Epstein: "In Praise of Income Inequality"
One month into the second term of the Obama administration, the economic prognosis looks mixed at best. On growth, the U.S. Department of Commerce reports the last quarter of 2012 produced a small decline in gross domestic product, without any prospects for a quick reversal. On income inequality, the most recent statistics (which only go through 2011) focus on the top 1 percent.
“Incomes Flat in Recovery, But Not for the 1%” reports Annie Lawrey of the New York Times. Relying on a recent report prepared by the well-known economist Professor Emmanuel Saez, who is the director for the Center of Equitable Growth at Berkeley, Lawrey reports that the income of the top 1 percent has increased by 11.2 percent, while the overall income of the rest of the population has decreased slightly by 0.4 percent.
What should we make of these numbers? One approach is to stress the increase in wealth inequality, deploring the gains of the top 1 percent while lamenting the decline in the income of the remainder of the population. But this approach is only half right. We should be uneasy about any and all income declines, period. But, by the same token, we should collectively be pleased by increases in income at the top, so long as they were not caused by taking, whether through taxation or regulation, from individuals at the bottom.