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torek, 26 januarja, 2021

Bernard Brščič: Ronaldo and the Illusion of Social Justice

Ferrari LaFerrari, two F12 TDF Ferrari, Pagani Huayra, Lamborghini Aventador LP 700, Bugattti Veyron, Rolls Royce Phantom, Mercedes AMG S65, are just a selection of cars owned by Cristiano Ronaldo. In addition to various types of private properties, the Portuguese soccer player owns a private jet, the gulfstream G-200. The price for a new one is 19 million USD. Such luxury can easily be afforded if we consider that his annual salary at Juventus FC amounts to 31 million euros. 31 million euros in net pay! On the other hand, a cleaner in Slovenia hardly exceeds the minimum wage, which amounts to a net of € 638 per month, or € 7,656 per year. Ronaldo’s annual salary is 4,049 times higher than the wages of a cleaner. In other words, we could employ as many as 4,049 cleaners for Ronaldo’s salary. An extreme example of inequality created by a market economy. How to morally justify such differences in salary? Are the unbelievable ball tricks of the skillful Portuguese really worth more than four hundred times the contribution of a Slovenian cleaner?

The Socialists will say a laconic NO. The market economy creates morally unacceptable inequality, and if we follow the modern-day left-wing bible Capital in the 21st century by Thomas Piketty, the inequality is only increasing. Capitalism is supposedly not only a social injustice system, but also an ineffective one. For the latter claim, they cannot state either theoretical nor empirical arguments. There is no better empirical test than the prosperity of companies in the market economy and, on the other hand, the misery of socialism. Capitalism works, socialism does not. The superiority of the market economy was already demonstrated, at the theoretical level, in the middle of the last century by later recipients of the Nobel Prize for economics Kenneth Arrow and Gerard Debreu. Firstly, assuming the rationality of economic agents, complete information and motivation with self-interest brings the market mechanism to a Pareto-optimal result. Second, every Pareto-optimum condition is achievable by initial resource redistribution. These two conclusions, the so-called 1st and 2nd parts or theorems of the Theory of Prosperity, are the formal confirmation of more than the two centuries old insight by Adam Smith that the free market is the most effective allocation mechanism. The socialists cannot challenge the validity of the two theorems, only the equity of distribution can be put into question. Nothing is said about the desirability and fairness of these theorems since the attainment of Pareto-optimality is not related to them. In contemporary economic theory, they are perceived as exogenous, plunged into the field of meta-economics.

The market system is neither moral nor immoral, it is an amoral, value-neutral system that does not necessarily reward according to meritocratic principles but works in accordance with the contribution to the welfare of others.

If the question of equity in economic theory does not play a role today, it occupies a central role in moral and political philosophy. It is not enough for the socioeconomic system to be effective; it must be perceived as just. Not socially just, however, because this cannot be achieved in a market society. There is no entity on the market that would determine allocation shares in advance in accordance with a specific social plan. The price mechanism is an impersonal, spontaneous order, and the final distribution result is an unintended consequence of the operation of millions of customers and producers. Imposing a distribution pattern or certain degrees of inequality ex ante, in line with the ideals of social justice, means denying the catalytic nature of the price mechanism and hence its narrowing into a central-planning system. This can provide equality, but only at the expense of the abundance of goods and services.

Despite the obvious superiority of the market system, the white lies about its morality and meritocratic nature must be rejected. The market system is neither moral nor immoral, it is an amoral, value-neutral system that does not necessarily reward according to meritocratic principles but works in accordance with the contribution to the welfare of others. Therefore, the most hard-working, smartest or most beautiful are not necessarily rewarded, but those who contribute most to the prosperity of their fellowmen are. Here we can look for a reason to justify the astronomical salary of Cristiano Ronaldo. His legendary free throws are greeted by millions of soccer enthusiasts and the market mechanism for his contribution to the prosperity of others rewards him abundantly. We can frown upon the Ronaldo supporters or philosophize that the utilitarian ethics is the philosophy of pigs but, at the end of the day, Ronaldo seems to be earning his salary.

In a truly free society, social justice is not achievable, only procedural justice is. The rules of the game must be the same for everyone. If this so-called isonomy is achieved, the results of the market game are also fair at the end of the day. The inequality and the 31 million euros high salaries of football masters is the price we pay for enjoying prosperity. We must be grateful to the socialists for their equality. Let them be the same, equal in socialist poverty. Let us, with our ideas about improving the world and social justice, be rewarde

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