THE BENEFITS OF INCOME INEQUALITY

In this essay, we maintain that income inequality has positive effects on the economy. This is so because it leads to an increased quality of life, decreases poverty, and maintains the freedom of the individual. For all too many people, even experts who really should know better, reducing income inequality is the best, perhaps, even, the only, way to reduce poverty. We take the diametric opposite position: as Smith (1776) saw so clearly, a necessary and sufficient condition for increasing the “wealth of nations” is via adherence to private property rights, the rule of law, and free enterprise. To say this is a contentious claim would be an understatement of the year. However, the present essay is an attempt to help right the balance in this important debate. All men of good will wish to wrestle poverty to the ground; the main disagreement concerns the appropriate and efficacious means to that end.