Addressing Inequality

I’m reading a book on political economy that, early on, says “Consider, for example, inequalities in the distribution of income and wealth that result from the stark differences of economic opportunity and power between people in different socio-economic circumstances, particularly those relating to class, race and gender.” It happens to be this book, but that sentence is characteristic of contemporary thinking regarding economic issues. Inequality along racial and gender lines is a hot topic. I wrote about this in The Beacon recently, here, and here.

So, as that book says, let’s consider inequalities in the distribution of income and wealth.

Data from this US government website shows that in 2020 men in the United States earned, on average, 20% more than women. White men earned 22% more than black men. White women earned 19% more than black women. Asian men earned 34% more than white men. black men earn 12% more than Hispanic men.

The biggest disparity in incomes is between Asian and Hispanic men—Asian men earn almost double the earnings of Hispanic men, on average. The disparity between blacks and whites and men and women is around 20%. You can go to the linked website to see these comparisons yourself.

Meanwhile, according to the World Bank, per capita income in the United States is 134 times as high as in Afghanistan, 38 times as high as in Haiti, and seven times as high as in Mexico.

Per capita income in the United States is 59% higher than in France, 36% higher than in Germany, and more than double that of Spain. Income inequality between the United States and European nations—and the rest of the world—is much greater than between blacks and whites, or men and women within the United States.

If we are concerned about “the stark differences of economic opportunity and power between people in different socio-economic circumstances,” our concern should be focused on the substantial differences across countries rather than racial and gender differences within our own country. The difference in economic opportunity between Americans and Afghans, or even Americans and Spaniards, is much greater.

I am not claiming that we have eliminated all of the barriers to economic mobility in the United States. I am saying that those barriers are far greater in some countries than in others, primarily due to government policies in those countries, and that the United States offers more economic opportunity to everyone than most other countries.

If we are really concerned about inequality of economic opportunity, a bigger disparity is found in inequalities across countries than in inequalities among different demographic groups within countries.

Randall G. Holcombe is a Senior Fellow at the Independent Institute, the DeVoe Moore Professor of Economics at Florida State University, and author of the Independent Institute book Liberty in Peril: Democracy and Power in American History.
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