Recent discussions of economic inequality,
marked by a lack of clarity and care, have con-
fused the public about the meaning and moral
significance of rising income inequality. Income
statistics paint a misleading picture of real stan-
dards of living and real economic inequality.
Several strands of evidence about real standards
of living suggest a very different picture of the
trends in economic inequality. In any case, the
dispersion of incomes at any given time has, at
best, a tenuous connection to human welfare or
social justice. The pattern of incomes is affected
by both morally desirable and undesirable mech-
anisms. When injustice or wrongdoing increases
income inequality, the problem is the original
malign cause, not the resulting inequality. Many
thinkers mistake national populations for “soci-
ety” and thereby obscure the real story about the
effects of trade and immigration on welfare,
equality, and justice. There is little evidence that
high levels of income inequality lead down a slip-
pery slope to the destruction of democracy and
rule by the rich. The unequal political voice of the
poor can be addressed only through policies that
actually work to fight poverty and improve edu-
cation. Income inequality is a dangerous distrac-
tion from the real problems: poverty, lack of eco-
nomic opportunity, and systemic injustice.
Thinking Clearly about Economic Inequality
by Will Wilkinson
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Will Wilkinson is a research fellow at the Cato Institute and editor of Cato Unbound.
Executive Summary
No. 640
July 14, 2009
Introduction
“We are now living in a new Gilded Age, as
extravagant as the original,” says the Nobel
Prize–winning Princeton economist and New
York Times columnist Paul Krugman.1 In the
days of Krugman’s youth, “the economic dis-
parities you were conscious of were quite mut-
ed.” But that America is “another country,”
Krugman says. Once, the AFL-CIO was a fix-
ture of nature, even Ike liked the Ne