Income inequality does not mean low quality of life

by Lindsey Hubbart

In the wake of Occupy Wall Street protests and increasing criticism of the so-called “one percent,” the rising income inequality in America has garnered significant attention recently. Undoubtedly, the gap between the wealthy and the poor has grown larger in recent history.

According to the Pew Research Center, the top one percent received “nearly 22.5% of all pretax income,” while the bottom 90 percent took in 49.6 percent. President Obama declared income inequality “the defining challenge of our age.” Paul Krugman, Nobel Prize-winning economist and New York Times columnist, claims America has the potential for “a transformation into a permanently unequal society.” To remedy the inequality, many people have called for greater redistribution of wealth, primarily through heavy taxation of the wealthiest Americans.

However, income inequality is not inherently unjust. According to Will Wilkinson of the Cato Institute, “the level of economic inequality is a reliable indicator of neither individual well-being nor social justice.” He also claims that “a society’s least-privileged class can fare very well in a highly unequal society (such as in the United States) and fare dismally in a highly equal society (such as Ethiopia).” Thus, a society’s level disparity in income does not correlate with quality of life.

Of course, income inequality can come as a result of injustice. If someone has accumulated wealth through exploitation, the justice system must address that person on an individual basis. Cases of exploitation do not require a revolution of our economic system as members of the Occupy movement and others have called for.

Additionally, income itself is an incomplete statistic. Income can only measure how much an employer has agreed to pay an employee, which can vary drastically depending on the company’s resources, the location of the company, the industry, the employee’s skills and education, among a host of other factors. Income can reflect a person’s talent or hard work, but it can also come as a result of sheer luck.

A clearer picture of well-being requires a more thorough analysis than just examining income. For example, if person A makes $500,000 per year and person B makes $30,000 per year, person A’s income reveals nothing about person B’s quality of life. While person B probably cannot afford yachts or luxury cars like person A can, that is not inherently problematic, assuming that person A accumulated wealth without exploiting person B. One’s ability to afford basic necessities matters much more than the actual value of his or her income. An individual’s ability to achieve sufficiency matters much more than whether or not he or she has a high income.

If person B finds him or herself in poverty, the problems run much deeper than whether or not person A has a higher income. According to Wilkenson, our focus on “income inequality is a dangerous distraction from the real problems: poverty, lack of economic opportunity and systematic injustice.” We must shift our focus away from the difference in income between the two people and look more closely at the root problems that have driven person B into poverty. For example, he or she may have been trapped in a failing education system. Person B could also have faced discrimination of some form.

Failing schools, discrimination and other problems that prevent people from achieving economic self-sufficiency ought to be our focus, not how much one person makes in comparison to another. To establish a truly just society, we must concentrate on lifting people out of poverty, not on equalizing incomes through redistributing wealth.

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