Income Inequality 2

1_123125_2265681_2266033_100903_diverge_disparitytn.jpg.CROP.original-originalDr. Anne Bradley, in Why Does Income Inequality Exist? An Economic and Biblical Explanation, says “if we care about a society that reduces poverty and assists the poor, we should be concerned not about income inequality but the relative prosperity of those at the bottom and their income mobility” (emphasis mine).

I agree we should care about income mobility.  I also think we should care about income inequality.

If the only reason for income inequality in our society is due to the diversity of gifts and the diversity of the monetary value our society attaches to such gifts, then it might be easier to argue we ought to focus solely on income mobility.  Dr. Bradley states it this way: “In a free society, absent cronyism, disparity of wages is not a sign of injustice” (and, it is implied, thus such disparity need not be addressed as if it is an unjust outcome).  Let me restate that this way: “disparity of wages is not a sign of injustice” so long as we live “in a free society” where “cronyism” is “absent.”

Do we in fact live in a “free society” free from “cronyism”?  First, what do those words mean?  Here is Dr. Bradley:

It is important to make the distinction between free-market exchange and rent-seeking (cronyism). The farmer, who grows soybeans, innovates and keeps costs down will be rewarded through profit by the market. The farmer who grows soybeans and lobbies the federal government for subsidies which protect him from other more productive soybean farmers is not serving his customers. Rather, he is lobbying the government for money which he did not earn, and the “profit” he secures in this fashion is appropriated from taxpayers.

In other words, a free society is a society in which “free-market exchange” takes place, and is free from “rent-seeking” behavior such as lobbying for federal government subsidies.

So, again, do we live in a free society, free from cronyism?  Again, Dr. Bradley:

This research suggests that there is some amount of income inequality which results from the uniqueness with which we are created; however, it is economically unwise to exacerbate any natural level of income inequality by: not letting business fail when they deserve to fail (bailouts); protecting some businesses from competition (subsidies and tariffs); or letting some businesses succeed over others through protective legislations (licensing and other regulatory requirements) (emphasis mine).

Do we live in a society that has bailouts?  Yes.  Do we live in a society that has subsidies and tariffs?  Yes.  Do we live in a society that has licensing and other regulatory requirements?  Yes.  Do we live in a “free society” free from “cronyism” (as those terms are defined by Dr. Bradley) then?  No.

This means, while “there is some amount of income equality which results from the uniqueness with which we are created” and thus does not pose any issue of injustice, there also is some amount of income inequality which results from factors other than our diverse gifts.  And, if so, to the extent such other factors are results of unjust processes or systems (whether social, economic, political or other), we should care about income inequality as a sign of injustice.

That was the easy part, though.  And I doubt that’s a controversial conclusion to anyone. But there is more….

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One thought on “Income Inequality 2

  1. Pingback: Income Inequality 3 | Working Prototype

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