Thinking Clearly about Economic Inequality (Policy Analysis)

Alex Beehler Contributor

Recent discussions of economic inequality,

marked by a lack of clarity and care, have confused

the public about the meaning and moral

significance of rising income inequality. Income

statistics paint a misleading picture of real standards

of living and real economic inequality.

Several strands of evidence about real standards

of living suggest a very different picture of the

trends in economic inequality. In any case, the

dispersion of incomes at any given time has, at

best, a tenuous connection to human welfare or

social justice. The pattern of incomes is affected

by both morally desirable and undesirable mechanisms.

When injustice or wrongdoing increases

income inequality, the problem is the original

malign cause, not the resulting inequality. Many

thinkers mistake national populations for “society”

and thereby obscure the real story about the

effects of trade and immigration on welfare,

equality, and justice. There is little evidence that

high levels of income inequality lead down a slippery

slope to the destruction of democracy and

rule by the rich. The unequal political voice of the

poor can be addressed only through policies that

actually work to fight poverty and improve education.

Income inequality is a dangerous distraction

from the real problems: poverty, lack of economic

opportunity, and systemic injustice.Recent discussions of economic inequality,

marked by a lack of clarity and care, have confused

the public about the meaning and moral

significance of rising income inequality. Income

statistics paint a misleading picture of real standards

of living and real economic inequality.

Several strands of evidence about real standards

of living suggest a very different picture of the

trends in economic inequality. In any case, the

dispersion of incomes at any given time has, at

best, a tenuous connection to human welfare or

social justice. The pattern of incomes is affected

by both morally desirable and undesirable mechanisms.

When injustice or wrongdoing increases

income inequality, the problem is the original

malign cause, not the resulting inequality. Many

thinkers mistake national populations for “society”

and thereby obscure the real story about the

effects of trade and immigration on welfare,

equality, and justice. There is little evidence that

high levels of income inequality lead down a slippery

slope to the destruction of democracy and

rule by the rich. The unequal political voice of the

poor can be addressed only through policies that

actually work to fight poverty and improve education.

Income inequality is a dangerous distraction

from the real problems: poverty, lack of economic

opportunity, and systemic injustice.

Will Wilkinson is a research fellow at the Cato Institute and editor of Cato Unbound.