How we should discuss income inequality

I’ve been trying to articulate the way to engage with OWS-sympathizers for the past few weeks. It’s hard to write-off some aspects of the OWS gripes: some sectors have seen an inordinate amount of favoritism from the government while a lot of the middle class has fallen on hard times. My friend Trevor recently penned a piece on inequality that articulates – in far more lucid terms than what I could produce – how we should think about income “inequality”:

While we understandably regard wealth as important because money can be turned into what we love, perhaps we should also be concerned with whether what we love can be turned into money. Money isn’t everything. In fact, for economists, money isn’t anything but an instrumental mechanism to achieve ultimate values. Yet, perhaps oddly, many of those who regard money and success as lesser values seem to analyze the world as if relative income and wealth are the only things that matter. If “creative types” are disproportionately represented in the OWS movement, then many of them have made choices in their lives in which they knowingly sacrificed absolute economic well-being for psychological satisfaction.Ultimately, productivity made these choices available to them. Perhaps the simplest way of stating my point is this: a world with more choices is a world with more possibilities for divergence (i.e. inequality) along many different metrics. […] inequality and productivity travel together. Having more choices means that people can maximize particular inequalities based on subjective valuations.

Trevor writes about subjective values, opportunity and satisfaction extremely well.

I also think that a lot of people in favor of OWS are mourning the death of a dream. I can sympathize with that. A lot of the rhetoric I heard while growing up in the 1990s was akin to this: if you get good grades, go to a decent college, and don’t screw up, you can live comfortably. I think that, for a lot of folks who did just this, the past three years have been particularly difficult for them. It has been more of a struggle than they anticipated. Wall Street is their chosen scape goat, but I really doubt it’s the source of the difficulty a lot of 20-somethings have come across. That’s a post for another day, I suppose.

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