Income Inequality

Common Sense and Wonder has a great post on income inequality. I like this part:

For example, according to Robert Rector, an economist with the Heritage Foundation who uses the government's numbers, the typical person in the poorest fifth of U.S. households today spends as much as the person of average wealth in the early 1970s (adjusted for inflation).

And John H's analysis is good too:

Actually the whole phenomenon of worrying about the relative levels of income rather than absolute levels is directly related to the irrational behaviour I discussed below. There have been numerous studies which show that people will actually do harm to themselves to 'take down' someone they think has too much. In games where there is a 'big winner', people will pay money to remove money from the winner even though this benefits them in no way (in fact it actually harms them). It is why the left prefers places like Cuba where the richest citizen is poorer than the poorest citizen in the US, but the difference between the richest and poorest (except, of course, for billionaire Castro and his cronies) is much smaller. Everyone equally miserable is preferable to everyone pretty well-off with some much better off.

I think drastic income inequality can cause a revolt by the poor, but in a place like the US where everyone has so much, I wonder if that would ever happen.

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