In serendipitous timing, the Institute of Economic Affairs in London released a new study this week entitled “Never Mind The Gap: Why we shouldn’t worry about inequality.” Authors Ryan Bourne and Christopher Snowden look at the facts and figures about inequality in the UK and conclude that “the trends do not conform to the story of unprecedented or spiraling inequality that are frequently implied in the media.”
They also point out that attempting to intervene in market functions to reduce inequality means accepting “more poverty or less wealth overall provided the distribution is more narrow,” which is the point Ryan Young and I also make in “People, Not Ratios.”
Bourne and Snowden also make a useful contribution to the debate when they point out that at least part of the problem of “inequality” is the presence of outcomes that might be seen as “unjust.” In this respect, they recommend that “the elimination of cronyism might be expected to improve general prosperity whilst also reducing the income gap.”
Finally, the IEA authors look at other areas where there might be genuine concerns about detrimental effects of inequality:
One might also be concerned about inequality if it could be shown that a larger gap between rich and poor led to a range of social problems corrupted the democratic process or slowed economic growth. But the evidence for each of these mechanisms, constantly heard in the media is weak.
This excellent study complements CEI’s new work on the subject perfectly.