Has Income Inequality Really Risen?

It has long been commonplace to assert that income inequality has been rising in the U.S. since the 1970s. Following Marc’s post about Robert Reich’s book and my reply to Roderick Long’s argument for moral concern about inequality, I thought readers might be interested in a debate going on at the Economist over new data on U.S. income inequality. Will Wilkinson points up new research showing that the rise in income inequality has been overstated significantly due to the fact that prices for the goods that lower-income consumers disproportionately buy have fallen relative to other goods. He also offers another argument for lack of concern about income inequality as such:

To find that American income inequality has been overestimated is not to find that America’s institutions are closer to some moral ideal than we had thought. Were America’s highest marginal income tax rate a little higher, that would do nothing to reform America’s penal system, to moderate America’s nation-building habit, to reform its de facto apartheid public-school system, or to improve its vicious treatment of undocumented immigrants. Inequality is indeed a frequent side-effect of injustice, but it is benighted to fixate on symptoms to the neglect of the disease. The more time wasted arguing about relatively meaningless abstractions like country-level income inequality, the less is devoted to addressing what ought to be the sources of American shame.

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