Perhaps the trendiest issue among modern progressives is the supposed problem of “income inequality”. In ominous tones, we’re told that the gap between the rich and the poor is growing, and that the top 1% of income earners are getting richer while the poor grow poorer.
It’s easy to see how such a narrative might gain traction. Most people – regardless of political orientation – recognize the depravity and excesses that often accompany extreme wealth. The injustice is especially clear when juxtaposed with the millions who die every year from thirst, malnutrition, and preventable diseases.
On the surface, it might seem that these injustices can be addressed by focusing on “income inequality” – the relative gap between the rich and the poor.
Consider, though, the following thought experiment (from Steve Horwitz):
“Want to have some fun with your leftist friends who are complaining about supposed growing income inequality? Ask them if they’d prefer the status quo or a world in which everyone’s real income got doubled. The latter, of course, would have much more inequality. If they prefer the latter, then they really aren’t so concerned about inequality, but something else. And that’s a different conversation. If they prefer the former, then at least you know where they stand: they prefer equality so much that they are willing to condemn all of us, including the poor, to worse lives to achieve it.”
This isn’t a new idea, of course:
For the sake of argument, though, let’s imagine that our goal is to reduce income inequality. Where should we begin? What policy initiatives should be put in place?
As it turns out, there are a couple of clear, evidence-based solutions to income inequality. Ironically, these proposals are widely rejected and/or ignored by progressives – the very people who claim to care most about this issue.
Solution 1: Reduce income taxes and enact right-to-work laws.
According to economists Stephen Moore and Richard Vedder, “the income gap between rich and poor tends to be wider in blue states than in red states. Our state-by-state analysis finds that the more liberal states whose policies are supposed to promote fairness have a bigger gap between higher and lower incomes than do states that have more conservative, pro-growth policies…The two of us have spent more than 25 years examining why some states grow much faster than others. The conclusion is nearly inescapable that liberal policy prescriptions—especially high income-tax rates and the lack of a right-to-work law—make states less prosperous because they chase away workers, businesses and capital.”
Solution 2: Embrace pro-family social policies (and start by repealing no-fault divorce laws).
As explained by economist Mark Perry, it’s actually household inequality – not individual inequality – that has been increasing over the last several decades. “The combination of a flat Gini coefficient index for individual income inequality for more than 50 years along with rising Gini coefficients for US households and families means that social, rather than economic factors, are responsible for the most frequently reported rise in income inequality for households and families.”
This has been driven primarily by an increasing number of single-parent families and single-person households. Yet this crucial distinction goes largely unrecognized:
“[In] the current discussions about increased inequality, few researchers, fewer reporters, and no one in the executive branch of government directly addresses what seems to be the strongest statistical correlate of inequality in the United States: the rise of single-parent families during the past half century.”
Following the second-wave feminist movement of the 1960’s and 1970’s, many states enacted no-fault divorce laws – allowing either spouse to unilaterally obtain a divorce without penalty, and without having to demonstrate infidelity or wrongdoing.
As a result, marriage is perhaps the only legal contract that can be violated by one party, without that party facing any kind of penalty. As an added perversity, the party that walks away from the marriage (breaking the contract) is often granted financial rewards and/or child custody.
These laws have resulted in higher rates of divorce, which not only harms children, but also directly contributes to income inequality. Yet no-fault divorce laws are staunchly defended by mainstream progressives.