A debate on inequality

I had already seen it, but the Journal-Sentinel'sPatrick McIhleran, fast becoming one of the most well read men in Milwaukee, directs us to a piece by George Mason ecoomist Tyler Cowen in the New York Times. Cowen talks about the sources and consequences of economic equality (which he finds neither nefarious or, in the US, staggering) but also makes a philosophical point which is what catches Patrick's eye. Cowen writes:

The broader philosophical question is why we should worry about inequality — of any kind — much at all. Life is not a race against fellow human beings, and we should discourage people from treating it as such. Many of the rich have made the mistake of viewing their lives as a game of relative status. So why should economists promote this same zero-sum worldview?

What matters most is how well people are doing in absolute terms. We should continue to improve opportunities for lower-income people, but inequality as a major and chronic American problem has been overstated.

Cornell lawprof hEduardo Penalver ,writing on the excellent Mirror of Justice blog, has a different view:

Relatedly, but perhaps more deeply, Cowen ignores the extent to which society is a joint venture -- that we are all, rich and poor, in this together. Maintaining this joint venture as a going concern requires a degree of social cohesion and other-regarding concern, what the Church calls "solidarity." And, as the Second Vatican Council put it in Gaudium et Spes, excessive economic inequality, by itself, undermines that solidarity, and therefore weakens the viability of the social order.

I think Professor Penalver has a point, although economic inequality does not "weaken the viability" of the social order in a vaccuum. The extent to which those with less resent those with more is not unrelated to the extent to which opinion elites (think Sen. Webb after the SOTU address) foster that resentment.

What is missed is the extent to which to which some measure of income inequality is related to raising absolute wellbeing. Much income inequality is created by innovation - if you invented the light bulb or the technologies that made possible the personal computer - you are going to get very rich. At a time or in a place where these things are not happening, the distribution of wealth will be, all things equal, much flatter.

If we want to encourage people to work hard and develop their talents, we have to, for lack of a better term, put something in it for them. People on the left think that we in the United States go "too far" in that direction, but can it be a mere coincidence that we have the most dynamic economy in history?