Thursday, June 05, 2014

Income Inequality Comes From Smart, Ambitious People Marrying Each Other

Mark Perry has a very important post up if you are interested in the debate over income inequality.  It is a must read.  It illuminates a key piece of evidence that underpins what ought to be society's conclusion on the issue (and has been my conclusion for some time) - that income inequality is not a problem, it should be ignored.

Basically, what has gone on over the past several decades is the rise of the two-earner family, and most notably the rise of the high-earning two earner family.  The economy has opened up to women sufficiently so that women who choose to work, can.  Over time women have made such strides educationally and thus in the workforce, that they can occupy high-paying jobs is large numbers.  These women form households with highly educated, high-earning men and voila, we've got the phenomenon of the "power couple" goosing income inequality at the household level.  Income inequality is purely a phenomena of social organization, not of an economic system.  And that is something the government cannot fix.

Not that we need this explanation to insist the government stay out of this business, it should stay out of our business as a matter of principle. Our government was not intended and should not be used to distribute or redistribute economic resources according to its own criteria.


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