How Important Is Inequality?

Apr 25 2012 @ 5:44pm

Mark Schmitt worries more about the causes of inequality than inequality itself:

I am concerned about what leads to sharply rising inequality, and what follows from it. And that’s what the book is really about. Think of it almost like one of those medical mysteries from the New York Times Magazine, in which a patient presents with a symptom – sudden weight gain or mysterious headaches. The symptom itself may not be debilitating, but the doctor has to figure out what caused it, what else is going on, what’s likely to happen, and how to treat the patient, not just the symptom. The Great Divergence – high end gains/middle- and low-income stagnation — is a big symptom. What are the causes and consequences? How bad is it, doc?

Brink Lindsay differs:

I don’t believe that the level of inequality, on its own, tells us anything useful about the state of a society or the justice of its institutions. As my former colleague Will Wilkinson has pointed out, the U.S. and Ghana have roughly the same Gini coefficient – the leading metric for overall income inequality. Yet Ghana ranks 135th out of 187 countries on the United Nations’ 2011 Human Development Index, while the U.S. ranks 4th. It thus seems beyond serious dispute that the Gini coefficient by itself is virtually useless as an indicator of social well-being.

Schmitt goes another round:

The question that can’t really be answered statistically, yet, is whether today’s 35 year olds, or even 45 year olds, will enjoy the same level of widely distributed security later in life that today’s Boomer seniors and their predecessors do. It seems unlikely, since they are starting out in a world of stagnant incomes, educational debt, and with little chance of enjoying the kinds of wealth gains that someone who invested in either a house or in the stock market in the 1970s or 1980s has accrued. That’s not to say that all seniors are rich, or promote a generational conflict – just that the majority of wealth is concentrated in a sector of the population that reflects the greater equality of opportunity in an earlier era.