Here is a truism about the wealth of nations: Zero-sum games do not increase it. Historically, the welfare of the poor always—always—depends on putting people in a position where their best shot at prosperity is to find a way of making other people better off. The key to long-run welfare never has been and never will be a matter of making sure the game’s best players lose.
In the WSJ piece, Heather Boushey writes,
It is also true that the inflation-adjusted cost of consumer goods has dropped dramatically, especially when we quality-adjust them. Today, one can go to Wal-Mart and pay only $35 for a DVD player, and most families have one. However, the costs of getting a college education and health care have risen faster than inflation, putting them out of reach of many families. Less than half (46%) of low-wage workers had employer-provided health insurance from any employer, their own or a family members', compared with 82% of high-wage workers.
Russ Roberts replies,
The level of inequality is an emergent phenomenon rather than something controlled by politicians or a wealthy elite.
In America, the level of inequality is the result of differences in skills, differences in family structure over time, differences in immigration patterns, educational choices of young people, entrepreneurial opportunities and a thousand other factors caused by each of us going about our lives as workers, managers, family members and consumers. Attempts to alter the level of inequality as if it were the temperature in the house that can be adjusted by a thermostat are unlikely to result in the intended result of a more just society.
My view of inequality is that it is one of those issues that gets trotted out when everything in the economy seems to be going so well that we have nothing else to complain about. When you have serious bad news, such as high unemployment or a financial meltdown, the media forget about inequality.
The question I have for people on both sides of the debate is this: what would the data have to look like to get you to consider changing your position? That is, if you think inequality is a big deal, what would the data on relative consumption or wealth or income have to look like to make you think it is not a big deal? Conversely, if you think inequality is not a big deal, what would the data have to look like to make you think that it is a big deal?