Inequality as such should be a complete non-issue. It is utterly meaningless as a measure of anybody’s real-world standard of living or of national prosperity. If real wages for the bottom half of households were growing at an average of 1 percent a year and those for the top half were growing at an average of 1.5 percent a year, we’d have a situation in which everybody’s standard of living was improving at a very good clip even though the pay gap between the highest-paid jobs and the lowest-paid jobs was poised to get much larger over time. That’s exactly the kind of problem you want to have.
The Left talks about “inequality” rather than about bringing up real wages for low- to middle-income households because the Left — like the Right — does not really have a plausible policy agenda for raising those incomes. Inequality rhetoric is simply an exercise in sleight-of-hand, turning a conversation about poverty and low or stagnant wages into a conversation about what is going on with the incomes of hedge-fund managers and Fortune 500 CEOs. Doing something to their income is pretty straightforward: You implement confiscatory taxes. They’ll retaliate in various ways — sometimes you move the corporation to Switzerland, sometimes you move yourself to Singapore. But you could, if you were serious about it, significantly reduce incomes for U.S. corporate managers, investors, and financial operators. You might even decrease measured inequality in doing so.
And all that would do squat to raise incomes — not government benefits, but incomes – in the middle and at the bottom.
The fact is, we do not really know what to do.