Member-only story
Why we have income inequality
What the data tell us
There are two questions regarding income inequality. The first is whether government policy can impact it. I answered that question with a resounding “YES” in a prior post. Evidence for that fact exists in the comparison between inequality in the United States and France. In France, where “yellow vest” protests have erupted as a result of their increasing inequality, inequality is relatively close to that of the United States before taxes and government transfers are factored in. Once those government programs are included, however, inequality in France is far less than that in the United States. Thus, government policy can reduce income inequality and while France has chosen to use the power of government to impact this problem, in the United States, especially with the recent Trump tax cuts, we have implemented a policy aimed at increasing it. That policy continues.
That brings us to our second question, which is why the government chooses to adopt such a policy. After all, one would think that since income inequality means that most people fall into the lower group…
