Monday, March 16, 2015


It's very hard to turn around these days without stumbling on yet another discussion of increasing inequality.  It is surely an election year favorite.  Is there a politician who can resist the theme -- and adding his/her promise to do more to "help" the down-and-out?

Concerns over poverty are surely justified. But poverty and inequality are not the same thing -- and they are purposefully muddled by those with an agenda. There is a "teaching moment" in the following thought experiment: imagine that a doubling of all incomes could somehow be achieved; it would surely end poverty but it would also increase inequality. Should we do it (if we could)?  The thought experiment gives many true believers a headache.

Poverty and inequality are not the same.  Tyler Cowen and his commenters add the idea that measuring poverty is not simple -- and if we make the proper corrections the actual U.S. poverty rate is much lower than what we hear and read about.

The poverty=inequality misconception is fed by the suspicion that wealth is most likely ill-gotten and/or we live in a zero-sum world. If most people (most voters?) believe either one or the other these, we have a problem.  And the election is more than one and one-half years away -- not that we will have much relief after the votes are counted.