Economic Inequality in the United States

By Lars Osberg | Go to book overview

12

GROWTH AND/OR EQUALITY?

12.1 Introduction

The connection, if any, between economic growth and economic inequality has fascinated economists for generations. It is probably fair to say that most have agreed with Dalton (1935:21) that absolute economic equality would impede economic growth. However, as he notes, "The rejection of crude egalitarianism does not take us far, though there are some who seem to think that, when they have disposed of the argument for absolute equality, they have disposed also of all arguments for reducing existing inequalities." The more important question, since all societies are to some degree, by some definition, "unequal," is whether more unequal societies will grow more quickly or, to pose the issue somewhat differently, whether efforts to produce a more equal society will also produce lower rates of growth of average incomes. Several recent writers (e.g., Okun, 1975) have argued that society faces a "trade‐ off" between growth and equality—Taubman (1978:5), for example, puts the point unambiguously: "Policies to redistribute the economic pie as measured by market production also cause the pie to be reduced."

A major theme of Chapters 2 and 3 was, however, that what one means by "the economic pie" and how one measures the inequality of its division is not in general an unambiguously obvious issue. Even if one is considering only inequalities of economic outcome and not those of economic opportunity, it matters a good deal which variable one selects for examination (e.g., annual money income, annual "full" income, lifetime income, wealth, etc.) and how one measures its dispersion (e.g., Gini ratio, Theil index, etc.). "Growth" and "efficiency" are also terms which need to be defined carefully. Broad assertions that a trade-off exists between "equality" and "growth" may therefore reflect accurately a certain attitude of mind but they are difficult to evaluate dispassionately until the terms involved are carefully defined. More usually, they are very vaguely defined and the "trade-off" is asserted as virtually a self-evident proposition.

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Economic Inequality in the United States
Table of contents

Table of contents

  • Economic Inequality in the United States *
  • Contents *
  • Preface ix
  • Economic Inequality in the United States *
  • 1 - Introduction 3
  • 2 - Inequality in Money Income 9
  • 3 - Economic Inequality 32
  • 4 - Poverty and Inequality 61
  • 5 - Of Laborers and Capitalists— the Issue of Factor Shares 85
  • 6 - Of Chance and Ability 100
  • 7 - Of Race and Sex 115
  • 8 - The "Neoclassical" Perspective: the Implications of Choice 130
  • 9 - Structural Interpretations: the Importance of Constraints 162
  • 10 - An Eclectic Summary 184
  • 11 - The Acquisition of Property 195
  • 12 - Growth And/Or Equality? 220
  • 13 - Government and Inequality 234
  • 14 - Conclusion 256
  • Bibliography 267
  • Index of Names 291
  • Index of Subjects 296
  • About the Author 307
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