The phrase “income inequality” has been all the rage. Economists study it. Talking heads rant about it. Politicians debate it. And it has become another litmus test in the Great Liberal-Conservative Theater of the Absurd.
But “income inequality” can not possibly mean what it suggests, that those who think it is a problem believe that all incomes should be equal. I’ve known some Marxist firebrands in my time, and even they would have paused before suggesting such a thing.
So why employ a term that poisons the discussion at it’s start? The usual left-wing laziness, I suppose, abetted by the usual right-wing ambush mentality.
But there is something real here.
For years, economists have thought of such inequality in part as a side effect of policies that fostered the country’s economic dynamism…But economists’ thinking has changed sharply…The concentration of income in the hands of the rich might not just mean a more unequal society…It might mean less stable economic expansions and sluggish growth.
Income Inequality May Take Toll on Growth – NYT 10/16/2012
While the steady or slightly accelerating global growth rates predicted by the IMF is the most likely outcome, it may not be achievable because of three imbalances: social, geographical and demographic. These seem deeply embedded in the structure of global capitalism today. They are weakening demand, creating excess savings and driving the buildup of borrowing and lending that has been both a cause and consequence of the global financial crisis…
If too much of the income created by capitalism’s capacity to increase production flows to people who are already rich and likely to save rather than spend, then crises of under-consumption become almost inevitable…
Karl Marx was right – at least about one thing – Reuters 6/11/2014
Granted that any or all of these opinions may turn out to be wrong (although I am doubtful of that), it is important to distinguish between the technical questions concerning national and global economies, and the political questions surrounding who should get what.
So I propose we stop talking about “income inequality”, because the converse is something no one wants or expects to achieve, and think instead in terms of “income imbalance” — the converse of which at least stands a chance of having meaning.