What does inequality policy try to accomplish?

We want to make the poor better off materially; to shrink the social disadvantages that go along with having less wealth or income; and limit the political power of the rich.

Matt Yglesias asks about the point of policies to reduce inequality:

Is the goal to make the poor richer, or is the goal to decrease the gap between rich and poor?

Actually, it seems to me there are three goals to be served.

1. We want those in absolute want to have more of what they need. If there are people who can’t afford necessities while others are spending money on things they barely care about, there’s an obvious gain from shifting resources from those with plenty to those without enough, either by transferring income or by providing some necessitities (education, medical care, housing) directly.

2. In addition, we want to minimize the extent to which low income and lack of wealth translate into social marginalization, political powerlessness, and barriers to economic opportunity for the next generation. Reducing economic inequality is one way, though not the only way, to reduce the social disadvantages of being low on the income distribution.

3. We want to limit the extent to which those with the most wealth can extert social or political dominance over the rest of us. Again, that can be done either by reducing inequality from the top or by limiting the capacity of the rich to translate their wealth into power. Your mileage may vary, but I don’t think it’s “class warfare” to want to live in a country that’s democratic in practice as well as in form.

The urgency of the goal of relieving absolute want diminishes as the average level of wealth in a society rises. You can be very, very poor by contemprary American standards and still be well-nourished and decently clad. That wasn’t true a century ago.

But you can be well-nourished and decently clad but still so poor relative to others as to not really experience full social membership. (A family at today’s poverty line has the access to material resources of a middle-class family in 1948, but the way a member of that family is treated by others reflects its relative position, not its absolute level of material wealth. The chances of a child growing up in that family graduating from college are dramatically smaller, and his chances of winding up in prison dramatically greater, than those of a child from a family at the median income.)

And for this purpose, it’s not only the poverty-level poor we care about: we could reasonably worry about the status of the lower half of the income distribution relative to the upper half, or the lower 80% relative to the upper 20%, or the lower 95% relative to the upper 5%.

I haven’t seen recent figures, but I’d bet that half the students at elite private colleges and universities are drawn from families in the top 5% of the income distribution, and that fewer than 10% are drawn from the bottom 50% of that distribution. Populism as a political phenomenon largely reflects popular resentment over facts like those, and the great failure of the left has been to allow its concern about income distribution to be understood entirely in terms of concern about “the poor.”

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com