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Glenn Reynolds and the “Problem” of Income Inequality

In his latest op-ed for USA Today, Glenn Reynolds—a law professor usually supportive of free markets—takes seriously income inequality as a problem:

Once a state where the middle class reigned supreme, the apotheosis of the American Dream, California now has the wealth distribution—and, in some disturbing ways, the political underpinnings—of a Third World country. In Silicon Valley, a group of super-wealthy tech oligarchs live lives of almost unimaginable wealth, while only a few miles away, illegal immigrants live in squalor.

The oligarchs feel free, and even entitled, to choose the direction of society in the name of a greater good, but somehow their policies seem mostly to make the oligarchs richer and more powerful.

Although I object to Reynolds’s practice of referring to tech entrepreneurs and employees as “oligarchs”—especially given that many such people aren’t even active in politics, or, if they are, they support an essentially rights-respecting government—Reynolds does make some legitimate points later in his op-ed.

Unlike the left, Reynolds blames income inequality, not on greedy capitalists or the like, but mostly on government policies. Reynolds condemns “regulations, land-use rules and environmental restrictions that make things worse for businesses,” occupational regulations that make it harder for people to find work, and “a thicket of petty regulation” that makes it harder for people (especially the poor) to keep their money and to navigate daily life.

Unfortunately, Reynolds does not fully clarify when income inequality is a problem and when it is not.

As I have discussed, income inequality is a perfectly moral aspect of a free market, in which government consistently protects rights. In a free market, income inequality results from (among other things) some people founding major businesses and producing vast wealth, some people working harder and more rationally than others, some people going into high-paying fields while others choose lower-paying careers, some people investing more diligently and rationally than others, and some people moving to America starting with nothing. In such cases, income inequality is not a moral problem; it is just a fact.

The real problem (as Reynolds substantially recognizes) is that the market is not fully free, and government routinely violates rather than protects rights in myriad ways. Thus, although there’s nothing wrong with income inequality per se, when and to the degree income inequality results from rights-violating policies, then it is a symptom of those immoral government actions. In such cases, the moral solution is to end those policies.

The left sees income inequality, not as sometimes good and sometimes bad depending on the context, but as inherently evil. Thus, leftists routinely ignore the rights-violating policies of which income inequality can be a symptom, and they call for more rights-violating policies (including coercive wealth transfers) in the name of curbing income inequality.

Although in his op-ed Reynolds wrongly castigates the wealthy and fails to clarify the moral status of income inequality in a free market, at least he substantially recognizes the immorality and economic harms of rights-violating government policies. Hopefully that is the problem on which Reynolds and others will focus more clearly in the future.

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