This is the question-as-headline from this article in the NYT. As might be reasonably guessed, it is an article about a critique from a Financial Times writers regarding the core data that underlies Piketty’s recent best selling book on income inequality.
It’s a good article, and I have to say, Piketty – right or wrong – has an honest, even if not heartfelt, response:
“Of course, if the FT produces statistics and wealth rankings showing the opposite [of his results], I would be very interested to see these statistics, and I would be happy to change my conclusion! Please keep me posted.”
Honesty aside. Correctness aside. Criticism aside, my question – what I would argue is the most important question – is: does it matter?
Whether Piketty is right or wrong, why does income inequality matter? I have yet to see a single response to this question that makes any sense.
I typically frame the issue this way: why does it matter how much money Bill Gates has?
Does Bill Gates having a lot more money than me in any way make my life worse?
Does Bill Gates having a lot of money in any way make it harder for me to have a lot of money?
I think the answers to all of the above questions are a resounding NO. Nobody has shown me that the opposite answer is at all plausibly true.
Now, perhaps I am framing the issue incorrectly. Perhaps the issue is that income inequality is symptomatic of some other issue. Perhaps income inequality is symptomatic of, for example, college education. Further, suppose that there is some fundamental or systematic causality between achieving a college education and being on the low end of the income inequality scale. That seems plausible to me, though I doubt anybody has proven it, yet. Regardless, that is a DIFFERENT issue. It’s not about income inequality that we should be complaining, it’s about whatever that other issue might be that we should be focusing our attention. Why? Because “solving” income inequality without addressing the real underlying issue (if there is any) will not, uh, wait for it, solve the real underlying issue. That is, we won’t have actually solved any problem. The issue isn’t leveling the playing field; it’s: how did the playing field get to be out of flat in the first place.
You’ve waited this long, so I’ll go ahead and say it: complex systems are complex. And this particular system involves people, so it’s mighty complex. Income inequality may or may not be a problem. Whatever underlies it may or may not be solvable. And before either of the previous sentences is addressed in any meaningful manner, we actually have to figure out the causality. Good luck.