… The conventional wisdom on inequality is built on three assumptions: (1) Income inequality is inherently unjust; (2) it is bad for the economy; and (3) government redistribution is the best way to remedy it. According to this narrative, narrowing the gap between what wealthy and working-class Americans earn should be our top political priority, and policies such as raising taxes or increasing the minimum wage are the answer.
This conventional wisdom is incorrect. A free enterprise society is not a zero-sum game in which citizens fight over resources. It should be a shared journey that empowers everyone to improve their station and earn their own success. Income differences are inevitable, and they are not inherently problematic as long as the opportunity to rise is available to everyone. Survey data show that the American people agree: narrowing the income gap is an afterthought for people who believe everyone has a shot at success, but it ranks as a top priority among those who feel the game is rigged.
While fixating on the distribution of income per se is misguided, the free enterprise movement must not neglect the reason for the debate. Mobility and opportunity are indeed falling in low-income America. And as the policy failures of the past half-decade have made painfully clear, outdated policies actually exacerbate the problematic trends they are intended to reverse.
Fighting to lift up vulnerable people is a mission with universal resonance. It is time for advocates of free enterprise to join the conversation, explain the truth about inequality and redistribution, and articulate the principles that will restore opportunity for all.
—Arthur C. Brooks, AEI President
Read the full compilation.
via Opportunity for all: How to think about income inequality – Economics – AEI.
Contents
INTRODUCTION 1
Arthur Brooks
CONSUMPTION AND THE MYTHS OF INEQUALITY 3
Kevin A. Hassett and Aparna Mathur
IF YOU REALLY CARE ABOUT ENDING POVERTY, STOP TALKING ABOUT INEQUALITY 7
W. Bradford Wilcox
THE INEQUALITY ILLUSION 12
Aparna Mathur
DEFINE INCOME INEQUALITY 18
Jonah Goldberg
MORE THAN THE MINIMUM WAGE 21
Michael R. Strain
2014’S REAL ECONOMIC CHALLENGE 24
James Pethokoukis
INCOME INEQUALITY IN THE UNITED STATES 27
Aparna Mathur
A NEW MEASURE OF CONSUMPTION INEQUALITY 45
Kevin A. Hassett and Aparna Mathur
SHOULD THE TOP MARGINAL INCOME TAX RATE BE 73 PERCENT? 82
Aparna Mathur, Sita Slavov, and Michael R. Strain
Utopia, you are standing in it! 
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