Income Equality Is No Measure of Human Progress

From FEE.org:

Following the Great Recession of 2008, income inequality became a focal concern of those who feel that market economy has let them down. In 2011, “We are the 99 percent” became a unifying slogan of the Occupy Wall Street movement. In 2013, the U.S. President Barack Obama described income inequality as the “defining challenge of our time.”

A year later, Pope Francis called for a “legitimate redistribution of economic benefits by the state*,” while leftwing economist Thomas Piketty tried to supply the movement for greater income equality with intellectual ammunition in his book, Capital in the Twenty-First Century. The elevation of Donald Trump to the U.S. presidency impeded the movement’s momentum, but concern over income inequality did not disappear. Just this week, for example, The New York Times ran an article entitled "Happy Birthday, Karl Marx. You Were Right!"

According to Jason Barker, an associate professor of philosophy at Kyung Hee University in South Korea and author of the novel Marx Returns, “educated liberal opinion is today more or less unanimous in its agreement that Marx’s basic thesis—that capitalism is driven by a deeply divisive class struggle in which the ruling-class minority appropriates the surplus labor of the working-class majority as profit—is correct.”

No, Agreement with Marx Is Not Unanimous

To start with, it is crucial not to confuse income inequality and poverty. Standards of living are increasing, albeit unequally, in most of the world. Developing countries, in particular, have benefited handsomely from declining barriers to trade and movement of capital. That’s why inequality between countries is actually shrinking. As for inequality within countries, enrichment at the top has not caused mass impoverishment.

The market economy is not a zero-sum game, where someone’s gain must come at someone else’s expense. “The rich get richer and the poor get poorer” is a synopsis of the socialist critique of the market system, implying the perceived inevitability of what Marx called the Law of Increasing Poverty. It is also a myth unsupported by empirical evidence.

The Evidence Is Not There

Another set of arguments proffered by those who are worried about income inequality revolves around a variety of psychological theories, which claim that a person’s happiness depends on his or her relative position vis-à-vis other members of the community. This critique of income inequality includes concerns over “social comparisons,” “reference groups,” “status anxiety,” and
“relative deprivation.”

Again, evidence in support of the critics’ arguments is scarce. “Contrary to an earlier belief that people are so mindful of their richer compatriots that they keep resetting their internal happiness meter to the baseline no matter how well they are doing,” Pinker writes, “richer people and people in richer countries are (on average) happier than poorer people and people in poorer countries.”  [read more]

*Pope Francis should know better. Socialism is not only anti-capitalistic but also anti-Christian. Then again the Left has corrupted Christianity like it has corrupted many other institutions.