Ezra Klein is wrong

[passiveporcupine]

http://www.vox.com/2014/5/7/5690976/wealth-inequality-is-dangerous-for-america

Income Inequality is almost on a constant loop in the news it seems, but its more dangerous cousin — wealth inequality — often goes unmentioned. In the video above, Ezra Klein explains why wealth inequality should worry you much more than income inequality.

In the video, he says that people are not born equal, and he's right.

He says: "usually when people are talking about inequality, they are talking about income inequality"

but he says that income inequality is less dangerous than wealth inequality...and he goes on to explain why...the rate of return on capital wealth is higher than the rate of return on the growth of the overall economy. So people who are wealthy will always keep getting wealthier, unless something happens to control that, like war or taxes.

Then he says: "there is an upside to income inequality. That income is a reward for people who start up new businesses and do great things. You can like income inequality or hate it but usually it is money they earned in this lifetime...usually through talent or risk or hard work with a little bit of luck."

His point in the video is to look at how important wealth inequality is, and he's right. But he is wrong to diminish the importance of income inequality, as it is not always a "just" reward. The more inequality there is in income, the less "just" it is, because those people who do get wealthy by starting a business should still be sharing the profits of that business with their employees...or they wouldn't even have a business. And we all know that the CEO of a company is NOT worth 300 or more times the wages of the average worker in that company...yet that's is what has been happening.

I have an idea why income inequality happens (and keeps getting worse). Aside from the fact that it is not regulated in any way, the wealthy, who already have an unfair advantage, are setting the standard of what rich means and what people should be striving for. So if they are billionaires, the people on the top of the income ladder think they should be trying to be billionaires too, even if it means establishing income inequality that hurts the overall growth of the country (which in turn increases both income and wealth inequality).

So he is right in pointing out how serious wealth inequality is. But I think he is dead wrong to imply that the rewards are justified no matter how extreme they are. And remember that the wealthier you are, the better your chances of sending your kids to the top schools where they will get into the better paying jobs. That's another advantage of income inequality...it perpetuates itself.

I think Ezra is pretty smart, but he's wrong on this. We need to challenge both forms of inequality. And right now there seems to be a trend in talking about this, which is minimizing the problem of income inequality, instead of tackling it head on. Like raising minimum wage. That will help a little, but it's not really addressing the problem.

[GeorgeGist]

1. income inequality leads to wealth inequality.

both are bad for society.

[upaloopa]

2. Most of income inequality results from

capital investments and inheritance so in saying it comes from work he is also wrong.