Fairness and Distributive Justice Justice and Moral Equality • Justice means that we need to treat all people as “moral equals.” • It recognizes that people are different in many ways, but we need to treat them as the same when it comes to morality. • However, this does not mean that we need to treat all people in exactly the same way. • The key is to determine what is a morally relevant difference to decide that we can treat people differently. Sameness and Difference • Moral equality requires that organizations and individuals do not treat people differently on the basis of morally arbitrary features. • This leads to a major issue—what’s a morally arbitrary feature? • In general, we see “immutable characteristics” as morally arbitrary: • Race • Sex • Age • Religious preference (this one is debated, with some arguing that religion is something which is easily changeable, and others arguing this is not). • Sexual orientation (this one is debated as well, with some arguing that sexual orientation is something we are born with, and some arguing it is not). What about things we aren’t “born with?” • We generally are asking the question of whether this is something someone can do something about, e.g., can their choices lead to better or worse outcomes (although even that is debated—as we will see!). • So, many philosophers have argues economic class is immutable since class is a construct of society, but others say we can change our class through our choices. • Familial relationship to those in power—anti-nepotism, basically—is generally seen as arbitrary as well, but, again, is it? So, how can we treat people differently? • One of the key questions of justice is determine under what circumstances it is OK to treat different people differently. • Is it OK to treat your family differently than a stranger? • Is it OK to give special parking to the disabled? • Is it OK to punish a criminal? Types of Justice • Retributive Justice: this is what we often think of as “criminal justice.” People being held accountable and punished for violating the rights of others. • Compensatory Justice: this is what we generally think of as justice in the civil court system. Make sure that those who infringe on the rights of others have to give fair recompense to those who are harmed. • Distributive Justice: this is the most common form of justice in business ethics. This is ensuring that society allocated benefits and burdens in a way that treats people as moral equals. This is the one we are concerned about in this course. • We can look at this both at a large societal level, but also in smaller ways as well, e.g., if you have 5 applicants and 1 job opening, who gets it? Distributive Justice • Distributive justice involved treating people as moral equals in the assignment of right and responsibilities. • The problem is, of course, that moral equality has many different interpretations. So, how do we ...

1. Fairness and
Distributive Justice
Justice and Moral Equality
• Justice means that we need to treat all people as
“moral
equals.”
• It recognizes that people are different in many
ways, but we need
to treat them as the same when it comes to
morality.
• However, this does not mean that we need to
treat all people
in exactly the same way.
• The key is to determine what is a morally
relevant difference
to decide that we can treat people differently.
Sameness and Difference
• Moral equality requires that organizations and
individuals do
not treat people differently on the basisof morally
arbitrary
features.
• This leadsto a major issue—what’s a morally

2. arbitrary
feature?
• In general, we see “immutable characteristics” as
morally
arbitrary:
• Race
• Sex
• Age
• Religious preference (this one is debated,
with somearguing that
religion is somethingwhich is easily changeable,
and others arguing
this is not).
• Sexual orientation (this one is debated as well,
with somearguing
that sexual orientation is somethingwe are born
with,and some
arguing it is not).
What about things we aren’t
“born with?”
• We generally are asking the question of whether
this is
somethingsomeone can do somethingabout, e.g., can
their
choices lead to better or worse outcomes
(although even that
is debated—as we will see!).
• So, many philosophers have argues economic class is
immutable sinceclass is a construct of society,
but others say

3. we can change our class through our choices.
• Familial relationship to those in power—anti-
nepotism,
basically—is generally seen as arbitrary as well, but,
again, is
it?
So, how can we treat people
differently?
• One of the key questions of justice is
determine under what
circumstances it is OK to treat different people
differently.
• Is it OK to treat your family differently than a
stranger?
• Is it OK to give special parking to the
disabled?
• Is it OK to punish a criminal?
Types of Justice
• Retributive Justice: this is what we oftenthinkof as
“criminal
justice.” People being held accountable and
punished for
violating the rights of others.
• Compensatory Justice: this is what we generally
thinkof as
justice in the civil courtsystem. Make sure that
those who

4. infringe on the rights of others have to give
fair recompense to
those who are harmed.
• Distributive Justice: this is the most common form of
justice in
business ethics. This is ensuring that society
allocated benefits
and burdens in a way that treats people as
moral equals. This
is the one we are concerned about in this course.
• We can look at this both at a largesocietal level,
but also in
smaller ways as well, e.g., if you have 5 applicants
and 1 job
opening, who gets it?
Distributive Justice
• Distributive justice involved treating people as
moral equals in
the assignment of right and responsibilities.
• The problem is, of course, that moral
equality has many
different interpretations.
So, how do we consider people
to be “moral equals?”
• Libertarianism: equal respect for rights
• Merit & Desert: equality of opportunity
• Utilitarianism: equal consideration of interests
• John Rawls: The Difference Principle/Justice as

5. Fairness
• Ronald Dworkin: Initial equality of resources
• Amrtya Sen: equality of capabilities
• Equality of welfare (economic satisfaction, not
like the welfare
system)
• Equality of access to resources
LIBERTARIAN JUSTICE
Equal Respect for Rights
• Libertarianism: distribution of rights and
responsibilities is just
if, and only if, it respects people’s natural rights
to ”self
ownership.”
• Self-ownership: ownershipof your own body, own
labor, and
your thoughts. These are negative rights—in otherwords,
others shouldn’t interfere with thesewithout your
permission.
John Locke
Locke & Property Rights

6. • Locke believed that “Though the earth, and all
inferior
creatures, be common to all men, yet every man
has a
property in his own person: this nobody has any
right to but
himself. The laborof his body, and the work of
his hands, we
may say, are properly his. Whatsoever then he
removes out of
the state of nature hath provided, and left it in, he
hath mixed
his laborwith,and joined to it somethingthat is
his own, and
thereby makes it his property…at least where
thereis enough
and as good, left in common for others.”
Libertarian Argument for
Private Property Rights
• All people have equal natural right of self—
ownershipto their
labor.
• People who “mix” their laborwith somethingun-owned
come
to own it, as long as they leave enough, and as
good, for
others.
• Therefore, people have a natural right to their
initially
acquired property.

7. • This property right incudes the right to give, sell, or
trade.
• Therefore, people have a natural right to any
property that
they have acquired by initial acquisition or by
just transfer
from others.
• Property rights are distributed justly when
they are acquired
in thesetwo ways.
Weakness
• Actual property rights mostly acquired by force.
• Mixing is a metaphor—and perhaps not a good
one? What if I
take a can of soup (which I own)and pour it in
the ocean, do I
now own the ocean? If you mix the pollution
your company
emits with the atmosphere, do you then “own” it,
and
therefore have responsibility for it?
• Leaving enough and as good for others doesn’t
work. At this
pointwhat isn’t owned? Is it really possible to
leave “enough
and as good?”
• Replace mixing metaphor with producing compensating
value for
others.
• Value produced by specialization and the division of

8. labor, not by
individual effort. People rarely produce value on
their own!
UTILITARIAN JUSTICE
Equal Consideration of
Interests
• Equal Consideration of Interests: a distribution is
just, if and
only if, it assigns the same weight to everyone’s
interests in
the aggregation of interests for purposes of
utilitarian
maximization.
• This is an indirect or “rule” utilitarian theory:
it claims that
equal consideration of interests will lead to the
equality of
resources because the diminishing marginal utility of
income.
Total and Marginal Utility
• Total utility: the sum of all the utility
produced by the
consumption of those goods or services.
• Marginal utility: additional utility gained through
the

9. consumption of one additional unit of that good or
service.
• Law of Diminishing Marginal Utility: as the
consumption of a
given good increases, the marginal utility produced by
the
consumption of one additional unit of the good tends
to
decrease.
For Example…
• For example, imagine you go out drinking on Friday
night. That
first drink is awesome and you’re feeling good
and having a
good time sinceyou had a long week. The second
drink is
pretty good too. The third’s OK, but it’s getting in
to the
evening now and you’re feeling pretty buzzed.
By the 6th drink
now you’re passed out puking out behind Streets.
Drinks 0 1 2 3 4 5 6
TU 0 3 5 6 6 4 0
MU 0 +3 +2 +1 0 -2 -4
Argument for the Equality of
Resources

10. • Imagine we live in a limited world of drinks,
and two people
who are drinking. How do we distribute the drinks in
a fair
way?
• In this example, we have only 4 drinks to
distribute.So how do
we maximize totally aggregate utility? Well, we
have to do the
math. This assume people get the same utility
functions out of
drinks!
Person A Person B A TU B TU AU
4 0 6 0 6
3 1 6 3 9
2 2 5 5 10
1 3 3 6 9
0 4 0 6 6
Weaknesses
• People can have unfair preferences—one person
can like
drinks more than another.
• People can also be jealous of otherpeople—they
can have
their pleasure taken down by the pleasure of

11. others.
• So this leadsto the problem of it being hard to
calculate
properly here.
EQUALITY OF OPPORTUNITY,
WELFARE, & RESOURCES
Equality of Opportunity
• Equality of Opportunity: a distribution is just if
and only if it
assigns positions in society according to morally
relevant
criteria such as ability or merit and not
according to morally
arbitrary such as race or gender.
• People should get benefits based on ability
and past
performance.
• This is typically the one we strive for in
business—giving
positions of power to those who have the greatest
ability and
performance.
Problems with Equality of
Opportunity

12. • Aren’t ability, effort, merit, and desert
determined by factors
that are arbitrary from a moral pointof view?
• Genetic lottery
• Family background
• Lucky decisions
• Even effort can be determined by background!
• How should benefits be distributed to
positions?
• In otherwords, this isn’t telling us how these
benefits should be
distributed to the positions. Should the CEO make
1,000,000x the
salary of the lowest worker? 100x? 10x? 5x
• Usually we’re figuring it via marginal
contribution—what does the
individual in that position bring to the firm,
marginally?
Desert & Marginal
Contribution
• What sort of marginal contribution does, say, a
CEO bring?
• Obviously the CEO of a big corporation has a
lot of business
knowledge and experience they can bring to
bear on a problem, and
that’s awesome.
• Butwould they really be able to do that job
without the people
under them? Now just their VPs, but all the way

13. down to the
janitors—if no one was taking care of the
physical plant, then
customers wouldn’t want to come to the office,
clients would be
lost, and the CEO would be spending his or her
time scrubbing out
bathrooms.
• In addition, this leadsto an issueof the order in
which employees
are hiredin. The 1st employee, technically, brings
the most to the
firm because therewas 0 first. But if the first
employee is doing a
low level job and the second is doing a high
level one, the marginal
contribution isn’t actually reflective of what they are
doing.
Equality of Welfare
• Equality of welfare: distribution of property rights
and
resources is only just if and only if the result is
that everyone
has the same level of welfare, or preference
satisfaction.
• How do you measure welfare?
• What about expensive tastes? This seems to
say that we
should give more resources to those who like
expensive
things.

14. Equality of Resources
• Strict equality of resources: distribution of
property rights in
resources is just if and only if it results in
everyone having the
same amount of resources.
• Everyone gets everything exactly the same.
• This solves a lot of problems—there are no
measurement
problems, thereare no comparison issues, thereis no
expensive tastes problem, everything is equal!
• That said, few people—if anyone—holds this view.
Why? It
doesn’t account for any sort of motivation to do
anything.
THE DIFFERENCE PRINCIPLE
The Difference Principle
• John Rawls proposed in this 1971 book A Theory
of Justice,
that “all social primary goods—liberty and opportunity,
income and wealth, and the bases of self-
respect—are to be
distributed equally unless an unequal distribution

15. of any or all
of thesegoods is to the advantage of the least
favored.”
• The difference principle says a distribution of
rights and
responsibilities is jut if and only if everyone
receives the same
resources unless an unequal distribution results in
the least
well-off receiving more than in the strictly equal
distribution.
Strengths
• Distributes measurable income and wealth
• Avoids leveling down problem—because the least
well off are
getting more from theseunequal distributions
• Creates incentives for people to contribute—so long as
the
least well off are better off, then doing things
that contribute
to the society are rewarded
Weaknesses
• No extrashares for natural handicaps
• Doesn’t hold people responsible for their choices.
• It creates incentives because those that contribute
more get
more.

16. • However, there’s a free rider problem—you don’t
have to do
anything and still can’tfall beneath the “floor.”
Initial Equality of Resources
• Initial Equality of Resources: a distribution of
rights and
responsibilities is just if and only if it is the
result of people’s
free choices after an initial strictly equal
distribution or
resources couples with insurance against natural
handicaps.
• Ambition sensitive: initial strictly equal
distribution of
resources. After this, people’s choices determine their
fair
shares. Equal “starting gate.”
• Endowment insensitive: a hypothetical insurance
market
provides extraresources to those with higher costs
due to
natural handicaps
Strengths
• Incentives
• Responsibility for choices
• Insurance against natural disadvantages

17. Weaknesses
• Distribution will depend on both choices and luck
• Presupposes individual production rather than
specialization
and division of labor
• Extremely complicated in actual application