How Much Equality Is Enough? And Who Decides?

I do not understand the argument Elizabeth Anderson is making.[1] In fact I agree with the Hayek quote she cites, but I don’t see its import. Let us assume you have the most generous welfare state in the world: How is that relevant to the measurement of income/wealth inequality?

To be concrete: Sweden already has a famously generous welfare state, yet in 2000 the Wallenberg family controlled roughly 40% of the value of the Swedish stock market (In contrast, Bill Gates’s 50 billion is less than one percent of the more than 10 trillion dollar U.S. market). Is that still unjust inequality? Are we better off taxing such families or opening up the market to further competition?

What measure of inequality do Kenworthy and Anderson wish to observe that would lead them to say, “Ok. No more needs to be done”?

And I agree with Lane Kenworthy that absolute equality is undesirable, so what measured inequality would lead him to say, “We have gone too far?” Should we trust Congress to decide this? Or a select committee perhaps? Does any country do a good job of dealing with measured inequality (as opposed to merely enhancing the welfare state)?

Even if I were to concede that such a redistribution might make sense, what tools do we have for deciding which measures tell us what to do?


[1] Anderson also says I stack the deck to only include stories where people get what they deserve. But I specifically cited a case where someone received $1M in a lottery and someone else got a scholarship but had no financial wealth. That has nothing to do with just deserts. Why should the former be taxed for the latter?

Also from this issue

Lead Essay

  • In his lead essay, Will Wilkinson observes what he believes is a poor chain of reasoning: Income inequality is rising; it is also a measure of injustice. To fix this injustice, we should redistribute incomes. Wilkinson attacks this reasoning on several fronts: Income inequality is less important than consumption inequality, and consumption inequality is probably lessening. But if income inequality is a problem, it is so only as a symptom of a different problem: substandard schools, perhaps, or our high incarceration rate, or CEOs who conspire to overpay one another. Rather than redistributing income, we should identify the underlying problem and fix it directly. This may well lessen income inequality, and it will also fix an undoubtedly serious problem somewhere else in our society.

Response Essays

  • Lane Kenworthy argues that income inequality is indeed important, and that we should not be misled by the relatively reassuring data on consumption. Unconsumed income also adds to the quality of life enjoyed by the rich, even if that increase is still hard to measure. A more egalitarian society need not entail a radical social leveling, but it should entail better public services for the poor and the middle class.

  • John Nye adds several considerations to the mix: First, positional goods may make us feel more unequal — there are only so many “top ten” schools for our kids, only so many “best” views or neighborhoods. Yet, with rising incomes, more of us feel that we should be able to afford them, even as they slip further from our grasp. As we become more equal, we feel less equal. Second, one other effect of relative equality has been to erode the security formerly enjoyed at the very top of the economic pyramid. This security itself was a form of compensation, and executive salaries may be rising in recent years in part because executive security has fallen. And third, much of human inequality is not directly measurable in money at all. Differences in appearance, intelligence, ability, and the like are all real and may translate into economic inequality as well. Consideration of these elements is curiously absent from many discussions on inequality.

  • Elizabeth Anderson agrees with Wilkinson that the root causes of inequality are more troubling than inequality taken alone. But economic inequality is still a problem for two reasons: First, economic inequality of the sort we have today is not making the poor better off in absolute terms, but rather it is making them worse off. And second, economic inequality translates directly into inequality of political power, which in turn reinforces economic inequality. This is an unacceptable state of affairs.