Edward Conard

Top Ten New York Times Bestselling Author

Upside of Inequality Unintended Consequences
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
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Income Inequality is Not the Problem

If the rich succeed at the expense of others, growing income inequality in the U.S. should drive down poor and middle class incomes relative to the other high-wage economies. Misallocating a large share of the economy’s resources should also slow growth.

1.27-Graph-556.350

Alternatively, if the success of the most successful workers grows the economy faster without hurting other workers, that growth should increases domestic demand for other workers and raise their incomes.

The U.S. economy has grown faster than other high wage economies since the financial crisis. It was also growing faster before, suggesting resources are not misallocated relative to other high-wage economies.

America’s median household incomes are substantially higher than the median incomes in other high-wage economies (blue diamond), despite the out-sized success of top-earning America’s relative to the top-earners in other high wage economies (green). America’s poor (red), whose incomes are largely a function of government policy rather than economic wages, are no poorer.

 

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