Microeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 9

John Rawls is a philosopher famous for his "maximin" principle, which states that society should maximize the position of the people with the minimum amount of goods, and not focus only on the level of inequality. For instance, Rawls would favor a society in which the bottom 10 percent earn $30,000 per year and the top 10 percent earn $2 million over a society in which the bottom 10 percent earn $28,000 per year and the top 10 percent earn $40,000 per year. Drawing on the trade-off between equity and efficiency, explain whether Rawls would favor (a) redistribution that limits growth but creates equality or (b) economic development that encourages growth but creates inequality.