If Only It Were True!

by Don Boudreaux on November 29, 2014

in Inequality, Myths and Fallacies

Here’s a letter to the Washington Post:

2014 is the Year of Income Inequality Obsession – an obsession stretched to preposterous extremes by Kurt Campbell’s claim that income inequality in America weakens U.S. “power” and, thereby, threatens U.S. interests and world order (“How income inequality undermines U.S. power,” Nov. 29).

Overlook Mr. Campbell’s dubious neocon-fashion faith that Uncle Sam’s foreign interventions over the years have been selfless, noble, and necessary both to create and to maintain world order.  Ignore his suggestions that America’s growing inequality of monetary incomes means that non-rich Americans are becoming absolutely poorer.  And disregard Mr. Campbell’s failure to offer any evidence, or even argument, for his assertion that income inequality is making America “an unstable society.”  Instead, note that his central claim – namely, that growing income inequality in the U.S. has reduced “support for … building blocks for comprehensive and sustained international engagement” – is at odds with relevant facts.

If greater income inequality makes ordinary Americans less willing to support Uncle Sam’s “international engagement,” then inflation-adjusted per-capita defense spending (arguably the single best measure of such “engagement”) should have fallen since 1979, the year that Thomas Piketty identifies as the start of the recent steady rise in America of income inequality.*  Yet as data from your own pages reveal, starting in 1980 real per-capita U.S. defense spending dramatically rose.  By 1987 such spending was higher than it was at anytime in the 1950s, a decade during which income inequality in the U.S. was near an all-time low.  (Indeed, despite the Cold War, the 1950s saw a general decline in real per-capita defense spending – yet another fact decidedly at odds with Mr. Campbell’s thesis.)  And although real per-capita defense spending fell during the 1990s, since 2000 it has risen steadily, along with income inequality, so that by 2010 such spending reached a post-WWII high.

Income inequality might or might not be something to worry about, but it does not appear to diminish Uncle Sam’s ability to project power around the globe.

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

* Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), p. 24.

One wonders why the judgment of the Washington Post‘s editors was so poor that they published such a weak essay.  The likely cause is growing income inequality.


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