8 - The Growing Importance of Equity and Safety Nets

Summary

Growing popularity of welfare policies after the Second World War but opposition to them continued by pro-market economists, such as Milton Friedman, Robert Lucas, and economists at the Chicago School. Others strongly supported redistributive policies, including Amartya Sen. There was important work by John Rawls, a philosopher. He introduced two popular redistributive principles. Rawls’ “second principle” justified some income inequality if it made the market more efficient, and if it helped those at the bottom of the income distribution by creating good jobs for them. Still, redistribution of income remained controversial and continued to be strongly opposed by some. Skepticism vis-a-vis a large government role remained strong among some groups, and it would lead to market fundamentalism in the 1980s. There was debate as to how well the market was performing. Some harmony between the market and government role was approached only rarely, and for short periods.