Why Is This Distinction So Difficult to Grasp?

by Don Boudreaux on March 18, 2015

in Inequality, Myths and Fallacies

Here’s a letter to the Washington Post:

It’s disappointing that Michael Gerson joins the crowd of confused people who mistake inequality for poverty (“The effects of inequality on America’s kids,” March 17).  An unequal distribution of income does not mean that people at the bottom of the distribution are poor in any absolute sense.  And in a world such as ours in which the amount of total wealth grows over time, everyone can become wealthier – indeed, become fabulously rich – even if income inequality increases.

It’s important to keep in mind the distinction between inequality and poverty.  To confuse the two (as is common today) risks addressing the wrong malady.  Just as we do not blame a cancer victim’s suffering on an unequal distribution of good health – that is, just as we recognize that a cancer victim’s illness is not caused by the good health of others and cannot be cured by making healthy people less healthy – we should recognize that a poor person’s poverty is not caused by the prosperity of others and cannot be cured by making wealthy people less wealthy.  Indeed, recent research suggests that simply transferring more money to relatively poor people in rich societies does not provide much relief; poverty persists for reasons that run far more deeply than the fact that some people earn more income than do others.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

UPDATE: Over at EconLog, David Henderson also weighs in on Gerson’s confusion of poverty with inequality.


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