Why income inequality is bad

The first is because a justification for redistribution needs to include some response to the claims of the rich that they are entitled to keep what they have earned. What Peter Singer argues for powerfully is voluntary redistribution.

A justification for reducing inequality through non-voluntary means, such as taxation, needs to explain why redistribution of this kind is not just robbery, like the activities of Willie Sutton and Robin Hood. Second, if inequality, in itself, is something to be concerned about, we need to explain why this is so.

It is easy to understand why people want to be better off than they are, especially if their current condition is very bad. But why, apart from this, should anyone be concerned with the difference between what they have and what others have? I will mention four reasons for objecting to inequality, and consider the responses they provide to the charge of mere envy and to the claims of entitlement. The first three:. Economic inequality can give wealthier people an unacceptable degree of control over the lives of others.

If wealth is very unevenly distributed in a society, wealthy people often end up in control of many aspects of the lives of poorer citizens: over where and how they can work, what they can buy, and in general what their lives will be like.

As an example, ownership of a public media outlet, such as a newspaper or a television channel, can give control over how others in the society view themselves and their lives, and how they understand their society. If those who hold political offices must depend on large contributions for their campaigns, they will be more responsive to the interests and demands of wealthy contributors, and those who are not rich will not be fairly represented.

Two economists figure prominently in the textbook story about inequality and growth: Simon Kuznets and Arthur Okun. In the s, Kuznets' theory of inequality and economic growth cast inequality as an inevitable growing pain of the development process.

He said that as countries develop, inequality rises, but it then falls as growth takes off and standards of living rise. In it, he described how inequality creates positive incentives for people to work and invest, and made the case that policies to address inequality, while they might be socially desirable, will take a toll on economic growth.

For decades, these theories—perfectly aligned with ideas about trickle-down economic growth—dominated the field of economics and set the terms of policy debates. Yes, policymakers have the tools to do something about inequality, but it will cost us in growth. Better to invest in growth at the top that would eventually lift up those at the bottom. Now a new consensus is emerging. In Europe at least, rising prosperity seems to have led to better societies with less social ills, but for the non-European countries is remains unclear why levels of social ills changed.

Still, our results prompt scholars as well as the public to re-think the widespread negative image of contemporary society. In many countries, there is small progress towards a better society with less social ills" explains Leonie Steckermeier, co-author of the study. The empirical analysis was based on a set of six social ills, namely low life expectancy, infant mortality, and obesity as health issues, and intentional homicides, teenage pregnancy, and imprisonment rate as social problems.

The data were compiled from international sources such as the Worldbank and the World Health Organization for the years from to If you would like to know more about the types of cookies we serve and how to change your cookie settings, please read our Cookie Notice. By clicking the "I accept" button, you consent to the use of these cookies. In recent decades, income inequality has increased in almost all OECD countries. Twenty-five years ago, it was seven times as high.

While overall prosperity has increased in recent decades, growth has not been just, and not everyone has benefited. Greater inequality fuels distrust, discontent and right-wing populism.

Individuals whose income has grown less than others' more often support radical right-wing parties, a new European study shows. The inclination to support these parties is greater among individuals who perceive their own income to be low if they live in a country where income inequality has increased more. A Swedish study found that lay-off notifications among native-born workers in Sweden after the financial crisis led to increased support for the Swedish far-right nationalist party, the Sweden Democrats.

This effect was greater in areas where a large share of low-skilled immigrants had moved. In some countries, the reaction against increasing inequality is taking the form of demand for a stronger national state that detaches itself from international market relations.

We see this most clearly in the US and the UK. Both countries are closing themselves off from the rest of the world: the US, by terminating and renegotiating trade agreements, and the UK, by leaving the EU. It is not just liberal democracy that risks crisis when inequality increases.

Curbing the global rise in temperature demands difficult changes, costly measures and international cooperation. But for action to be possible, the transition to a low-carbon economy requires that costs are shared, and that economic prosperity is more equally divided.