Living Standards in an Open Economy: The Danger of Front-Loading Income Inequality, by Lane Kenworthy: Over the past decade, the American left has directed a growing share of its attention at income inequality.
Indeed, for some, reducing income inequality seems to have become the central goal.
There are compelling reasons to object to America's high and rapidly rising level of income inequality.
One is fairness. Much of what determines a person's earnings and income - intelligence, creativity, physical and social skills, motivation, persistence, confidence, connections, inherited wealth, discrimination - is a product of genetics, parents' assets and traits, and the quality of one's childhood neighborhood and schools. These aren't chosen; they are a matter of luck. A non-trivial portion of income inequality is therefore undeserved.
Second, income inequality may increase inequality of other valuable things, such as education, health and happiness. Even if we think greater inequality in the distribution of income is acceptable, we may feel that greater inequality in the distribution of health, schooling and subjective well-being is not.
Third, a rise in income inequality contributes to slower absolute income growth for those in the middle and at the bottom.
These, however, are not the rationales commonly put forward for worrying about income inequality. Instead, the most common arguments are that inequality is bad for the economy, overall health, opportunity and democracy. "Of all the competing and only partially reconcilable ends that we might seek," writes Tony Judt in Ill Fares the Land, 'the reduction of inequality must come first. Under conditions of endemic inequality, all other desirable goals become hard to achieve?" Is that true? ...[continue]...