Is income inequality a GOOD thing?

With all the talk of the 99% and income disparities in the United States, one might think that there would be some empirical evidence that less inequality would automatically be a good thing. The reality is that greater inequality may actually be a good thing for the so-called 99% (or at least the bottom 50%).

Check out this chart. The data are income data from the Tax Foundation (which took its data from the IRS). And, from the looks of things, income inequality in 2009 was about where it was back in 2001. During the intervening time period — an economic boom of strong income growth and low unemployment, by the way — inequality between the top 1% and the bottom 50% rose dramatically.

Why is this? The fact is that when the economy booms, the wealthy are in a better position to make more money. As the saying goes, “it takes money to make money.” When the wealthy buy boats, more middle and working class people are hired to build those boats, sell them, and maintain them etc. When the economic crisis hit, all Americans took a hit, but the very wealthy actually took a harder hit than the rest of us.

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.