Policy Documents

Thinking Clearly about Economic Inequality

Will Wilkinson –
July 14, 2009

In the Policy Analysis the author writes that those who speak about economic inequality, marked by a lack of clarity and care, have con- fused the public about the meaning and moral significance of rising income inequality. Income statistics paint a misleading picture of real stan- dards of living and real economic inequality. Several strands of evidence about real standards of living suggest a very different picture of the trends in economic inequality. The dispersion of incomes at any given time has, at best, a tenuous connection to human welfare or social justice. The pattern of incomes is affected by both morally desirable and undesirable mechanisms. When injustice or wrongdoing increases income inequality, the problem is the original malign cause, not the resulting inequality. Many thinkers mistake national populations for “society” and thereby obscure the real story about the effects of trade and immigration on welfare, equality, and justice. There is little evidence that high levels of income inequality lead down a slippery slope to the destruction of democracy and rule by the rich. The unequal political voice of the poor can be addressed only through policies that actually work to fight poverty and improve education. Income inequality is a dangerous distrac- tion from the real problems: poverty, lack of economic opportunity, and systemic injustice.