The latest Barron’s “Review & Preview” section features the following quote from President Obama, uttered last week while promoting his Buffett Rule:
What drags our entire economy down is when … the gap between those at the very, very top and everybody else keeps growing wider and wider and wider and wider.
Really? I’ve heard plenty of arguments about the ills associated with income inequality. None of them ever has focused on the notion that rising inequality “drags our entire economy down.”
In fact, one of the more common complaints about income inequality stems directly from economic growth — not decline. The notion is that economic growth tends to benefit those at the higher end of the income scale, so the “rich get richer” and the gap between high earners and low earners grows wider. A good counterargument is that low earners benefit most from policies that promote economic freedom, since their portion of the overall income pie is going to be about the same, whether they live in a nation with the type of economic freedom that promotes growth or in a nation that restricts economic freedom in an effort to equalize outcomes.
If you want to reduce the gap between those at the “very, very top” and “everybody else,” there’s an easy solution: a tanking economy. The president already has some experience with that option.
