Democracies gravitate towards a fascination with producing total equality

Envy in a Time of Inequality

by Samuel Gregg

Envy, I’ve often thought, is the very worst human emotion. The epic Biblical narrative of Cain’s slaying of Abel reminds us that people have been jealous of others’ successes and well-being from time immemorial. When mixed, however, with the near-obsession with inequality that dominates much public discourse these days, there’s a serious risk that envy — and desires to appease it — can start driving public policy in ways that aren’t economically wise or politically healthy.

Remarks like “you didn’t build that” or François Hollande’s notorious 2012 “I don’t like the rich” statement don’t of course come out of a void. On one level, they reflect long-standing ideological complaints about the nature and outcomes of market economies as well as animus against particular groups. But the current fixation with economic inequality has arguably made it easier for our political masters to say such things out loud and with less fear of electoral retribution.

The situation isn’t helped by the sheer looseness of contemporary discussions of economic inequality. Inequality and poverty, for instance, aren’t the same things. That, however, doesn’t stop people from conflating them. Likewise, important distinctions between inequalities in income, wealth, education, and access to technology are regularly blurred. As recalled in a paper recently published by the Federal Reserve of St. Louis, wealth inequalities can have greater impact upon people’s comparative abilities to build up capital for the future than income inequality. Yet we spend most of our time anguishing about the latter.

Debates about inequality are not made any saner by some of the wilder numbers thrown around. Take, for example, the endless denunciations of the gaps between the incomes of American CEOs and their employees. According to the AFL-CIO, itstood at 331-1 in 2013.

The Bureau of Labor Statistics, however, tells us that the average American CEO (i.e., not the outlier 200 CEOs of America’s largest companies) earned $178,400 in 2013. Taking this number together with the AFL-CIO claim that the average worker earned $35,239, it adds up to a vastly-smaller ratio of 5-1.

Nor, we should recall, are all forms of economic inequality unjust. Many people are born with skills that are in higher demand and shorter supply than others. That’s not unfair. It’s simply a reflection of the human condition. In other cases, some people are willing to work harder, take on higher risk, and assume more responsibility. It’s therefore just for a company to choose to pay them more than those employees who want to shoulder less risk, work fewer hours, and accept less responsibility.

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