Income Inequality


A recent PBS article stated, “The richest 1% of the world’s population now controls 50% of its total wealth.” Often we here messages like that in America, “[1] Income inequality has become a hot-button issue in the last ten years. Meme makers feast off the clever one liners that tap into our emotions.

Americans are fond of feeling bad for others. We feel good about feeling bad but we don’t often think well about why we feel bad and what we should do about it.  First, let’s define what we’re talking about because not all inequalities are equal. There is relative inequality and absolute inequality. Relative inequality compares one person’s wealth with another. This is what most of us complain about. Humans have a nasty habit of wanting what other people have. In fact, we can be quite satisfied with what we have until we see someone with more.

An old joke tells about a poor peasant whose better-off neighbor has just gotten a cow. In his anguish, the peasant cries out to God for relief from his distress. When God replies and asks him what he wants him to do, the peasant replies, “Kill the cow.”

The joke illustrates an important point about human nature: the line between clamoring for justice and envy can be very thin.

Chuck Colsen referenced studies that show that, given a choice between making 25 percent more than their neighbors or making 25 percent less, people will choose to make more than their neighbor, even if making 25 percent less than their neighbor is more realized income. In other words, many would choose to make $50,000 per year if their neighbor made $37,500 rather than to make $60,000 if their neighbor made $75,000.

With this in mind, the first thing we should look at when addressing wealth gaps, is our own heart. Envy is a sneaky adversary. Some of our outrage is really thinly veiled jealousy and we need to call it as we see it.

Does a socialist economy eliminate envy? Ironically, a Soviet friend of resident scholar Dr. John Williams – Anton Borishenko – recently argued that jealousy runs rampant in a socialist economy.

Anton illustrated his point with a sad little joke. A genie grants a Russian peasant one wish. But there was a catch. Whatever the genie granted the Russian in question would be granted twice over his  neighbor. The man responded with is request, “Blind me in one eye.” “Envy is rampant here,” sighed Anton, “and capitalism cannot afford envy.”

Charles Murray explains the difference of inequality between a socialist economy and free market economy in his book, The Pursuit of Happiness. In a capitalist economy, one can earn enough money to purchase a car. By so doing, he or she can “innocently” acquire a car. At the worst, some may criticize the purchase as extravagant or a waste.  In a socialist state, such a purchase invites very different reactions. “Whom does he know that I do not? How did he manage to jump the line? Why should he be granted a privilege denied me? What has he done to deserve a car when I do not?”

Socialism does not eliminate envy; it simply creates a powerful ruling class with few ladders to economic advancement. What ladders exist, are often built through corruption. Envy is encouraged and entrenched. Winston Churchill said, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”

Dealing with our envy is the first step in dealing with income inequality.