Did Nobel Laureate Angus Deaton Prove We Should Worry About Inequality?
You don’t have to believe in class warfare to be troubled by economic inequality — at least not according to Vox.com, which breathlessly quotes Angus Deaton, this year’s winner of the Nobel Prize in economics. According to Vox.com, Deaton makes a “compelling” case that inequality threatens democracy. Here’s the key quote from Deaton:
The very wealthy have little need for state-provided education or health care. . . They have even less reason to support health insurance for everyone, or to worry about the low quality of public schools that plagues much of the country. They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash. To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.
Economist David Henderson rightly points out that the underlying assumption — that “the rich” have a shared set of policy preferences — is difficult to square with the facts. The political views of rich people are by most indications just as diverse as those of the rest of the population. (Henderson also rightly points out that Deaton’s work on global poverty is excellent.)
I want to make a different point. Basically, what Deaton is arguing is that we should worry about economic inequality because high economic inequality will make it harder to preserve and expand the policies endorsed by the critics of inequality. Or, to put it differently, we should wage war on “the rich” because they (supposedly) support free markets, rather than a regulatory-welfare state. We should punish them because we don’t like their ideas.
Frankly, I don’t find that argument “compelling.” I find it chilling.