Why Inequality Matters: Some Economic Issues

Ethics and International Affairs 15 (2):3-28 (2001)
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Abstract

Many industrialized countries, developing countries, and countries that have recently made the transition from communism to market-oriented economies are characterized by high and increasing income inequality. Trends in income inequality have been understood to have ethical significance for different reasons. Some have argued that lessening income inequality is a valuable goal in itself. This essay, on the other hand, focuses on three instrumental reasons for pursuing economic policies that engender less income inequality, particularly in developing countries.• Inequality can inhibit growth and slow poverty reduction.• Inequality often undermines the political process: that may lead to an inadequate social contract and may trigger bad economic policies-with ill effects on growth, human development, and poverty reduction.• Inequality may undermine civic and social as well as political life, and inhibit certain kinds of collective decision-making; at the societal level it may also generate its own self-justifying tolerance, perpetuating a high inequality equilibrium despite the potential economic and political costs.The author concludes that while societies with relatively high income inequality can, in principle, be equitable, it is more likely that income differentials will compound and aggravate unfairness in the allocation of opportunities, the functioning of the political process, and efforts to improve the well-being of the least advantaged.

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Nancy Gucker Birdsall
University of Vermont

Citations of this work

Economic inequality and the long-term future.Andreas T. Schmidt & Daan Juijn - 2024 - Politics, Philosophy and Economics 23 (1):67-99.
Thomas Piketty's Capital and the Developing World.Nancy Birdsall - 2014 - Ethics and International Affairs 28 (4):523-538.

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References found in this work

What we owe to each other.Thomas Scanlon - 1998 - Cambridge, Mass.: Belknap Press of Harvard University Press.
Inequality Reexamined.John Roemer & Amartya Sen - 1994 - Philosophical Review 103 (3):554.
Inequality Re-examined.David Archard & Amartya Sen - 1995 - Philosophical Quarterly 45 (181):553.

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