When economists talk about inequality and the current economic crisis, things tend to get weird. Discussions of possible mechanisms don’t seem to go anywhere. Empirics generally rely on time-series correlations of aggregate figures. The overriding sentiment is, “but how?”
We’ve talked a lot on this blog about the relationship between inequality and the crisis. The right answer, I think, is that the conditions that produce inequality and are reproduced with its help had a major role in the crisis. All of this, though, requires two things- first, abandoning the characterization of this crisis as a financial one; and second, a discussion of class, at which most mainstream economists’ eyes glaze over. Inequality in and of itself did not cause the crisis. However, inequality is endemic to our version of capitalism, which I think did.
Inequality is based on the reality that people are not equal — neither in their selves nor in their situations. The phrase, . . . all men are created equal . . .” does not mean literally what is says, and one could struggle to define exactly what it does mean.
.
Some say it means “equal opportunity,” but even that cannot exist in reality. You might be more correct to say, “No two men are created equal.”
.
The notion of equality may be related to the notion of “fairness,” and even here it falls apart. What is fair? I once compiled a list of taxes in an effort to find one that is fairest (Fair Taxes. I was unsuccessful. There can be no form of taxation that is fair or even close to fair.
.
Similarly, nor can there be any form of income distribution, wealth distribution, health distribution or any other human-related distribution that is fair. One of the failures of Communism lies in its heavy-handed attempts to impose equality, when equality is impossible.
.
In short, “equality” is an artificial construct, never seen in nature, though continually pursued in law by opposing forces.
.
A question then becomes: Given that people are not equal and never will be equal, should this fundamental inequality be reduced? And if so, how and how much? And why?
.
We each have our own unequal morality, so perhaps the best we can do is propose solutions that essentially will “lift all boats.” I address one such solution at Salary for Attending School
Rodger Malcolm Mitchell