Equity, not equality, should be the goal

Mind_the_income_gapWhat’s so great about being equal? If we all lived equally but in medieval conditions, would that be better than some of us stuck in, say, 1950s living conditions but others living the 21st-century dream? Wouldn’t we all be better off if each of us were better off, even if not by equal amounts?

And how do we objectively measure equality in a subjective world? My definitions of success, happiness and fulfillment are bound to be different than yours. We have different economic, career, family, and spiritual goals and aspirations. How can someone arbitrarily take just our relative wealth and income to define whether we’re equally happy or successful? Study after study has shown that trust fund babies and lottery winners are some of the unhappiest people in the world. Do we want everyone equal to them?

And what about our different talents and abilities? I’ll never be a child actor or NBA All-Star because I, thankfully, didn’t have Honey Boo Boo’s mom and couldn’t sink a bucket in a barrel of water. Have I been treated unequally because of those outcomes?

So let’s put aside this idea that we can all be equal and agree instead that what we have is a right to equity. We have a right to be treated equally under a fair and consistent set of rules, but not a right to equal outcomes.

We have a right to reap the rewards of our successes, and a responsibility to accept the costs of our mistakes. But all of us slipping the mortal coil with the same number of zeros in our bank accounts has nothing to do with either of those. It’s simple score-keeping to pit one group of people against another, even though they may not even be playing the same game.

But even that score-keeping is wrong, or at least not complete in the way President Obama and others would have you do it in their never-ending drive to demonize success and create envy among their target voters. There are plenty of ways to measure income that don’t fit into the meme of growing income inequality. As with most things, it depends on how and what you measure.

Here’s an example from a recent report by the Manhattan Institute. Yes, according to some measures income has been growing faster at the upper ends of the spectrum than the lower. But “income” doesn’t measure everything coming in the door or how it’s spent. If you account for taxes paid at the top end and government benefits received at the bottom end, the gap narrows significantly.

This is illustrated by differences in buying power. Adjusted for inflation, since 1987 those at lower income levels have increased their spending at a higher rate than those at the upper end. That means that, even though income distribution might be wider, the spending power of those with lower incomes has increased more than that of those with higher incomes. And that means that “income” isn’t a very good measure of how well or poorly people are doing.

We should measure whether people are doing well, not whether they’re winning or losing; and whether they’re being treated equitably, not whether their incomes are equal.

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