Posts tagged with: Income inequality in the United States

chartFueled, in part, by the Pope’s passionate appeals, the campaign to reduce income inequality is growing rapidly around the globe.

The income equality movement argues that there is a growing gap between the incomes of top earners and everyone else. This claim is supported by a recent study conducted by the International Monetary Fund. In the United States, the income growth rate for the highest income earners has significantly surpassed the national average over the past 30 years.

Many politicians, including President Obama, have called for policy changes in order to slow the growing divide. However, this concern results from a distorted understanding of the word “income” and disregards the importance of aggregate income growth.

The term “income inequality” is deceptive. It is used to imply that income equality is the norm and anything else is abnormal and harmful to society. Income is payment for services provided. If all income was equal that would mean that all services were equal. Proponents of income equality ignore the definition of income and instead emphasize the word equality. They make the erroneous assumption that equality is always good for society. Inequality has come to imply injustice, but while justice is always good for society, the benefits from equality depend on the circumstances. (more…)

o-man-taller-facebookFor most of my life I was, at 5-foot-10, of exactly average height. But in the span of one day in 1989 I became freakishly tall.

While I hadn’t grown an inch upward, I had moved 6,000 miles eastward to Okinawa, Japan. Since the average height of native Okinawans was only 5-foot-2, I towered over most every native islander by 8 inches. It was the equivalent of being 6-foot-6 in the United States.

Unfortunately, when I would leave the towns of Okinawa and step back onto the military base I instantly shrunk back to average height. My height advantage only lasted as long as I got to choose my point of reference.

Where did the truth lie? Was I truly tall or only of average height? The answer was completely dependent on my point of reference. Height, after all, is just a statistical artifact.

While this example may seem silly and rather obvious, it highlights how we our choice of what is a relevant standard of comparison can shape our thinking on important matters of economic policy. Take, for instance, the issue of poverty and income inequality. As Robert Higgs explains,
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l_20121213-school-reform-145-600-300If you really care about income inequality, notes John Goodman, you need only focus on one thing — the inequality of educational opportunity:

The topic du jour on the left these days is inequality. But why does the left care about inequality? Do they really want to lift those at the bottom of the income ladder? Or are they just looking for one more reason to increase the power of government?

If you care about those at the bottom then you are wasting your time and everyone else’s time unless you focus on one and only one phenomenon: the inequality of educational opportunity. Poor kids are almost always enrolled in bad schools. Rich kids are almost always in good schools.

So what does the left have to say about the public school system? Almost nothing. Nothing? That’s right. Nothing. I can’t remember ever seeing an editorial by Paul Krugman on how to reform the public schools. So I Googled to see if I have missed something. The only thing I found was a negative post about vouchers. And Krugman is not alone.

You almost never see anything written by left-of-center folks on reforming the public schools. And I have noticed on TV talk shows that it’s almost impossible to get liberals to agree to the most modest of all reform ideas: getting rid of bad teachers and making sure we keep the good ones.

(Via: AEI Ideas)

Acton Institute Senior Editor Joe Carter joined host Darryl Wood’s Run to Win show on WLQV in Detroit this afternoon to discuss the issue of income inequality from a Christian perspective. The interview keyed off of Carter’s article, What Every Christian Should Know About Income Inequality. You can listen to the entire interview using the audio player below.

the_abyss_of_inequality_3075151Earlier this week I claimed you rarely hear progressives argue that income inequality is a problem since for them it just is an injustice. But there’s another reason you rarely hear them make arguments about why income inequality is morally wrong: their actual arguments are terrible.

CNN columnist John D. Sutter recently asked four people — Nigel Warburton, a freelance philosopher and writer; Arthur Brooks, president of the American Enterprise Institute; Thomas Pogge, director of the Global Justice Program at Yale; and Kentaro Toyama, researcher at the University of California at Berkeley — to answer the question, “Is income inequality ‘morally wrong’?”

Sutter only summarizes their arguments, but it’s doubtful they would become more coherent or persuasive if they were in book-length form. So let’s examine each of the summaries:

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income-inequalityWhen it comes to household income, progressives tend to start with their intuitive understanding of fairness (i.e., some people have a lot more income than others), move to the solution (redistribution of income and wealth from those who have more to those who have less), and only then to develop a metric that justifies implementing their solution: income inequality.

Because of this roundabout approach, you rarely hear progressives argue that income inequality is a problem since for them it just is an injustice — and that wealth redistribution is the primary solution. When conservatives and libertarians disagree about whether it even is an issue we should be concerned with, we are considered heart-hearted apologists for an immoral capitalist system.

The truth, however, is that we don’t care about income inequality because relative differences in income tell us nothing about fairness or the just distribution of wealth. What we care about — what everyone should care about — is whether people have adequate opportunities to increase their household’s income, and hence, improve their standard of living. While there is no truly adequate gauge to measure such opportunities, we can get a fair estimate based on measurements of social mobility.

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