Social Justice, Current Events

Does Inequality Matter?

A common theme among the Occupy Wall Street crowd and its supporters is that inequality in the United States has skyrocketed over the last thirty years.  Often, statistics about increasing inequality – and income inequality in particular – are put forward as examples of self-evident injustice.  In this post, I want to suggest that things are not this straightforward.  Recognizing that much more could be said about each of these points, here are a few thoughts to bear in mind when thinking about the relationship between inequality and social justice.

  • There is very little reason to think that inequality of outcome is necessarily unjust.
    • Sergey Brin makes more money than I can ever hope to make.  Is this unjust?  I don’t think so.  He made his money by making the world a much, much better place than he found it.  Ken Lay’s wealth was a very different story.  In general, whether inequality is unjust seems to depend on how the inequality came about, not just (not at all?) on the absolute magnitude of the inequality.
    • My sense is that the position I express here is a non-idiosyncratic – perhaps even the dominant – position among political philosophers.  For example, very few philosophers today are simple egalitarians.  Many more are luck egalitarians.  But luck egalitarianism is distinguished from simple egalitarianism just by holding that inequality of outcome is not per se morally objectionable – only inequality that is the product of brute luck is.

  • Often when we think inequality of outcome is bad, it is because we are confusing inequality with insufficiency – we are confusing having less than someone else with not having enough for a decent life.
    • Would income or wealth inequality be troubling in a society of people who all had the purchasing power of billionaires?
      • (Aside: isn’t this exactly how the United States looks to most of the rest of the world today?)


  • Even if inequality of outcome as bad, there’s no good reason to think that income inequality is the right way to measure it.  Why not inequality of wealth?  Or inequality of consumption?  Or happiness?
    • After all, if income matters morally, isn’t it because of the way it contributes to our overall wealth?  Is there anything morally objectionable about a society in which very wealthy people have very low incomes?
    • Even wealth, though, is just a means to an end.  If wealth matters, it’s because of what it can buy us.  And if Aristotle was right, then what we can buy matters only insofar as it contributes to our happiness.  So isn’t happiness inequality what really ought to trouble us.
    • While income inequality has arguably increased dramatically over the last thirty or so years, however, inequality of consumption and happiness have not.
      • (Aside: Some people think relative wealth makes a bigger difference in people’s happiness than absolute wealth.  Does the relatively flat trend of happiness inequality combined with the relatively steep increase in income inequality tend to undermine this claim?)


  • Even if income inequality does matter, it’s not clear that we are measuring it correctly.
    • I’m no economist, but the message I get from listening to them is that a lot depends on the details – whether we’re measuring income before taxes and transfer payments, or afterwards.  Whether we’re tracking households or individuals.  Or whether we’re correctly adjusting for inflation.


  • Even if income inequality matters, and even if we’re measuring it correctly, none of this is relevant unless we take into account economic mobility.
    • Here’s a scary-looking fact: between 1975 and 1997 the wealthiest 20% went from receiving 43.2% of the national income to receiving 49.4% of it.  The bottom 20%, in contrast, went from receiving 4.4% to receiving 3.6% (US Treasury Dept., via Steve Horwitz)
    • But this is much less scary once you recognize that the people who constituted the bottom 20% in 1975 are by and large not the same people who constituted it in 1997.  In fact, most of the people who were in the bottom quintile in 1975 had moved out of it by 1997.
    • (It’s even less scary when you take into account economic growth.  4.4% of the total national income in 1975 is probably a much smaller figure than 3.6% of the total national income in 1997.)
    • For more on mobility and economic growth, take a look at Steve Horwitz’s excellent short video here.

None of this is to suggest that the OWS crowd is wrong in thinking that there are serious injustices in our political/economic system.  And it’s certainly not meant to cast doubt on the claim that much of the inequality that we actually find in the United States is the product of injustice – of processes that would be identified as unjust, moreover, but almost any political theory, libertarian, Rawlsian, socialist, or otherwise.  But there’s a sense among the OWS protesters (though it’s common among protesters for other social causes as well) that the nature and existence of the injustice they seek to eliminate is obvious.  An apparent corollary of this belief is that those who disagree with their prescriptions are stupid or evil.  And that all that’s required to make positive change is to develop the willpower to do what we already know is right.

Maybe it’s the philosopher in me, but this kind of attitude always rubs me the wrong way.  Things are rarely so simple.  Here, as in so many other involving complex social issues, there is room for reasonable people to disagree not merely about what ought to be done to correct injustice, but about what really ought to count as an injustice in the first place.


UPDATE: My original post failed to include a link to Will Wilkinson excellent Policy Analysis report on Inequality.  Wilkinson actually makes many of the same points I do, though with much more supporting detail and evidence.  My only excuse for omitting the link is that I read it so long ago and found it so compelling that the arguments just slipped into the background of my mind in the set of “things that are clearly true.”

  • Damien S.

    But this is much less scary once you recognize that the people who constituted the bottom 20% in 1975 are by and large not the same people who constituted it in 1997.  In fact, most of the people who were in the bottom quintile in 1975 had moved out of it by 1997.

    “Lies, damn lies, and statistics”.  Simple aging can account for this; one hopes a single 18 year old is not in the same income band as their married 40 year old self.  A different measure of social mobility is generational: if your father is in quintile X, are you?  From The Spirit Level, over 40% of people born to the bottom quintile stay there, vs. 20% if there were no correlation between parental class and one’s own.

    Even if inequality of outcome as bad, there’s no good reason to think that income inequality is the right way to measure it.  Why not inequality of wealth?

    Uh, people who worry about inequality worry about wealth inequailty all the time.  And US society looks even more inequal when you do.  The top 1% has more of the nation’s wealth than it does of the nation’s income.

    Over 30 years, US productivity went up 50%.  Income of the top 1, 0.1, 0.01% doubled, quadrupled, sextupled (I don’t know if I have the exact mapping right.)  AIUI median household real income barely went up at all, especially after adjusting for hours worked.  Costs of college, which you increasingly need to have a chance, are soaring, so the cost of having your children get ahead or even stay in place is rising far faster than your income.

    (It’s even less scary when you take into account economic growth.  4.4% of the total national income in 1975 is probably a much smaller figure than 3.6% of the total national income in 1997.)

    But it was also spread among a smaller population.  National income (NI) goes up with both population and productivity, and the size of a quintile rises with population.

    Look, suppose productivity growth was 0, so the NI rose only with population.  Then the bottom 20% of that population should receive the same share if it’s not falling further behind: 4.4% then, 4.4% now.  That represents more real dollars but over more people, so the amount per capita is the same.  If they get 3.6% instead, they are falling behind, and poorer.

    But productivity does increase, though not very fast.  1% a year in that period, I think, which over 22 years gives a 24% increase per capita.  In this case, if the bottom 20% had received 4.4% in 1997, they’d be 24% better off in real terms than in 1975.

    But they didn’t 4.4%, they got 3.6%, which is 82% of 4.4.  And 0.82*1.24=1.02, only 2% improvement over all of 22 years.

    Now, 1% might not be precise enough.  50% productivity growth over 30 years is 1.36% a year, which over 22 years would give 35%, and .82*1.35=1.10, so 10% improvement in real income.  Slightly better — but a lot less than the 50% rise in national per capita income. 

    Meanwhile, as you say but somehow dismiss: between 1975 and 1997 the wealthiest 20% went from receiving 43.2% of the national income to receiving 49.4% of it.

    As for why inequality matters, you may have noticed that money has a big role in politics, from campaign contributions to media control.  And, as a libertarian, that government can be used to increase one’s wealth and income.  More money means more political power, which can be used to gather more money, and then more power.  And the Occupy Wall Street movement is driven by a perception that this is exactly what has been happening, especially with the top 1% — more accurately, the top 0.5% and 0.1%, as an investment manager describes .

    Libertarians call for separating money and power by limiting government somehow, despite the past failure of that; liberals call for limiting the money and thus power inequalities that can exist, as well as for more democracy less sensitive to wealthy.

    • “Libertarians call for separating money and power by limiting government somehow, despite the past failure of that…”

      Actually, the more common libertarian position is a reduction in the power of government to interfer in markets. The idea is simple enough. If government doesn’t have the power to favor one company or one industry over another, companies and industries will be less likely to throw money at politicians–why would they if there is no influence to buy?

      The failure has not been with “limiting government,” its been our failure to do so.

      • gaffigubbi88

        That seems like a plausible way of separating government from corporate money, but when you probe into the intentions of the liberals who propose things like campaign finance reform etc., you’ll find that the evils of corporate money are not really the driving factors. Liberals want market interference, often lots of it – it’s just that it’s THEY who should decide how, when, where and why to interfere, not the corporations. Therefore the suggestion sounds like throwing away rotten food that’s gathering flies to get rid of the flies, when the person you’re trying to help still wants that stinky mess of a meal.

        If you take away the power of government to regulate markets (“regulate” meaning “to set new rules willy nilly and to be able to meddle omnipotently with business transactions”, not “protect property rights and punish violations thereof”), liberals will look at you helpless and confused, saying “But what’s the point of having a democracy anyway? Isn’t this what the corporations wanted in the first place?”

        Many statist liberals detect some genuine problems with the corporate state that are shared by libertarians, but most aren’t able to see them clearly from their own (veiled) desire for power. In a statist mindset someone should always hold the reins even if they’re not riding, and that someone should be liberal and enlightened just like me, not a a corporation.

      • Damien S.

        This only works if the world is static, with all property rights and responsibilities totally and fairly allocated, with no changes from future discoveries or new technologies.  The real world is dynamic, and the lack of regulation appropriate for a rural 18th century society is not appropriate for an urban world of dioxins, overfishing, and nuclear weapons.  If you accept a government that can cope with new problems you run the risk of it being captured and distorted, but if you deny such a government then you run the risk of crucial, even existential, problems not being addressed at all.  We didn’t just fail to limit government, we decided that the limited government we inherited no longer suited our needs.

    • Hey Damien,
      You raise a lot of really interesting points here, and I wish I had the time (and expertise!) to engage in a longer conversation with you about them. But I’m trying to resolve myself to spend less time in the comments thread and more time, well, doing the stuff I’m really supposed to be doing instead.

      One quick question though. You seem to dismiss my appeal to income mobility on the grounds that much of it can be accounted for by “simple aging.” I’ve heard that claim before, and I’m sure it’s true as a statistical matter. But I’m not sure what the relevance is? Is that supposed to make the mobility we see in the US less impressive from an egalitarian perspective? Statistics on income inequality over time can give the impression that the US is a caste society – one where the great bulk of the gains go to one segment of the population (the top 20%) while another segment of the population (the bottom 20%) gets the scraps. But if mobility exists, even if most of it is explained by age, this is deeply misleading. The top 20% are not a separate caste to which you can never hope to gain admission. They’re just older than you. When they (many of them) were your age, they were where you are now. When you (many of you) are their age, you’ll be where they are now. Wouldn’t that fact, if true, do a lot (maybe not everything, but a lot) to undermine the moral reason we have to be concerned about income inequality?

      • Damien S.

        It complicates the issues, yes.  But I’d want to see more analysis to be able to dismiss the issue.  Especially with generational analyses, showing relatively low mobility in the USA, compared to “socialist” countries.  There’s also marriage: two poor people of equal income getting married will still be poor, but the resulting household will leap up the percentile table compared to the individual households.  I don’t think mobility based on marriage and divorce should reassure us much.

        Hmm, that reminds me — the top quintile has more dual income households.  Often dual professional.  This doesn’t necessarily hold true for the top 1% or 0.1%.

        I note Table 1 of the Tax Foundation PDF gives 43% retention (1999-2007) for the bottom quintile, around 35% for the next three, but 62% for the top quintile.  The middle ground is fluid, but the bottom is stickier and the top very sticky.  Also, everyone in the 2nd-4th quintiles seems more likely to move down than up.

        Top 10% is 57% retention, 5% is 54%, 1% is 45%.  Not as sticky as the top 20%, but stickier than the bottom 20%.

        If one is in the bottom two quintiles, one is 66% likely to stay in them in the period, though one might switch quintiles.   By contrast, the top quintile by itself has a 62% retention rate.  Someone in the top is 85% likely to be in the top two quintiles by 2007.  By contrast, someone in the fourth quintile is only 56% likely to be in the 4th or 5th quintiles later, so that’s not symmetric.  (one = household, of course.)  Someone in the top quintile is 43x more likely than average to reach the top 1%. Obviously we’d expect them to be more likely — they’re closer — but I see those numbers as evidence of an explosion of opportunity near the top.

        Also note the 40% percentile starts at $40,000 in 2007 — and that’s for a household, not per person — so the bottom two quintiles aren’t making that much.  If you rise out of the 1st quint into the 2nd, you’ve possibly doubled your income, but you’re still struggling.

      • Damien S.

        The top 20% are not a separate caste to which you can never hope to
        gain admission. They’re just older than you. When they (many of them)
        were your age, they were where you are now. When you (many of you) are
        their age, you’ll be where they are now. Wouldn’t that fact, if true

        Yes, but it almost certainly isn’t true.  The top 20% aren’t people who just happen to be in the  oldest 20% of their working life.  You don’t just age your way to a $100,000 income, still less the $143,000 of the top 10% or the half-million of the top 1%.

        • Early Ehlinger

          Of course not – if all it took was aging, it would be hard for anybody to whine about income inequality.  But the reality is that it takes hard work, smart investment, and above all, self-discipline (not necessarily in that order).  Fortunately, the reality is _also_ that this is generally all it takes.

          • Anonymous

            Unfortunately, the reality is that luck is more determinative than all of the foregoing. I wager there are more hardworking, smart and disciplined poor people than there are lazy, stupid and indulgent rich people. 

          • Damien S.

            No, it takes luck as well, starting with the luck of not getting sick while uninsured or crappily insured.  Being able to get insurance in the US is also a matter of luck — does your employer offer it?  Do you have any conditions that make insurers shy away?

            Hard work and education and a bit of luck can get one into the 4th quintile, or even 5th, though it’s not guaranteed.  To get into the top 0.5% takes huge luck (and work) as an athlete or entertainer, or very rare lucky as an inventor (or someone ripping off an inventor, probably more common), or access to money.


            The higher we go up into the top 0.5% the more likely it is that their wealth is in some way tied to the investment industry and borrowed money than from personally selling goods or services or labor as do most in the bottom 99.5%. They are much more likely to have built their net worth from stock options and capital gains in stocks and real estate and private business sales, not from income which is taxed at a much higher rate. These opportunities are largely unavailable to the bottom 99.5%.

            I asked if her colleagues talked about or understood how much damage was created in the broader economy from their activities. Her answer was that no one talks about it in public but almost all understood and were unbelievably cynical, hoping to exit the system when they became rich enough.

            Folks in the top 0.1% come from many backgrounds but it’s infrequent to meet one whose wealth wasn’t acquired through direct or indirect participation in the financial and banking industries

            The year 2010 was a record year for compensation on Wall Street, while corporate CEO compensation rose by over 30%

          • Anonymous

            Surely you realize that this statement: “Folks in the top 0.1% come from many backgrounds but it’s infrequent to meet one whose wealth wasn’t acquired through direct or indirect participation in the financial and banking industries,” is meaningless. You and I, by virtue of having checking accounts, mortgages or car loans, etc., have “participated…in the financial and banking industries.”

            I confess to not being clear on exactly what points you are trying to make above, but I think you might want to consult the very recently published (October 10th) “Forbes” magazine issue on the 400 richest people in America. On page 230 it states that 68.8% are self-made, while 12.0% are partially self-made, i.e. they inherited a small fortune and turned it into a large one.

            Of the 400, less than 25% (96) are categorized (same page) as making their money by “investments,” but this does not imply “wheeler-dealers,” as it includes folks like Warren Buffett, who are simply great long-term investors. At the very top are familiar names, entrepreneurs, who founded many of our most successful companies, e.g. Gates, Ellison, Bezos, Zuckerberg, Brin/Page, Dell, etc.

            It is true that capital gains are taxed at a lower rate than income, at least once your income rises to the level that you actually pay federal income tax (and pay it at the higher rate). But I see no injustice here. Capital investments of the sort that create great wealth are by their very nature risky. If Zuckerberg had invested years of his life and his total savings in Facebook, and Facebook failed, he would get nothing, not even a note from Uncle Sam saying “nice try sonny boy, we appreciate your effort.” Earned income on the other hand is relatively risk free. Also, when a venture capital type investment his a home run, it results in employment for tens of thousands of other people.

          • Damien S.

            Capital gains taxes weren’t always as low as they are now.  I think Bush cut them down to 15%.  Not exactly followed by a boom of productive investment, was it?  And we could reverse your logic: capital investments being risky are in large part the result of luck: one person works hard and hits the jackpot, another person works hard and gets nothing, for no clear reason; a third person has a diversified index fund portfolio and gets the same low tax rate for no work whatsoever.  Meanwhile the salaried worker is usually *working*, yet taxed more for her pains.

            It’d be interesting to know how Forbes defines ‘self-made’.

            Linking financial success as claimed by an investment manager  to savings accounts and mortgages seems wilfully obtuse.

          • Anonymous

            Right, I am “wilfully obtuse,” and you are a philosophical genius who dazzles everyone on this site with your brilliant reasoning and deep philosophical literacy. I will let our respective comments speak for themselves.

        • Of course aging us not the whole story. But I was just trying to raise a question about your claim that a lot of mobility can be explained (away?) by aging. My point was that even if all mobility could be explained in that way, it would not clearly undercut the moral pont people are trying to make by pointing to mobility. So I don’t understand why you think (if you think it) that the fact that some mobility can be explained in this way causes problems for my argument.

    • Anonymous

      You say, “From The Spirit Level, over 40% of people born to the bottom quintile stay there, vs. 20% if there were no correlation between parental class and one’s own.” The obvious reason for this statistic is that the children of the bottom of quintile are forced by law to attend whatever public school happens to be located closest to their (generally) poor neighborhoods. Many parents have been charged with felonies for the “crime” of trying to sneak their children into a better public school that they do not qualify for by residence. Rich liberals get to send their kids to Beverly Hills High (or the equivalent), and if they don’t happen to like that option can afford to send their children, a la our president, to a great private school like Sidwell Friends (where innumerable other politicos have send theirs).

      Will you join me in fighting for equal educational opportunity for impoverished children by means of vouchers (equal in value to what is spent per student in the school districts where these kids live) that could be used at whatever school will accept them? Or do you just like to complain about inequality while fighting like hell to maintain the status quo which perpetuates it?

      • Damien S.

        equal in value to what is spent per student in the school districts where these kids live

        That’s very problematic, since what is spent per student varies with property values and thus  the taxes funding the schools.  Vouchers might improve things where systems are broken — the evidence seems rather murky — but wouldn’t fix the spending inequity; your proposal explicitly fails to provide even nominal equal educational opportunity.  How about vouchers offering the same amount for every child in the country, regardless of location?

        Or do you just like to complain about inequality while fighting like hell to maintain the status quo which perpetuates it?

        That’s a pretty hostile question.  And a question begging one.  Given that the US has less mobility than other First World countries, my first idea, driven by empiricism more than ideology, would be to look at what those other countries do.  Which I suspect would look more like “national funding, control, and standards” than like vouchers.

        • Anonymous

          I’m fine with making the voucher amount equal to an average nationwide figure. Now you will support vouchers, right–I’m glad we agree on this quasi-libertarian solution. Just for the record, you may be surprised to know the spending levels in poor districts are not markedly less than in affluent districts, it just that the results suck. See this CATO study This study compared per capita funding according to official figures in the five largest metropolitan school districts (plus D.C.). The city wide avaerage in these five districts (plus D.C.) was $12,663/student, for the low income districts it was $11,580 and for the affluent districts it was $13,408. Using the author’s adjusted figures, which took into account off-the-books funding (e.g. for capital costs, employee benefits, etc), the gap between rich and poor districts vanished. Significantly, median private school tuition was substantially lower in these areas than public school expenditures.

          OECD studies have consistently shown that we spend more than almost all other developed nations for K-12 education, yet on standardized tests our students achieve mediocre results compared to the rest of the developed world. My solution to our failed system is to empower parents to do what they think is best for their children. Vouchers are the only way to accomplish this.

          • Damien S.

            Private school tuition is not comparable to public school tuition, as they’re not doing the same job.  The private school can kick out anyone who doesn’t fit, and is working with a favorably selected student pool with parents almost guaranteed to be cooperative and attentive,  not to mention able to afford tuition.  The public schools are charged with educating *everyone*, no matter their behavior problems or learning disabilities or home and parental disadvantages.  I think a lot of the extra cost goes to special education programs private schools can skimp on.  One could argue whether we should put so much effort into educating everyone if it hurts the mass, but as long as we do it makes such comparisons ill-founded.  And even without that, the public schools could be spending more on trying to make up for students who don’t have books at home, whose parents didn’t read to them…

            Does the rest of the developed world use vouchers to get their higher test scores?

            (There’s also some doubt as to how much our test scores actually are lower.  I’ve seen Asian countries in particular indicted — by their own citizens — for rigging the tests, softly if not explicitly, the way Texas rigged its test scores a while back.  If you subtly encourage your worse students to take the testing day off…  It’s the old “test everyone” vs. “testing the best”.  Some European countries have collegiate/vocational tracking, which could create an artificial split in secondary grades if not controlled for.  And there’s all the immigrants, with their language difficulties, though the US isn’t as far apart in that as we used to be — at least from Europe; Asian countries don’t take in a lot.)

          • Anonymous

            Well, nothing you say here really comes to grips with the central moral and practical case for vouchers, i.e. “let parents decide what educational option is best for their kids.” As for the rest, you parrot the standard liberal party line re: private schools but I don’t think its true. Catholic schools take virtually all comers, and I don’t think their students are all that different demographically from the public schools.

            With respect to the quality of parental involvement in private schools, most really poor parents can’t afford even parochial schools, but they are eligible for charters–and there are huge waiting lists and lotteries for the few available spots. These parents WANT a better education for their kids, but it is denied them. Public schools should toss out the disruptive students, but they don’t because they get per capita funding.

            Each nation has a unique culture, available teaching pool, and legal structure. I don’t know if the European nations have elite private schools that the rich to take advantage of, and public schools that vary, as do ours, between great and horrendous, with greater than 50% drop out rates. I don’t know if they are hobbled by union-enforced senority and virtually lifetime tenure for even the worst teachers. Here in our little part of the world, if you care about the disadvantaged, you will fight for their children to have something like the same opportunities available to the rich liberal politicos who are in the pocket of the teachers unions.

          • The Cato Institute basically makes stuff up. Everything I have ever read from that organization is seriously methodologically flawed and could never get published in a peer-reviewed journal. Sometimes I wonder how much those people (many of whom are PhDs) get paid….
            In any event you really need to start approaching the peer-reviewed academic literature on whatever topic you are interested in. I’m not trying to be rude but you will constantly be led in the wrong direction if you rely on research from people who are paid to produce certain results.

          • Anonymous

            Your kidding, right? There have been plenty of examples of outright sicentific ifraud n peer-reviewed journals in the hard sciences, let alone the social sciences. CATO publishes many hundreds of studies: perhaps you could furnish me with a few examples, backed up by evidence, of where they “made stuff up.” CATO and their authors have a reputational self-interest in not doing so. If you have specific complaints about the study I cited, I am all ears–otherwise, no sale. 

          • Its not that they “make stuff up” its more of a methodological problems like selecting on the dependent variable or not explaining their models. I’m going to bother to read the study in question (sorry much better things to do!) but I can offer some commentary on this one:


            there are a number of methodological problems with this research that would keep it from being published in any peer-reviewed journal.

            For one, it looks like he treated panel data as cross sectional (which is a fatal flaw). But I can’t tell because he never says one way or the other. Were are the variance components of his model?  How did he estimate the standard errors, are they clustered some way or unclustered? If he did employ longitudinal regression techniques did he estimate fixed, random, or between-effects? What about autoregressiveness? How balanced is his data set? Did he test for a unit root?  Did he test for multicolinearity? These are all basic things that would have to be addressed in any peer-reviewed quantitative oriented  journal in ANY of the social sciences (econ, poli sci, soc, etc.).  This piece could never get published in an academic journal without clearing up those issues and a radical rewrite. Its not exactly rocket science either; a first year grad student could easily find the flaws with this piece.

            So when I say that Cato and other think tanks/ lobbying organizations  “make stuff up” they “make stuff up” by misusing basic analysis techniques that most social science first-year grad students would not be able to turn in for a class assignment, much less get published in a journal.  A bad parameter estimate from purposefully misapplied statistical techniques is, in my view, essentially “making stuff up”.  This isn’t even a critique of the theory underlying the models or the results are interpreted, my point is that the analytical techniques are grossly misapplied by think tanks and other lobbying groups AND the people who do the misapplying know better.

          • Thanks, that’s a helpful response. Or at least, it’ll be helpful to someone other than me who knows how to make sense of these kind of methodological critiques! But I appreciate your putting forward an evidence-based argument.

          • Anonymous

            Matt, most of what Adam is calling out are legitimate questions about what statistical tool should be applied to some data set and what types of statistical transformations on the data may be required to make the application of some statistical tool produce an unbiased estimate. 

            Just about everything he mentions have tests built into most statistical analysis packages, which often with provide summary analysis about such data problems by default.

            Whether or not the criticisms apply to the Cato study or not would really require access to the report and the underlying data set. 

          • Anonymous

            Sadly I am not qualified to evaluate the flaws you cite in this CATO study. However, whatever their gravity, extremely prestigeous peer-reviewed journals such as “The Lancet” have published studies that were the product of outright fraud, so the CATO study’s flaws cannot be worse than this.

            More to the point, the study I cited, which is the only one relevant to this particular thread, is a compilation based on publicly available data, i.e. school district budgets and state records, and in some cases information provided to the author by district officials. The author is fully transparent about his sources, with footnotes explaining the sources for each data point. Under these circumstances, absent some evidemce to the contrary, I am willing to rely on his results.

          • Damien S.

            There’s a difference between individual researchers slipping fraud past peer review — and getting caught and punished for it some of the time — and systematically bad methodology and bias.

            One way of looking at think tanks is as providing a home for the stuff that can’t pass peer review, after all.  If it could, it wouldn’t need  a think tank.

          • Anonymous

            The one CATO study critiqued by Adam was authored by Richard Vedder, who is a full professor, holding an endowed chair, in the Department of Economics at Ohio University. The study (in “The Cato Journal”) analyzed the economic consequences of state labor laws, i.e. right to work vs. agency shop laws. I have quickly glanced at Vedder’s CV, and as one would expect of an academic of his achievement, he has published dozens of papers in peer reviewed economic journals. I don’t know who “Adam” is, but I will bet you that he is no more qualified than Prof. Vedder in statistical/regression analysis.

            Note that Adam does not actually say anything indicating that the study at issue reached false conclusions, merely that the author didn’t specify his methods. Well the CATO Journal’s readership may not be in a good position to evaluate them anyway, so it is the wrong venue for that sort of detail. Moreover, if Adam or anyone else wishes to refute Prof. Vedder’s conclusions, he/she can do their own study of the same variables examined by Prof. Vedder. Nothing said by you or “Adam” convinces me that studies appearing at CATO are categorically useless.

          • Well, gosh, I’m not trying to be rude either, but some guy writing under a pseudonym, telling me that Cato just “makes stuff up,” without even stenting to provide any supportive evidence, direct really do much to convince me.

            But I’m not trying to be rude.

    • Pete Smoot

      I was looking at a table referenced by Mark Perry. In a study by the Federal Reserve of Minneapolis, from 2001 to 2007, 46% of households in the bottom quintile of income had moved to a higher quintile. And that’s in just six years, _and_ it’s counting households, not individual earners.

      The movement between quintiles was surprisingly high. I thought people moved between quintiles but not nearly that much, that fast.

      Post is here:

      • Damien S.

        44%, not 46%.  Small error, but the numbers are right there.
        You’re also comparing the depth of the previous recession to the peak of the housing bubble.  Peak to peak or trough to trough would be more generally valid — and look a bit better for that argument, as the 1999-2007 numbers has 66% bottom->(bottom two), vs. 87% here.

        I note that someone jumping from the bottom to the top could be as simple as a college student in business or engineering, or with good connections, getting a job.  Doesn’t actually tell us anything about class mobility, without knowing how people get to college.  Kind of like those claims that most Confederate soldiers didn’t own slaves — of course not, 18 year olds tend to not own much of anything, let alone valuable capital equipment.  But the families they came from…

        Footnote of your link claims the classes aren’t like closed clubs.  Well, they’re not airtight.  But even by their numbers, the top 20% has higher retention — by far — than any other quintile.  It’s more of a closed club than the others, and the runner up is the bottom quintile.

        Oh, and from the Tax Foundation, let me pass on the *size* — that is, monetary range — of the first four quintiles:
        $22,000, $18,000, $23,000, $36,000.  Mobility in and out of the second quintile — well, it’s half the width of the 4th one, so somewhat easier in sheer number.  (The top quintile is of course open-ended, though it’s another $43,000 to start the top 10%.)

  • Fernando Teson

    A thought on luck egalitarianism. I think there is some merit in the claim that (setting aside government failure issues) a proper job of the state is to equalize opportunity, by which I mean helping folks who cannot pursue their life projects for lack of material means. But I don’t think there is merit in the luck egalitarians’ stronger claim that the state ought to redress inequality of talents. There are several reasons for this difference, but one is that it could perhaps be said that the worldly goods I hold were taken by force or fraud from others sometime in the past, thus the state’s role in redistributing those. But my natural talents came attached to my person: they were not taken from anyone else. Luciano Pavarotti’s voice was fundamentally his, an integral part of his person, in a way that his home was not. And, I think luck egalitarians commit a fallacy. The fact that someone does not deserve X does not mean that he is not entitled to X. If I give you a gift that you don’t deserve, surely my having given it to you counts as a reason for your having title to it.  It is weird to say that I do not deserve to be who I am, but that is the assumption in luck-egalitarian thinking.

    • Anonymous

      I completely agree with your statement that “The fact that someone does not deserve X does not mean that he is not entitled to X.” But even if for the sake of argument we concede that a person must deserve X in order to be entitled to it, people like Pavorotti may still deserve their financial rewards in the morally relevant way. As Nozick famously put it, it need not be the case that “the foundations underlying desert are themselves deserved all the way down.” (ASU, 225). Pavoratti may have been born with a great voice, but he was not born an opera star; many things had to happen in between. And those things will constitute “desert” in the morally relevant sense. I am probably not telling you anything you do not already know.

    • Anonymous

      You seem to be distinguishing between moral entitlement (someone deserving X) and legal entitlement (someone entitled to X). But the relationship between these things goes one way – morality can motivate law but law cannot motivate morality. Thus, the fact that someone has a legal entitlement to X does not inform whether they have a moral entitlement. 

  • “Libertarians call for separating money and power by limiting government somehow, despite the past failure of that…”

    Actually, the more common libertarian position is a reduction in the power of government to interfer in markets. The idea is simple enough. If government doesn’t have the power to favor one company or one industry over another, companies and industries will be less likely to throw money at politicians–why would they if there is no influence to buy? 

    The failure has not been with “limiting government,” its been our failure to do so.

  • Matt–

    One might counter that the alleged distinction between white-hatted capitalist Mr. Brin and black-hatted capitalist Mr. Lay is overdrawn.  Despite what Functionalist sociologists and neo-classical economists claim, Brin did not become a gazzillionaire simply because he is a creative inventive guy.  If he was content with making cool stuff he might have made one and hung it on his wall or given copies away fro free.  He got rich because he CAPITALIZED on it.  He used the existing system to enrich himself.  That was a choice.  He might have chosen to do otherwise.  There is nothing natural or inevitable about any individual characteristic, attribute, or quality being rewarded by a disproportunate share of a society’s rewards.  NBA stars (and NBA owners) get rich only because there are such things as the game of basketball and people with extra money and time on their hands.  Lots of creative and inventive people don’t get rich because they don’t want to get rich.  You pretty much have to want to get rich to get rich and what our society rewards is not talent but people willing to do whatever it takes–including much we might find morally offensive and ethically problematic, to get rich.  Or, of course, as Malcolm Forbes once noted, the best way to get rich in America is choose your parents very carefully.

    Contrary to what all the inequality-justifying economists like to say, what inequality (of wealth or income) is all about is power–the unequal distribution of it.  What the increase in income and wealth inequalities over the past 30 years signals is, in fact, the erosion of democracy and the concentration of political power in the hands of the rich.   It means plutocracy instead of democracy.  I believe that realization, more than anything else, is what generates the energy behind OWS.  It’s also what makes the movement capable of generating tremendous support among the general population.  Few Americans are interested in making sure that everyone makes exactly $50,001 a year; most Americans (aside from the fascist Right) are interested in preserving our democracy, however feeble it sometimes seems to be at times.  Brandeis said it best, I think: “You can either have democracy or you can have great wealth concentrated in the hands of a few, but you can’t have both.”  

    So, yes, we can come up with many circumstances in which the average Joe (or philosopher) would find some sort of inequality unobjectionable.  Fine, I’ll give you those.  But what about those inequalities that stem from an undemocratic concentration of power in the hands of the few?  Are you willing to justify those inequalities?  If not, then we have a great deal of inequality to get rid of before we have to haggle about the possibly unobjectionable kind.  Once we’ve, to be generous, restored democracy in America we can worry about whatever inequalities seem to remain once social and political justice have been achieved…or at least improved.

    best wishes,

    • I don’t really disagree with anything you say in your first paragraph. Except perhaps your claim that I’ve overdrawn the distinction between Brin and Lay – a claim that doesn’t seem supported by anything you say in the remainder of the paragraph. What makes Brin’s wealth just is not that he’s a self-made man, or that his wealth is exclusively the result of his natural talent. Both of those claims are false. What makes his wealth just is that he got it by trading value for value in an honest way. Not by defrauding people. That’s all I meant to say. As for your final paragraph, of course I agree with that too. Lots of inequality is unjust, and we should focus on correcting it. But in that case, it’s the causal process that generated the inequality, and not the inequality itself, that is unjust.

      • Thanks for responding Matt.  My point in the first paragraph, poorly made, is that I think I have good reason to be deeply suspicious of ANY attempt to claim this or that inequality is just within a corporate capitalist system.  You claim that Brin got rich by “trading value for value in an honest way.”  Are you really going to give him that easy a pass?  I think any and all claims/assumptions about how someone got rich in our society are so encrusted with capitalist ideology that none should be accepted without scrutiny.  So, I wasn’t, and don’t accept the claim that all Brin did was “trade value for value in an honest way.”  Indeed, I think the burden of proof should be on those who make such claims.  Show me that Brin’s unequal share of society’s wealth was a simple matter of trading value for value.  I don’t buy it.

        But, as to the question of whether any level of this or that inequality is, in itself, unjust, I agree completely that no level of inequality anywhere on earth or in history is unjust without a person to claim that it is.  Clearly, inequality is a more or less objective condition; all claims about the morality of that condition are normative.  Indeed, find me the “worst” level of inequality in human history and I am sure someone (usually those with the goods) were trying to justify it.  Indeed, I think a good case can be made that ALL inequality of whatever level, trivial or non-trivial seems to require justification and legitimation.  The OWS people have, rigorously or sloppily, come to the conclusion that the level of inequality they observe and experience is unacceptable.  Same as it ever was or will be.    So, I must assume then that the point of raising the question about the OWS folks is that you think they might want to do a better job of justifying their claims, or to measure a libertarian standard against theirs, or to make your case for a particular standard.  I assume you are not supposing to launch a standard that successfully escapes the normative atmosphere within which all such claims must remain?  

        • Hey Cliff.  I guess “showing” you that Brin’s unequal share of society’s wealth was “simply” a matter of trading value for value is hard to do.  I’m sure there were some elements of injustice that contributed to his wealth.  But Brin gave us Google.  And it was his giving us Google that was responsible for the great bulk of his wealth.  And I’m quite certain that the social value of Google to the world far, far exceeds the value of the income Brin has received from it.  So, he gave the world something much more valuable than what he took from it.  That’s my basic claim.

          • Matt–

            Still not near the bottom I don’t think.  It’s not obvious to me at all that “giving us Google was responsible for the great bulk of his worth.”  This seem to assert that which needs explanation.  What does it mean to “give us Google?”  What does “was responsible” mean in this context?  This is a euphemism, not an explanation.  Underneath it are complex social processes that can and should be subject to empirical analysis.  Brin ends up “getting the credit” for inventing Google, but this business of assigning credit is really a social, political, legal process itself–a story that needs to be told before anyone is justified in coming to any conclusions about whether or not Brin is “responsible” for Google or whether his wealth is any kind of proper reward.  We really shouldn’t be treating Forbes Magazine’s self-serving ideology of wealth creation as a political economic explanation.

            And let’s not even get into whether the appearance of Google on earth is an obvious evidence of “progress.”  I am reminded of Wendell Berry’s classic essay “ Why I am Not Going to Buy a Computer.”  He was convinced that having one would allow him to write faster, but remains unconvinced that any computer ever made anyone write BETTER.  So too with Google.  With it I can do a lot of work I might otherwise do slower, but I’ve yet to convince myself that the end result is any better.  Similarly, the primary function of the Kindle is to more quickly move money from my wallet into Jeff Bezo’s bank account.  This is progress?

          • Anonymous

            These discussions are now illustrating why I think egalitarian philosophy has made a complete mess of itself.  Rawls at one point hints at the logical conclusion of his analyses: no one deserves to be who or what they are.  When desert is normatively vacuous, fairness seems to be a way of bringing in particular beliefs about desert through the back door.  It also seems like distinguising dignity, autonomy, and moral worth are ad hoc. 

  • Anonymous

    “Would income or wealth inequality be troubling in a society of people who all had the purchasing power of billionaires?”

    Um.  No.  Guilded-age billionaire J.P. Morgan couldn’t purchase most of the items your average single minimum-wage burger flipper can now afford.

    What’s troubling instead of purchasing power is that despite this gap J.P. Morgan had, um, considerably more power than all contemporary minimum-wage burger flippers combined.  (Even if, by some chance, the aggregate purchasing power of all combined burger-flippers happened to exceed Morgan’s purchasing power.)

    Consider that by virtue of… well… absolutely nothing the publisher and politician Steve Forbes derives what power he can manifest almost entirely through having the fortune-as-in-luck to have inherited a publishing platform and personal fortune acquired by his father, Malcom.  Minus the luck of his merit-free inheritance he’s almost certainly just another midline executive at Dunder, Mifflin.

    So I’m a Jeffersonian (and also, incidentally, a Bill Gates-ian) in believing that one should be able to accumulate all the wealth, power, and influence one is capable of in life, but that upon death one’s “heirs” should inherit exactly one last name and half a set of chromosomes.  As a bleeding heart libertarian I’m not exactly sure where the no-longer-needed fortune should go (I’m not sure it should got to taxes — how about dividends to current living shareholders?), but as a… well… a bleeding heart libertarian I sure as heck know it shouldn’t just be passed on in concentrated form to people simply by virtue of sharing a name and chromosomes.

    That’s how you get dynasties like the Bushes, the Ortegas, the Kims, the Kennedys, and the Medicis.  All of whom seem to have the general opinion that society owes them the same things it owed their forebears.  Not a healthy outlook for small-l libertarianism.


    • Anonymous

      figleaf, would you also outlaw wealthy (or non-wealthy, for that matter) people giving away their wealth to whoever they choose while they are still alive? Isn’t that basically what a will does, except that the giving happens after their passing? Why not just extend that to saying that the state owns you and everything you accumulate? It’s a logical extension of your view.

    • Just to echo figleaf’s sentiment, I’ve always been a bit puzzled by the claim that inheritance should be abolished.  But I’ve never read any serious scholarly literature on the topic, so it’s possible that my concerns are utterly naive.

      But the obvious question is this: if you ban inheritance, what do you do about parental gifts made prior to the parent’s death?  If a parent is told she has 24 hours to live, and gives all her worldly possessions to her only child immediately upon hearing the news, is that to be banned too?  What if 80 year old parent A signs a contract with third-party C that C has rights to dispose of A’s property as of right now (t1) but is contractually obligated to do nothing with it until the time of A’s death, at which point she is to give it all to B, A’s child?  Etc.  These aren’t exactly moral objections to your position, but they seem to me to be very, very deep practical problems with it.

      • Anonymous

        I think you give yourself too little credit here. Most people, even many left-libertarians, believe that gifting one’s property is a right that should be respected under almost all circumstances. If an opponent of inheritance cannot distinguish in a principled way gifting from inheritance, they face an obvious dilemma; either preserve consistency and hold that gifting is also morally illegitimate or concede that inheritance is also morally permissable. The former choice makes their position largely untenable, since it is squarely contrary to most thoughtful persons’ moral intuitions and thus implausible, while the latter choice simply concedes defeat. So, by forcing the opponents of inheritance to consider the logical implications of their view, you are making a moral objection. 

        • Damien S.

          An obvious retort is that gifting is done by live people, not dead ones.  If you want to give a gift, give it while you can, but if you hold onto your property until you die, it returns to the public.  Seems like a perfectly principled difference.

          As for limiting contractual freedom, that ship sailed when we banned selling oneself into slavery.  Ruling out noxious entailments of property — which I think is part of current laws — is a short step from there.

          • Anonymous

            Well, Damien, it is an obvious “retort,” but this does not actually constitute an argument against inheritance. You need to explain why the wishes of a live person in the form of a gift should be honored, but the wishes of a dead person may be ignored. Obviously, only a live person can give a gift, but this is a tautalogy, and not an argument for holding that the wishes of a dead person have no moral significance.

            Example: on her death bed you promise you mother that you will bury her in a certain cemetery and erect a tombstone with a certain inscription. After her death, although you can well afford to honor your promise, you decide to save a few bucks by cremation. Are you acting in an ethical way? I think not.

            Hillel Steiner actually attempted to construct an argument that  would distinguish in a principled way gifts from inheritence. See his  An Essay on Rights (Oxford: Blackwell, 1994), pp. 253-4. This argument was refuted by Peter Jones, see “Two Conceptions of Liberalism, Two Conceptions of Justice,” British Journal of Political Science, vol. 24/4 (1995), pp. 540-1.

          • Damien S.

            Conversely, you have to argue why the wishes of dead people have moral significance.  Especially since, in this case, it would be up front, not like your hypothetical of breaking a promise; the societal rules would be changed so everyone knew that property at death passed to the public/state.  No bait and switch here, just a different way of doing things.

            In particular, I see no violation of libertarian principle here; no one is being coerced.  If you’re alive, you’re free to give away or hold onto your propery; if you’re dead, you can’t be coerced, and I see no path from non-coercion to an unimpeachable right to wills and inheritance law.

          • Anonymous

            What gives the state the right to the property, Damien? Especially considering that the deceased let their wishes be known in their will.

          • shemsky, to add my 2 cents, I think the founding of the U.S. as objecting to the notion of “divine right of kings” has something to do with it, i.e.,  trying to break the legacy chain between generations, which is not to say, of course, that all wishes of a deceased should be unenforceable.

          • Anonymous

            Very few libertarians believe that the non-aggression axiom is the only moral principle to be found in the universe. Most believe, for example, that we have a positive obligation to help someone in dire straights if we can do so at only a trivial inconvenience to ourselves. So, at best, your point only works against them.

            Moreover, your attempt to shift the burden of proof doesn’t work because the testator did express his intentions while living, in his/her will, just as in my example of the dying mother. You do not dispute the intuitive force of this case.  What is it about death that enables us to ignore these intentions?  

            Finally, putting all that aside, unless you are wiling to bite the bullet and outlaw gifts, you accomplish nothing for the reasons noted by Matt above. The only people affected by your principle would be those who die suddenly, without making a conditional gift of their property. 

          • Anonymous

            So is inheritance — the will has to be drafted by a person “of sound mind and body”. as the old saying goes. The simply fact it transfer at the time of death doesn’t seem particularly relevant .

  • gaffigubbi88

    Matt Bruenig, a socialist philosopher, on social mobility:

    • Apart from the analysis of social mobility here, which I find a bit problematic, this is a perfect example of the conflation between inequality and insufficiency that I was talking about in my post.

  • I was more or less with you, Mr. Zwolinski, up until the end. While the call for a certain level of agnosticism about issues of right and wrong appeals to me, I find that too often, we only call for it when people with whom we disagree conclude that “that the nature and existence of the injustice they seek to eliminate is obvious.”

    And in this instance, your stance that the nature and existence of the injustice that Occupy Wall Street seek to eliminate is manifestly inobvious, if it exists at all, gave your conclusion a feeling of being tacked on and self-serving, and in that respect, it would have been better left out, in favor of something that might help us better determine if and when inequality does ever rise to the level of an obvious injustice. After all, I’m not an idiot. I know that I’m reading a Libertarian website, and so of course the party line is that inequality doesn’t matter – you may as well have set out to explain that water is wet.

    • I certainly wasn’t trying to call anyone an idiot, least of all you, Aaron. Nor did I take myself to be setting out a party line. I took myself to be giving arguments against the importance of income inequality that could be seen as legitimate from any moral perspective – there was nothing distinctively libertarian about them.
      Maybe I need to work on my rhetoric. But I wasn’t being insincere. I get annoyed at libertarians when they act like their beliefs are obvious too.

      • It’s entirely possible that a “moral perspective” on income inequality is the wrong way to look at this. It may be that consideration of “doing something” about income inequality (whatever form that might take) is analogous to consideration of whether to impose speed limits on roads and (if so) what those limits should be. It’s not bad in a moral sense to drive fast, especially if it helps us all get where we’re going faster; it’s also an imposition on our liberty to dictate how fast we can drive, and that imposition falls hardest on those few who have fast cars and the skills to drive them safely at speed. And who can say how fast is too fast? It all depends on the type of road, the weather, how crowded the road is, and so on. So why even have speed limits? Why not adopt the autobahn philosophy?

        On the other hand, the laws of physics and the cognitive limits of humans imply that at some point driving faster takes us into a regime of increased instability where the interaction of driver with road and with other drivers can lead to bad outcomes, even if we can’t predict in advance exactly where that regime might begin. Maybe inequality is like that in some sense, and at some point we’re at risk of societal “crack-ups” of greater or lesser degree. The problem though is that in driving we have lots of relevant experience (e.g., in the form of historical accident statistics) we can draw on in terms of where speed limits make sense and what they should be. When it comes to inequality (especially in modern societies) we don’t have that depth of experience, and as a consequence no good models to guide us. In fact, as you note, we don’t even have a universally-accepted consensus on how “fast” we’re going.

      • I didn’t mean to imply that you look down on your audience, Mr. Zwolinski or think of us as idiots and I certainly don’t think you were being insincere, but I have to admit that anyone who comes to Bleeding Heart Libertarians expecting to find arguments that stray far from Libertarian orthodoxy is either unfamiliar with the blog, hasn’t been paying attention or has a deeper expectation of sudden change than the rest of us.

        So as soon as I saw the headline: “Does Inequality Matter,” I knew that what was coming was going to be either a long or short elaboration on “no.” You’d have to be a few cans short of a six-pack to expect anything else. Not to say that various rationales weren’t enlightening, but the overall theme of the essay was, to be blunt, a foregone conclusion. And the piece read something like this, if I may condense it down to a couple of sentences:

        “Income inequality isn’t really a problem.

        People who think it is should be less strident and more open to the idea that it’s complicated.”

        As I said, the first of these statements was exactly what I expected. And that gave the conclusion a feeling of being disjointed from the longer essay, and somewhat superfluous.

        • Wait a minute, I realize this isn’t the main point of your post, but do you really think this blog fails to stray from libertarian orthodoxy?

          Did you read this post:

          Or this one:

          Or this one:

          Just to pick a few examples from memory…

          • Yes, as a matter of fact, I have read them. And they were enlightening. But, even those posts notwithstanding, I am of the opinion that the blog, as a whole, spends more time defending Libertarianism than it does linking it to ideas of “social justice” as the term is understood by non-Libertarians.

            Let me share with you part of a blog post I was preparing. I never posted it, because I’d starting feeling that my blog should be titled “Things That Aaron Doesn’t Like,” so I determined to be less critical of things. But anyway…


            “I’ve created this blog as a forum for academic philosophers who are attracted both to libertarianism and to ideals of social or distributive justice.”Matt Zwolinski “Bleeding Heart Libertarianism” (’s a fairly promising start. But perhaps because I, for my part, am not an academic philosopher, while I can see the attraction to libertarianism, the attraction to social justice is a little less noticeable. I suspect that most of the reason for this is fairly basic. Despite that fact that libertarianism is commonly understood by laypeople to be simply a flavor of conservatism that chafes at some of the restrictions on personal freedom that many other conservatives hold dear (otherwise known as “Republicans who want to smoke pot”), libertarianism isn’t considered a “mainstream” political philosophy. Accordingly, many libertarians spend a lot of their time explaining their position. And, given the fact that libertarianism has become associated publicly with a desire to abrogate the social contract for personal gain, many libertarians spend a lot of their time defending their position, and Bleeding Heart Libertarians is no exception.


            For my part, I think that Bleeding Heart Libertarians would do well to tackle a subject that so far hasn’t been put on the table. If the central tenent behind being a bleeding-heart libertarian is that free markets lead to better outcomes, then perhaps we should determine if a free market wants better outcomes. I’m borrowing the idea of a market “wanting” something from Russ Robert’s EconTalk podcast (which itself is libertarian-leaning) — if technology has “wants,” in a certain manner of speaking, then why not markets? In this case, the central question would be “do free markets function better with flatter income curves than they do with steeper ones?” If a market functions better with lower relative inequality, one would expect that natural market forces would function in such a way that a significant number of market players would be better off with lower inequality, and thus they would work to smooth out the income and/or wealth distribution overall, in the service of looking out for their own interests. Note that this is a different question than “Can a free market lower poverty levels?” because we understand that a free market CAN lower poverty levels. But if it lacks any natural inclination to do so, relying on it would simply be a case of defining “free” as “manipulated by someone other than a governmental body,” since it would likely take some deliberate intent to steer into doing so.So it’s worth figuring out if that “natural inclination” is there or not. I suspect that it isn’t – many free marketeers that I know seem to think that the natural tendancy of market forces is to increase inequality, and thus poverty (at least, as far as we understand it in the industrial West). But I couldn’t really say. So it would be an answer worth having.


            Part of the reason I mentioned that is this:

            Jason Brennan tells us, in “The Case of the Missing Callous Libertarians” ( “All of the libertarians I’ve met believe that in a libertarian minimal state or anarchist society, markets and other institutions of civil society would make nearly everyone better off, the poor would not be left behind, and that there would be significant progress. I’m not here interested in discussing whether they’re right about these empirical claims. I’m just curious what role these beliefs play in their political philosophies, given that they explicitly disavow social justice.”

            So… here’s my question. When I went back and read every post, in order, back in July, no-one had yet discussed those empirical claims. Now, I’ve missed a few posts since then, but has anyone discussed them?

            Anyway, this is likely WAY more than you were looking for, and I sorry to ramble on so. And so I guess my answer is no – I don’t think that BHL never strays from libertarian orthodoxy. But I don’t think that it challenges that orthodoxy strongly enough to seem truly committed to a Bleeding Heart moniker.

          • a) I have no idea. I’ve never done the research.

            b) I don’t understand how this is relevant to the idea that libertarianism is better at producing the outcomes that proponents of social justice claim to care about. This seems to be more about unions v. government.

          • I did read your blog post. And while you might be a very smart guy, that, in and of itself, does not count as having researched the issue.

          • Well, fair enough I guess. Though, for what it’s worth, there are plenty of mainstream libertarians who think we stray far too much from the standard libertarian line. Check out some of the comments on my Reason TV interview, for a sampling. “Socialist” was one of the nicer things I was called.

            As far as more evaluation of empirical claims, I should remind you that this is a blog consisting mostly of academic philosophers. As such, we’re not especially well-equipped to make original contributions to empirical analysis. We kind of have to take what we get from the economists and social scientists. Our specialty is normative argument and conceptual analysis – thinking about the nature of justice, its relation to liberty, things like that. There are a lot of other economist-heavy libertarian blogs out there. We’re trying to fill a different niche.

  • Mobility studies using quintiles can be very misleading. . The fact the same people are not in the lowest quintile as thirty years ago is not prima facie evidence that we live in a society of easy upward mobility. Undoutedly, a number of people “age out” of the bottom quintile as they graduate college, get better jobs, etc while other’s “age into” the bottom quintile when they retire. In other words, it’s by it’s nature a dynamic category.  

    I’m not trying to be a jerk, but Horwitz’s video is very misleading and if he’s a trained academic economist he knows better. I don’t know what “learn liberty” is but there is nothing especially liberating about the incorrect or deceptive use of empirical data.The upper threshold for the bottom quintile of the income distribution is probably somewhere around 22k/ year (sorry is been a while sense I looked at the data) and the upper threshold for the second quintile is probably around 40k/ year. I someone over the life course moves from 18k/ year as a college student (or just a young person trying to find there way) and by their mid-40s makes it up to 45k a year they have moved 2-3 quintiles. Some might disagree, but that’s not strong evidence of a high degree of mobility but it sounds like a lot because the person in question has changed categories a couple of times.Its more interesting to ask who makes it from the lowest quintile to the highest quintile and vice versa. Feel free to disagree, but if we want to study mobility I think it better to look how many who are born into the bottom quintile (I would prefer to use deciles) make it into the top quintile (which is basically an upper-middle class wage, I think around 180k) and how long and with how much effort it takes to get there. Additionally, if we want to quantify mobility we should also look at how many people drop from a start at the  top quintile into the lowest quintile. Presumably, a highly mobile society that rewards hard work would see some lazy upper middle class kids drop while the bootstrapping scrappy kids from wrong side of the tracks would overtake them. Though I doubt that we could agree on a definition of “the rich” most of us probably wouldn’t say that being in the top quintile makes a person rich; the lower threshold of the top quintile is basically an upper middle class income IMHO. Because the skewness of the US income distribution there is a lot of heterogeneity in the top 20%….it ranges from engineers or mid-managers all the way up to the highest-paid person in the United States for that year. This is one of the severe methodological problems with using quintiles; in general you want a categorical variable to have a high degree of within-group homogeneity.Now, there are all sorts of philosophical arguments to be made whether or not anything should be done about income inequality (there are many other types of inequality of course) but if we are going to be engaging in empirical analysis we need to understand what the data says and consider some general methodological issues. We should think about the variables in question and in longitudinal studies we should ask why the researcher decided begin and end the period of analysis at one time or another. 

    • Damien S. has the numbers you want, at least taking them at face value.  You were spot on at first but $180K is way too high.
      2007 numbers
      1st quintile starts at 0, of course
      2nd $22K
      3rd $40K
      4th $64K
      5th $100K
      Top 10% is $143K
      5% $201K
      1% $549K

      6% go from bottom to top 20%, 3% from top to bottom.  2.2% go from bottom 20% to top 10%, 2.7% the other way.

      I note the table says taxpayers; this my contradict my emphasis elsewhere on households.  If so that takes marriage off the table as an objection (somewhat, and especially for men who tend to not stop working) but also makes that $100K look more unattainable for most.

      You make a good point, and aligned with my comment on width; jumping from 1st to 3rd quintile can be as simple as getting a working class/lower-middle class job, though in fact it’s fairly rare.  Switching between 1st and 2nd is almost any non-minimum wage job vs. unemployment.  (If this was households, it could also be unemployment for one member.)  Jumping from the 2nd to 4th quintile seems harder; people who actually earn $22-40K don’t have as many opportunities to then earn $64+K, and in fact the 1st and 2nd quintiles are just as likely to reach the 4th or 5th quintiles. 

      In fact the bottom quintile is slightly *more* likely to reach the top 20% or 10% or 5%, though I don’t know if the difference is statistically significant.  But it’d be consistent with much of that being not class mobility but the graduation and employment of upper middle class students, not rising but simply exercising opportunities lacking to people who ostensibly earn more than they had.

      • Thanks for the data!  I have seen it published but it was in academic journal articles that, quite frankly, I didn’t want to look up for the sake of a blog comment….sorry I should have read over your comments better as we said much of the same thing.
        There is some limited research on the how long changes in quintile position last for individuals. That is, if a person moves from Q1 to Q4 how long do they stay in Q4? Basically it looks like downward mobility is a problem for many people and varies by race….
        There have been some attempts to quantify wealth inequality though the results are mixed. There is a great literature on health inequality too…..but I digress. 

        I looked up “Learn Liberty”. Though the organization is affiliated with a university it is probably awash in private money. It’s all well and good if they want to advocate for “classical liberalism” but I would advise caution when it comes to their statistical methodology. 

        But mobility arguments are different than inequality arguments and its important not to conflate the two. It’s also important to distinguish between moral philosophy and empirical analysis. 

      • Anonymous

        Interesting — lots of people in the Washington DC metro area that pull in about 100K annually.

  • CFV

    “Aside: isn’t this exactly how the United States looks to most of the rest of the world today?”

    I don’t understand this question. Let me show you a glance of how US looks to most of the rest of (reasonably well-informed people of) the world today:

    • What concerns me most about the income inequality described in this video is that it may indicate the IRS has lost regulatory control over our (non-coin) currency.  To function properly, fiat paper/electronic monetary systems absolutely require, not only minimum filing requirements to control poverty (a kind of negative income tax), but also high tax rates on excessive income.  The high income earners described by Brzezinski in this clip should be subject to tax rates 90% or higher.  These are not real wealth or job creators, i.e., not businessmen who earn “income derived from property sources,” and certainly not the kind of businessmen who should be operating sweatshops. 

  • Anonymous

    My little experience in a large corporate law firm taught me very quickly that income is not a good indicator of quality of life.  Coming from a lower middle class upbringing, this was both disappointing yet predictable.  But if we are concerned with resources that need to be distributed (e.g., Dworkinian equality of resources), than more serious thought needs to be given to “quality-of-life” occupation as a resource.  And I think there are objective features of jobs that can be taken into account (levels of stress (perhaps measured by heart attack/suicide rates, etc.).

    That being said, I think egalitarian philosophy is some of the more frustrating work done in all of moral/political philosophy, and it’s a shame that so many great minds have occupied themselves trying to work out the mess they have put themselves in.

  • Haytham Yaghi

    This post strikes me as stooping into nitpicking and hair splitting in order to delegitimize a widely supported movement and preserve the status quo of crony capitalism (the last few lines of generic statements notwithstanding).

    1) If people are happy and everything is rosy as the surveys you quote suggest, how come people from the left and right are protesting?
    2) You ended your post by some generic statements such as: “they might have good points” without much clarification. Would you please share which points you agree on with the OWS crowd?
    3) How come libertarians only nitpick and try to delegitimize OWS but not the tea partiers which seems to get blind support from libertarians despite their occasional racist slogans and misinformed demands?

    • I don’t want to delegitimize OWS at all. Its a diverse movement supported by people of diverse ideologies. And a lot of what they believe in is absolutely worth supporting. I oppose crony capitalism, and if you’ve followed this blog for any length of time, you’d see that we’ve devoted quite a few posts to the topic. (See, for instance, this:

      My point was a narrow one. To the extent that OWS folks are arguing that income inequality is unjust, or obvious evidence of injustice, they are making a mistake. It is, moreover, a big mistake, not merely a “nitpicky” one. I stand by that point, but in no way to intend it to undermine the many good points that people involved with OWS make: their criticisms of subsidies and bailouts for big businesses, their criticism of the Federal Reserve, their opposition to militarism, their belief that governments should serve the common good rather than the interests of a plutocratic class, etc.

      • Haytham Yaghi

        I’m sorry I misunderstood your intent. As you figured out, I’m a new reader to the blog and not very familiar with the big picture that the blog stands for. In the short time that I’ve been following, I stuck around because I’ve liked the posts that I’ve read. (I know it’s a bad habit to comment only when I disagree).  

        What felt like nitpicking to me was the elaborate distinction you made about not all inequality being unjust. However I don’t think that most people in OWS would disagree. It felt as if you’re pinning on the movement a simplistic view of inequality that OWS doesn’t adhere to.

        • Matt-you seem to be making various arguments. One is that  income inequality is just. Yet you seem to be variously arguing that it does not exist, or that it has remained static. That’s a far different argument than the philosophical or moral argument about the justness or unjustness of income inequality. I’ve never really understood why American libertarians make moral or philosophical arguments and then try to put the icing on the cake by citing some statistics. If you believe something is moral or amoral it shouldn’t matter what the data says on its effect on GDP growth, profits or the like or the most recent says about the level of income inequality. 
           For example, I am against patriarchy and heterosexism and I don’t care whether or not their liquidation would change GDP (or some other economic indicator). To me, it’s a little strange to think about whether or not income inequality is just or unjust, it’s more interesting to discuss what degree of income inequality is just and unjust at a particular time of observation.It’s also interesting to consider the elasticity of income inequality….does it always remain high or does it ebb and flow? I would think that, in a dynamic competitive economy, income inequality would have a lot of year-to-year (or business cycle to business cycle) variation as new technologies are invented, and old industries die (creative destruction, in other words) and new elites, based upon their entrepreneurial acumen,  are created. 
          I really doubt that any OWS protestor or supporter thinks that income inequality should be eliminated (gini=0).  And its important to not assume that every time someone says “equality” or “inequality” they are talking about the income distribution. 

          • You’re right. I am making a number of different arguments. However, they’re not incompatible and I believe they’re all correct. So I’m not sure why you think there’s a problem with this. An argument can contain both false moral premises and false empirical ones. And, I think, many of the arguments against income inequality have both.

            And, of course, i don’t assume that everytime someone says “equality” they are referring to income distribution. But both of the specific arguments I reference in the first line of my post talk specifically about income inequality. And it would be easy to multiply the examples.

          • I’m trying to make the point that if you think that high degree of income inequality is a morally or philosophically good, it shouldn’t matter what the data says.  Your argument about income inequality seems to be 1) its Good and 2) its not increasing over time. #2 is correct depending on how “time” is defined but the post war trend has been markedly increased income inequality.   #1 is in many ways a more interesting discussion point  but again I think its better to think in terms of what degree of income inequality is morally good. 
            For example:1)  Is more income inequality always better? 2)does the relationship have bell shaped distribution (as inequality increases its goodness declines after a certain peak)?  I am not an OWS protestor but I doubt that any them (or any folks on “the left” whatever that is) are seriously arguing that all incomes should be equalized throughout the country (gini=0) and I really doubt that you seriously believe that one person should make all the income in the country (gini=1).  So its better to define a degree of income inequality that you think is morally good and the reasons why.  Your second point (its not changing) is an easily testable empirical point that really isn’t worth much discussion. The moral-philosophical discussion is far more interesting. 

          • Just one final quick point: nowhere in the article do I say that inequality is good. I say that it is not necessarily unjust. This is importantly different.

  • Reason chimes in to report on some interesting analysis of the recent CBO data:

  • Since money is a fully-public commodity when issued directly by the Treasury Department, and quasi-public when issued by the central bank, I think we all have a right to be concerned about how people accumulate wealth measured by this commodity (assuming we can call money obtained through an improperly regulated fiat-money system “wealth”).

    But this is not to say that income inequality should always concern us. If you’re my neighbor and you discover gold or oil on your land, and I don’t, and your discovery results in great income inequality between us, I may be jealous, but I really have no legal right to object.

    On the other hand if you discover gold or oil while digging in the public gardens of my city, or in a national park, I do have a right to complain.  In effect, not only are you unjusty enriching yourself, but you’re polluting a public resource that I have rights to.

  • Anonymous

    MARK_D_FRIEDMAN wrote:
    “At the very top are familiar names, entrepreneurs, who founded many of our most successful companies, e.g. Gates, Ellison, Bezos, Zuckerberg, Brin/Page, Dell, etc.?”

    My worry is the common left-libertarian worry: how much of this wealth can be attributed to monopolistic power resulting from government-created barriers to entry?

    • Anonymous

      I hear this argument a lot, but I confess to not getting it. If “government-created barriers to entry” are so powerful, how is it that Zukerberg, Bezos, Brin, etc. (all relative newcomers) have overcome them? Why didn’t existing corporations—Yahoo, AOL. MS, Wal-Mart, My Space, etc. kill these new entrants in their crib?  I bet you that 10 years from now we will be talking about a new set of revolutionary companies, and I will be asking why didn’t Facebook, Google, etc. prevent them from being successful.

  • Anonymous

    Because I am not an economist, I cannot adequately respond.  But a few thoughts may (or may not) support my concerns.  First, just because hurdles can be overcome does not entail (i) they are non-existent, or (ii) they have no effect on the overall success of the actors.  One can overcome hurdles, and once the actor passes a certain point, things snowball.  Second, some every-day examples seem to bear this out.  Lawyers, for example, seem able to charge large fees for their services, even for relatively simple tasks (some personal injury or minor crime cases, filing corporate documents, etc.).  I think there are tremendous barriers to entry in the legal market, and however counterintuitive it may seem, there is an under-supply of attorneys relative to actual demand (note: I recognize the demand is not “natural” and reflects the existence of excessive amounts of laws/regulations).  This is probably why you find very wealthy attorneys whose practice does not require specialized knowledge and expertise.  So although I cannot answer your specific questions vis-a-vis Google, Facebook, etc., I think it is not unreasonable to have concerns regarding their wealth accumulation in relation to barriers to entry created by government interventions.

    • Anonymous

      Obviously, as a libertarian I am all for dismantling all state-created barriers to entry. In the legal profession this would include ending the accreditation of law schools and bar exams as a condition of practicing (incidentally, once upon a time I too worked at a large law firm). What I don’t understand is the connection between the existence of governmental barriers to entry and the conclusion that Zuckerberg and others don’t deserve their wealth. If he overcame barriers to entry that blocked other potential competitors, he is if anything more deserving of his wealth. 

  • Regarding the interesting discussion about inheritance rights, if we really believe, as Jefferson expounded “all men are created equal” upon birth—i.e., we spring into the world with a degree of independence from the curse of one’s family and culture—then after providing for ones dependents, all property perhaps really should inure to the state in “usufruct.”

    Regarding the pre-death gifting discussion, it’s my understanding that this problem is already accounted for under IRS gift taxing procedure.  People are allowed to gift so much per year to whomever they wish without penalty, but if they gift over that amount, the money will be “disgorged” or brought back into the decedent’s estate if the decedent dies too soon after the gift was made.

    If you think about it, it can be no other way under our (quite revolutionary and radical) system of government.  Either men and women are born free or not.  Also tied into this idea is the mention of “corruption of blood” under Article 3, Section 3, Clause 2 of the Constitution, whereby no one can be indicted for a crime simply because his/her relatives were guilty of a certain crime.

    I also found this link to one of Jefferson’s letters on the subject:

    • Anonymous

      I don’t think that’s what Jefferson meant by “all men are created equal”. He meant equality of authority. I suggest you read “Equality, The Unknown Ideal” by Roderick Long. Roderick explains it very well.

      • Damien S.

        I suggest you read Jefferson first, who wrote “Earth belongs in usufruct to the living”, that subsequent generations could not be bound by previous ones, and calculated based on life expectancy at the time that debts and constitutions should last 19 years.

        “Another means of silently lessening the inequality of [landed] property
        is to exempt all from taxation below a certain point, and to tax the
        higher portions of property in geometrical progression as they rise. Whenever
        there is in any country, uncultivated lands and unemployed poor, it is
        clear that the laws of property have been so far extended as to violate
        natural right. The earth is given as common stock for man to labour and live on. If,
        for the encouragement of industry we allow it to be appropriated, we
        must take care that other employment be furnished to those excluded from
        the appropriation. If we do not the fundamental right to labour the earth returns to the unemployed”

        “On similar ground it may be proved that no society can make a perpetual constitution, or even a perpetual law.”


        • Anonymous

          Very interesting web page, Damien. I’ll have to take some time to digest these quotes (and not just Jefferson’s). The initial problem I envision is the question of who has the right to decide what is just and what is unjust.  Choosing between the state and the individual, I side with the individual. (problem meaning trying to reconcile equality of authority with these views)

    • Damien S.

      I haven’t heard of disgorgement, though I’m no tax lawyer.  AFAIK you get the first $10,000 of gift tax free, and then full income tax on the rest.

      • Damien, I may used term “disgorgement” incorrectly here … just meant that if the gift exceeds the annual per person limit, the excess will be brought back and considered part of the decedent’s estate anyway for estate tax purposes.  The annual gift exclusion could be $10,000 per year, but I think it might be a little higher. The interesting thing is, though, the IRS allows you to gift to as many people as you want, even complete strangers. … Also, as I recall, gift and estate taxes can be quite a political football.

  • Anonymous

    I think the inequality argument has less to do with situation as it does with opportunity.  There was a time when the US was the best place in the world to go for opportunities to get ahead, but it’s not true any more (Denmark is #1, we’re #7-#9 depending on who you talk to).  The currently-wealthy in this country are using that wealth to lobby the government to protect them from competition, which in turn reduces the opportunities for not-wealthy people to become wealthy.

    That’s the heart of the inequality argument.

  • Damien S.

    Old blog post linking to an old article here
    Krugman notes that a lot of the inter-quintile mobility is from people near the border.  Make $21,000 one year, $23,000 the next — congratulations, you’ve jumped a quintile.  Doesn’t mean the people making $10,000 are going anywhere.  Of course, the same person might be making $21,000 again a bit later; ‘mobility’ that’s actually fluctuation around a long-term mean.

    Of course that would affect every other country’s quintile measurements as well, but I think the takeaway point is that ‘real’ income mobility is going to be less than what the raw numbers suggest, for these reasons as well as earlier ones such as upper middle class college students getting jobs after graduation.

  • Pingback: The Education of Robert Neuwirth | My Blog()

  • Pingback: The Invisible Economy | Laissez-Faire Bookstore()

  • Pingback: Occupy Roundup()

  • Pingback: its not just in the mountains. - US Message Board - Political Discussion Forum()

  • Pingback: Koppl on Income Inequality | Bleeding Heart Libertarians()