Although economic inequality is often discussed, almost no one actually thinks of inequality as their highest political priority. According to Gallup, as of early March only three percent of Americans say the "gap between rich and poor" is the most important problem facing the country today. To be fair, that's up from two percent in February and one percent in January. (At that rate, more than one in 10 Americans will say inequality is the biggest issue on Election Day.)
In all seriousness, though, that low number raises an interesting question: should government policy actually focus less on decreasing inequality?
"If everybody else is rising then really, in this country, there isn't a strong appetite for punishing wealth creators," Will Marshall, president of the liberal Progressive Policy Institute, said Wednesday at an inequality discussion hosted by Economics21 at the Manhattan Institute (my last employer). "Nobody cared about inequality in the late '90s because all groups were rising."
The same Gallup poll showed that 17 percent of Americans think the economy in general is the most important problem facing the country. Of the many different responses to the poll, that was the most common. Perhaps that shows people just want the economy, and surely their own well-being, to improve. It's less important how that improvement comes about — whether it's at the cost of wealthy Americans or if it means everyone is better off.
Richard Reeves, a senior fellow at the Brookings Institution, made an interesting point about why some inequality is necessary. "If everybody danced as well as me, none of us would go to the ballet." Inequality exists in all abilities, and some abilities are more valuable than others. "Inequality is what makes life worth living. If we were all the same at everything, can you imagine what a terrible society that would be?" That doesn't mean all kinds and levels of inequality are acceptable, Reeves says, but it's important to remember that some amount of inequality is a good thing.
Don Watkins, a fellow at the Ayn Rand Institute, says inequality doesn't matter. "Economic inequality is reflecting voluntary win-win transactions. So inequality can grow even if every individual is better off. Then to equalize, to move in the direction of more equality, what it really means is that we have to penalize people who create significant economic value."
That doesn't mean all inequality is good. For example, inequality created by government cronyism should be eliminated.
Perhaps the media and presidential candidates are overstating inequality, making it seem bigger than it really is. "Inequality isn't spiralling out of control," says Scott Winship, a Manhattan Institute Fellow, although it is probably rising slightly. "There's this argument that Bernie Sanders makes on the trail that almost all of the gains during our recovery have gone to the top one percent. … The latest numbers show that about 58 percent of the gains since about 2009 have gone to the top one percent. But what that misses is that from 2007 to 2009, the Great Recession, the top saw a huge share of the losses over that period." Winship pointed out that the share of earnings made by the top one percent peaked in 2000.
Marshall said a rise in inequality doesn't necessarily lead to more public support for government taking from the rich and giving to the poor.
"Despite the rise of some pretty sharp income and wealth gaps, we really haven't seen a surge in public support for redistribution," Marshall said. Some cities and states are able to pass inequality-inspired reforms, like minimum wage hikes, but support isn't widespread enough for those reforms to happen on a national basis. "Social democratic-style redistribution, which Bernie Sanders is offering, butts up against deep public mistrust of government."
Jason Russell is a commentary writer for the Washington Examiner.