Economic Inequality: The Short Version

January 2016

As often happens when you say something controversial, there have been some very adventurous interpretations of the essay I just wrote about economic inequality. I thought it might help clarify matters if I tried to write a version so simple that it leaves no room for misinterpretation.

Lots of people talk about economic inequality. Nearly all say it is bad if economic inequality increases, and that it would be better if it decreased.

But economic inequality per se is not bad. It has multiple causes. Many are bad, but some are good.

For example, high incarceration rates and tax loopholes are bad things that increase economic inequality.

But startups also increase economic inequality. A founder whose startup succeeds will end up with stock worth a lot of money.

And unlike high incarceration rates and tax loopholes, startups are on the whole good.

Since economic inequality per se is not bad, we should not attack it. Instead we should attack the bad things that cause it.

For example, instead of attacking economic inequality, we should attack poverty.

Attacking economic inequality would be doubly mistaken. It would harm the good as well as the bad causes. But even worse, it would be an ineffective way to attack the bad causes.

We will not do a good job of fixing the bad causes of economic inequality unless we attack them directly.

But if we fix all the bad causes of economic inequality, we will still have increasing levels of it, due to the increasing power of technology.