Is income inequality bad?

 Lawrence Zammit's article on The Times of Malta

A recent article in an English newspaper claimed that inequality is not to be seen as a problem as it is a driver of progress. The writer of the article accepted that there are issues of poverty or how to raise taxes to fund the public sector and that inequality is linked to these issues. However once inequality is seen as a standalone issue one is left with two questions. One is “Is inequality intrinsically bad?” The other is, “Is it bad, if some people are rich?” To complete the circle, the writer of the article claimed that almost no one claims that it is bad if some people are rich.

The issue of inequality in its various aspects are not only relevant in the United Kingdom. They are equally relevant around the world, including Malta. They are relevant in the relationships among people in a society as much as they are relevant in the relations among nations. It has been claimed often enough that if income inequality leads to a lack of social justice, then there can never be real peace within a society and among nations. I subscribe to this point of view. However it still does answer the fundamental question as to whether income inequality is bad or not.

I believe that inequality is a fact of life. If we were all given access to the same resources and to the same opportunities, there would still be some of us who can exploit those resources and opportunities better and will mange to earn more money than the rest. If by doing so, the few that are earning more money are causing harm to the rest, then the inequality that is created would need to be addressed. So it would seem that as long as everyone sticks to the rules, income inequality is not intrinsically bad.

There will also be others who will squander all their resources and the opportunities given them and remain poor. And the question arises as to what support should such persons be given such to help them get out of their poverty, once they did have access to resources and opportunities as much as anyone else. How should society deal with them? Should those persons, who may not have been as creative and innovative, as those who became rich, but have worked equally hard, be made to pay for those who were too lazy to work?

The way I have posed the question, implies an ideal situation as no one has access to the same resources and opportunities as his neighbour. In this regard we are certainly not equal. Some of us have an innate intelligence that others have not. Other people may have access to financial resources that are not available to others. Others still may grow up in a family background that is conducive to learning and development, while others do not enjoy that benefit. Some have to pay for the mistakes of their parents while others gain from the good that their parents do. In such circumstances it is very difficult to speak of equality because we are certainly not equal.

The political answer to such situations has been that everyone should be given equal access to opportunities. In an economy governments seek to redistribute wealth through taxation and spending on public services such that this equal access to opportunities is provided effectively. Most have been very happy that the state took over this role as it seemed to have absolved us all from our individual responsibility to address issues of inequality. They argue, that as long as they pay the taxes due, they have done their responsibilities. Then they complain that the state misuses the money they pay in taxes.

However this line of reasoning raises another question. Do we have an individual responsibility to address income inequality or is there a collective responsibility? Could there be both an individual responsibility and a collective responsibility? I believe that there is both. However the responsibility that we individually and as a society have to address income inequality cannot be dispensed with simple alms giving. And the distribution of social benefits can at times be described a simple alms giving. It requires solidarity, which is a social value.

This requires new thinking, courageous experiments and creativity on the part of economic policy makers because it implies the creation of a new mindset. Income redistribution that is aimed at compensating for income inequalities generated by the market mechanism has reached its limits and should not be confused with the true meaning of solidarity.

The answer to the question as to whether inequality is bad or not needs to veer off from the question itself and look at two fundamental issues. Are we creating an economy that excludes certain segments of society? If yes then income inequality is bad. Are the economic resources being used for the common good? If the answer is no, then income inequality is bad. 

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