It seems noble these days to be concerned with inequality. There is a constant barrage of people across the news discussing how extreme income inequality is a problem in America, but how much should it bother us? Bemoaning income inequality is a lazy way of discussing things we should actually care about, such as the plight of the poor, income mobility and macroeconomic stability.
Even though income inequality has increased in recent decades, there is little evidence that economic mobility has followed suit. Harvard University economist Raj Chetty led a recent study that found no change in economic mobility during the past 50 years.
All too often, people see the inequality issue as inextricably connected to poverty. Consider George Washington, a wealthy man of his day, who would likely be one of America’s first “1 percenters.” He lived through each winter eating only dried meats and starches. He lost his hair and teeth at an early age. He had no toilet, bathtub, running water or furnace.
Today, nearly all Americans with incomes below the poverty line have TV and a refrigerator. More than 80 percent have air conditioning, a landline and a cellphone. Most own a computer and a vehicle. They are more likely than other Americans to be overweight. An overwhelming majority of Americans below the poverty line have a higher living standard than America’s former top earners. At the same time, income inequality has grown precipitously. It was not redistribution that accomplished such improvement in their living conditions.
Some economists, most famously Joseph Stiglitz, argue that inequality creates macroeconomic problems, but his arguments do not align well with the facts. One of his chief arguments is that greater inequality makes it easier for the rich to influence politics and achieve policies such as lower tax rates and less regulation. It’s certainly plausible, but why, then, did a majority of individuals making $250,000 per year or more vote for President Barack Obama in 2008? He campaigned to raise taxes on the rich and to increase regulation of the health care and finance industries.
One of the great ironies of those on the left is that they simultaneously raise the alarms about big money corrupting politics, yet they want to give politicians more power. Each year, a mere 535 members of our society spend nearly $3.8 trillion. They are the 0.00017 percent of Americans who make up Congress and control a significant chunk of our economy. The more that we use government to temper income inequality, the more we concentrate power in the hands of a few.
What disappoints me most about the obsession with correcting inequality are the diatribes on fairness. The trouble with fairness is that five people will give half a dozen definitions of the word. I don’t consider it compassion to steal from Jones to give to Smith. Advocating that the government do so does not put you on moral high ground. Compassion is putting your own money where your mouth is.
Recently, Obama stated that income inequality is the “defining challenge of our time.” I think that people who say such things are the defining challenge of our time. Attempts to correct inequality are far more concerning to me than inequality itself.
