For example, in a December 2013 speech, then President Barak Obama commented extensively on income inequality labeling it “the defining challenge of our time.” This flawed assessment engendered misguides policies during his administration. Despite enormous social expenditures, the U.S. poverty rate in 2015 was 1.0 percent higher than 8 years earlier (Census Bureau Report). The defining challenge of our time is not that our incomes may be widely unequal. The problem is that poverty is widespread. Making everyone equally poorer is not the answer.
Yes, economic inequality may seem wrong, but what is morally undesirable is not inequality, but poverty. Consider the following: In the 2017 Forbes ranking of the World’s Billionaires, Bill Gates topped the list with a net worth of $86 billion. His fortune is 86 times the wealth of those at the bottom of the list with a mere $1 billion in capital. Are we morally offended by this inequality between the top and bottom billionaires?
Or, are we morally outraged by the enormous income inequality between someone earning $100 million yearly and someone earning only one million? Having less and having quite a bit are not contradictory. Doing worse than others is not equivalent to doing poorly.
If we are not distressed by these inequalities, and I do not know anyone who is, it should be clear that it is not inequality as such that we find morally disturbing. As professor Frankfurt puts its, “What directly moves us…is not a relative quantitative discrepancy, but an absolute qualitative deficiency. It is not the fact that the economic resources of those who are worse off are smaller than ours. It is the quite different fact that their resources are too little.”
To the degree that inequality is morally objectionable, is derivative of the fact that income inequality tends to generate unacceptable inequalities of other types such as political influence. The derivate negative aspects of income inequality need to be addressed. But to focus on how our economic status compares with the economic status of others is a shallow analysis that distracts from what ought to be the real policy aim: the elimination of poverty.
Our policymaking should not be guided by alienating strategies focused on the quantity of money that other people happen to have. What is morally important is not how people’s wealth compares. What is important is for people to have good lives.
Egalitarians, and others, unreflectively believe that income equality enjoys a presumptive moral advantage over other policies. Not so, there is a dangerous conflict between policies that seek income equality and our individual freedoms.
Increased inequality is a natural phenomenon that flows from our diversity in talents, capacities, preferences, and choices. When our activities create something of value and our wealth increases, we are better off, but so is society. Egalitarians incorrectly posit that the economic pie is fixed so that a bigger slice for some must come at the expense of others.
The evidence suggests that, in market economies, increased inequality and stronger economic growth work in tandem enlarging the economic pie. Patterns across developed nations show that higher inequality is accompanied by a richer middle class and richer poor population. Higher inequality is related to higher living standards for those below the high income levels as well as for those in the top levels.
The moral measure of improvements in society is not vilifying the rich; it is increasing the wellbeing of the poor. Natural inequality does not lower the standard of living of the poor. As a moral value, economic policy should focus on freedom and not on income inequality. Inequality results when an individual or group progresses. As such, inequality is a metric of success. Progress is always unequal. Intrinsically, income inequality is morally innocent.
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