Does Income Inequality Matter?
Our discussions of income inequality are misguided. Instead of criticizing the rich for their wealth, we must ask whether the poor truly deserve their poverty.
Imagine a society where everyone has equal access to quality education and healthcare. Imagine that in this society every hardworking adult earns enough to own a house, a car, and put a decent meal on the table for their family. Imagine this society still has a number of relatively wealthy individuals who can afford luxuries such as private jets and exotic vacations but who otherwise have no more than anyone else when it comes to the basic essentials.
In this society, to what extent does income inequality still matter? If everyone’s basic needs are satisfied, does it matter that some individuals have even more? Obviously, this is not the type of society we live in, but it raises an important question. Have we been too narrowly focused on income inequality when we should really be focused on a more fundamental issue: ensuring everyone has access to a minimum level of basic goods and services such as education and healthcare and an equal opportunity to earn a respectable living?
There has been much discussion about the magnitude and direction of income inequality, its implications for democracy and economic growth, and so forth.
Frequently, at the heart of these debates lies a basic moral question: who deserves what? But when examined more closely, we find the question of income inequality is in fact comprised of two distinct but related moral questions. Do the rich deserve to be rich? And do the poor deserve to be poor?
Much has been made of the first question. Do bankers who take excessive risks that contribute crucially to a severe economic recession deserve government bailouts and big bonuses? Do CEOs who destroy shareholder value and cut jobs deserve outsized compensation packages?