannot take human nature out of the equation when dealing with economics. To be honest, Socialism looks great on paper. Everyone has all they need. However, once you add in the human factors, unless it is done under an iron fist regime, socialism fails.

Simply put, it is human nature to work the least amount possible for the most amount of return for their labor. If one is getting their needs met whether they are working or now, then what incentive is there to work (absent punishment such as beating, imprisonment, or death). Hence, under socialism, productivity goes down. When productivity goes down, national output goes down because human capital is a finite resource (unemployment notwithstanding).

At the end of the day, economics is only about 20% head knowledge and formulas and about 80% human nature. The same goes for personal finance. That is why paying off the smallest debt regardless of interest rate works better for most people to get out of debt than going by interest rate.

The correct answer is C. The first thing they should have taught you in econ is the rationality assumption, this should suffice to clear up any doubt you have about this particular question.

Your thought process on this question was much too rigid, that is why you chose the wrong answer.

Orwell... *sigh*... alright?

It seems to me that theoretically, in a socialist society, you could produce just as much as a in capitalist society, getting your incentive elsewhere than money -- through your genetic makeup, for example. That we can genetically adapt to forms of government is something I think a lot of people overlook.

When people say, "Socialism has failed," they could mean one of two things: that socialism has failed in the past, or that socialism by its nature is doomed to failure. The former does not imply the latter.

Anyway, I'll do some more reading. And please, no personal attacks!

Well, you can't, and for more reasons than just the lack of incentives. Also, the question did not even address socialism- it only brought up the possibility of wealth redistribution, which is not the same thing as socialism and carries a different set of problems with it.


You've brought up something along these lines before. I asked you then to explain what you meant, and I don't remember ever getting much of an answer. What do you mean by people genetically adapting to forms of government? Why do you believe this occurs? Do you have a proposed mechanism for this happening?


Both are true, and to conclude the latter based on the former is reasonable based on inductive reasoning. But there are enough theoretical reasons why socialism fails that appealing to empirical data is unnecessary.

First of all, I commend you for avoiding personal attacks.

By genetic adaption to forms of government, I mean this: When the rules for a society change, the qualities and traits that allow people to function 'well' or 'poorly' also change. In our capitalist society, we have possibly evolved competitive instincts for the purpose of monetary gain, and if so, then these instincts appear as gene-combinations in our DNA. If we began a socialist system, then as we'd still have these genes, getting started would be difficult (we'd feel confused and lack monetary incentive), but as we decided over time who had the most successful traits -- a reverence for duty, a good work ethic, and a devotion to other people -- we could end up with more output.

We wouldn't have to do this by throwing people in furnaces -- that's painful -- but genetic adaptation is at least a possibility and a factor to consider.

The problem is that this is not observed, nor does it match with current theoretical understandings of evolutionary biology. Our being well-suited for capitalistic economies is just an evolutionary holdover from the competitive nature that had evolved long before civilization developed, not a result of the past couple hundred years of capitalism. Humans seek their own best interests, sometimes even at the expense of others. This is just basic natural selection going on, since more competitive early humans would more likely be successful. Now, in the context of a modern society and governmental structures, you have to remember that natural selection really does not act on humans any more, at least not in developed nations. The only selection we have is sexual selection, where some people attain mates and some do not, but this typically is unrelated to other measures of success in society (such as wealth, or community prestige, or any other incentive that may be offered by a particular economic system). In fact, in the West it is typically those who are less successful economically that have more children, and to evolution all that matters is who has the most babies.

Finally, I will note that, genetically, modern humans are not significantly different than we were at the dawn of civilization, and in the interval humans have lived under a wide variety of different forms of government, so the idea that we genetically adapt to our governments is not supported by the evidence.

The correct answers would be either A). or C).

The question doesn't give enough context for there to realistically be one discrete answer. Put simply, the question is too vague, whoever wrote it should feel shameful.

Yes, I chose A) and got marked wrong. Good thing I still aced the test.