Fairly well established theres some inequality. Summed up as the rich get richer and the poor get poorer. Articles cover the topics mildly, and more intensely. A common trend among them all is they don’t offer much in the way of solutions. Raising taxes on the rich is not the solution. Like it or not, there is no simple solution.

But even when the data is presented in most articles and blogs, it’s presented in a way that typically treats the inequalities as a disease that should be treated. Instead, you can look at inequality as a symptom. Here are some potential underlying causes:

Education: The system we have in the US is pretty sad these days. Teachers spending what little they have on basic school supplies, more people dropping out of school than there are jobs for them, and huge student loan burdens. You know who doesn’t feel this pain? The wealthy. The lower and middle classes have partially set themselves up for less stable incomes while the wealthy and well educated and more easily employable. That doesn’t mean they are to be punished, but it shows that when you’re less reliant on the basic and deteriorating educational infrastructure in the US you’re likely set up better later in life.

Housing: Up until the financial crisis many in the middle class used their homes as a bank account. Much of what was defined as our “wealth” was tied up in our home or homes. When housing values tanked, so did our wealth. Thus, when studies show how wealth has moved from the lower to the upper classes it makes for a convincing story but isn’t really true. The wealthy were just more diversified and didn’t take as much of a hit,

Employment: Like it or not, but the wealthy or generally more employable. Either they run their own companies or have had successful careers that led to their high wealth/income in the first place. In the face of a recession they’re more likely to whether it better. This doesn’t explain every rich person, but it does for the hard working ones.

All of these explanations and more basically send the same message: whether measured by income or wealth, rich people are less sensitive to recessions than others. This of course doesn’t explain all the elements of income inequality, but it helps.

Instead of citing reports on whether there is or isn’t income inequality, we should only focus on problems that matter. Inequality is simply not one of them. Yes many are suffering, but inequality is more of a symptom than it is a problem. We should define what inequality (which does exist) is telling us.

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categories: economics, government