Is Income Inequality A Good Thing?

May 31, 2012 in Daily Bulletin

In his forthcoming book: Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong Edward Conard makes the provocative argument that income inequality is actually a good thing. It’s a book that will likely spark a fair amount of debate as the election season draws near. Adam Davidson had the opportunity to sit with him and discuss his argument. Highlights include:

  • Income inequality is a sign of a healthy, functioning economy.
  • The super-rich spend only a small proportion of their income on personal comforts. The majority of their money goes into investments.
  • Estimates suggest that for every dollar invested, society gains $5, although Conad believes that the ratio is closer to $20:$1.
  • Computers, for example, have made their inventors and innovators extremely rich. But they have also greatly benefitted society. Similar stories can be told about a wide range of industries including agriculture.
  • Therefore income inequality actually benefits the middle class. If there was even greater income inequality then even more people would be investing and society would come out on top as a whole.

To read a comprehensive criticism of the argument, why this might become the most hated book of the year, what Conrad thinks about Art History majors, why he doesn’t like lawyers, Conrad’s mathematics inspired dating advice, why he thinks that Warren Buffet is stealing from the middle class, and what this all means for the 2012 elections, click here.

Source: New York Times

Via: Marginal Revolution