Justifying inequality

Two prominent American economists have written a justification for income inequality. Gary Becker, a Nobel laureate, and Kevin Murphy, winner of the John Bates Clark Medal of the American Economic Association, argue that widening inequality can be “beneficial and desirable”. In an article on American.com they point out that in China the rise in income inequality has accompanied a sharp decline in absolute poverty. In America it represents an increasing pay-off for education and other skills. Both African Americans and women have benefited from the latter trend.

The two authors are partly right. It is true that absolute rises in incomes and living standards should be welcomed. However, it would be preferable if those at the bottom of the income distribution gained even more than they do.