Why might inequality be necessary? Incentives, freedom, and efficiency

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Chapter 3 in Understanding Economic Inequality, 2020, pp 38-56 from Edward Elgar Publishing

Abstract: Some of the best and brightest minds in economics, philosophy, sociology, and history do not believe that inequality is necessarily something to worry about, and that a society in which equality is imposed on it by government is worse in every important aspect. Here, we examine different perspectives on inequality that contend that economic inequality is a necessary evil that should be accepted, not corrected. The views presented here argue that allowing markets to work optimizes efficiency and welfare by maximizing the size of the pie; allowing free choice ensures freedom; and that competition and a focus on meritocracy and “just deserts†promotes the virtues of hard work and entrepreneurship. In other words, inequality is not only efficient, it is also just. Focusing on attaining some abstract notion of “equality†will not only lead to a less efficient economy, it will also lead to a less fair society.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2020
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