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Mix-Ansicht- Has State Action Reduced Inequality in the US? / Artikel mises.org - - Elli -, 02.06.2003, 15:02
Has State Action Reduced Inequality in the US? / Artikel mises.org
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<font color="#002864" size="1" face="Verdana">http://www.mises.org/fullstory.asp?control=1231</font>
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<font face="Verdana" size="2"><font color="#002864"><strong><font size="5">Has State Action Reduced Inequality in the U<span class="015442012-02062003">.</span>S.?</font></strong></font>
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<font size="4">By William Art Carden</font>
<font size="2">[Posted June 2, 2003]</font>
<font size="2">In previous essays, I have argued that a) we may not be
measuring inequality correctly and that a proper conception of the concept may
lead us to the conclusion that inequality is actually decreasing, and
b) that even if inequality is increasing, it is unclear that it is necessarily
detrimental to society. Here, I will show that the data on the American
welfare state do not support the hypothesis that the state can reduce
inequality.</font>
<font size="2">Let's go ahead and assume that income inequality is the
proper metric by which we gauge true material inequality. Let's also assume
that we have a non-egalitarian outcome produced by the unhampered market in
which the outcome is the result of peaceful exchange between consenting
parties. First, we have to consider the grounds on which we propose to
redistribute goods. If, in fact, all property is justly acquired, then the
only criterion by which we can justify intervention and redistribution is
simple envy.</font><a title href="http://www.mises.org/fullstory.asp?control=1231#_ftn1" name="_ftnref1"><font size="2">[1]</font></a><font size="2"> </font>
<font size="2">It has not been shown (it has merely been asserted) that
this is an appropriate ethical criterion; moreover, it must be rejected even
by the most rigid Benthamite utilitarian because admitting envy as a
sufficient condition for aggression and redistribution admits with it a whole
host of unsavory things. But lest it appear that I'm ducking the issue, let's
go ahead and assume that inequality is acute, inequality is growing, and
inequality is unambiguously bad. I will proceed to show that the U.S.
government's track record leaves us no reason to be sure that the state can
successfully reduce inequality.</font>
<font size="2">The argument will be inductive, and it is important to lay
out ahead of time what we cannot conclude from the numbers and graph to
follow. First, we will not be able to conclude from this evidence alone that
inequality would not have been higher in the absence of state action. Second,
we will not be able to conclude that state intervention caused the increases
in inequality that we observe since the beginning of the"Great
Society" welfare programs of the 1960's. We will be able to conclude that
state action, in the form of increased social spending, has not reduced
inequality; if anything, the relationship between social spending and
inequality appears to be positive.</font><a title href="http://www.mises.org/fullstory.asp?control=1231#_ftn2" name="_ftnref2"><font size="2">[2]</font></a>
<font size="2">One of the most popular measures of income inequality is the
Gini coefficient, which is a number between zero and one that shows us how
income is distributed across groups. A Gini coefficient of zero indicates a
perfectly equal income distribution, and inequality is said to increase as the
Gini coefficient gets higher. The graphs below show us that inequality, as
measured by the Gini coefficient (right axis), is higher today than it was at
the start of the"Great Society" welfare programs of the 1960's—this
is in spite of large increases in social welfare spending at both the public
and private levels (measured as percentage of Gross Domestic Product on the
left axis). </font>
<p align="center"><font size="2">
<font size="2">There is a clear positive correlation between social
spending and inequality (see note 19, above), which suggests one of three
things: the state's efforts to reduce inequality have been ineffective,
increasing inequality is inspiring additional (and still ineffective) state
action to combat it, or additional social spending is causing more inequality
(unlikely). No matter what conclusion one draws, it is clear that the U.S.'s
"Great Society" welfare programs have not reduced income inequality.
It is not clear from the data that greater increases in social spending will
alleviate income inequality.</font>
<font size="2">In the preceeding essays, I have done three things. First, I
have argued that our discussion of inequality is informed by improper metrics—in
other words, we're measuring the wrong things. We should be looking at the
substitutability between types of goods available for consumption rather than
simple income figures.</font>
<font size="2">Second, I have shown that the United States outperforms
Sweden, the classic Scandinavian welfare state, on a number of quality-of-life
margins. Finally, I have shown that state efforts to reduce inequality and
poverty have been, at best, ineffective. Everywhere we turn, the prophets of
doom are telling us that the market economy sows the seeds of its own
destruction by generating unequal distributions of income. It just might be
that these prophets of doom—whether they prophesy from the pages of the Los
Angeles Times or the American Economic Review—are incorrect.</font>
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<font size="2">Art Carden is a graduate student at Washington University
in Saint Louis, and a visiting summer fellow at the Mises Institute.
See his archive
and send him MAIL.</font>
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<div id="ftn1">
<a title href="http://www.mises.org/fullstory.asp?control=1231#_ftnref1" name="_ftn1"><font size="2">[1]</font></a><font size="2">
The"all property is justly acquired" provision is important. If
the mode of distribution is the result of coercive interaction, then the
policy conclusion is entirely different. This, however, is a separate issue.</font>
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<div id="ftn2">
<a title href="http://www.mises.org/fullstory.asp?control=1231#_ftnref2" name="_ftn2"><font size="2">[2]</font></a><font size="2">
Caveat: one cannot conclude that the relationship is positive; both may
simply be following an upward time trend.
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