Policies for InCome Inequality

Policies for Income Inequality

Between 1992 and 2007 the median income of the top 400 households relative to the median income of a family of four has increased 5776 times. A highly controversial issue, income inequality is the result of ineffective government policies, an educational system lacking uniform structure, and individual human capital choice. Several policies have been outlined to correct the said unjust distribution of income including, but not limited to: the utilitarianism of John Stuart Mill and Jeremy Bentham, libertarianism, and egalitarianism outlined by Rawls.

Utilitarianism is a philosophical framework describing society's happiness as a measure of total utility, which means creating the greatest good for the largest number of people. To Mill and Bentham, utility means whatever produces happiness and reduces pain, but Mill's interpretation is less calculated and more qualitative than Bentham's analysis. Bentham fails to recognize differences in amounts of utility derived from different activities. Mill accounts for long-run utility in which utility is grounded in the interest of man and society as a progressive whole. Collectively, they argue the best policy for closing the gap would government taxation. Bentham argues for an aggressive, progressive tax as justified by his law of diminishing marginal utility of wealth. Alternatively, Mill would argue that less oppressive taxes would be more efficient because it would produce the largest benefit the greatest number of people.

Libertarianism is a philosophical framework explaining each person in society should be able to exercise the fundamental right to do what they want with the property they own. It also explains that government regulation is only acceptable for enforcing contracts, protecting property, and keeping public order. In other words, they would oppose any public policy interfering with individual decision-making; the redistribution of income would be an example. A libertarian will argue that an individual should get to decide whether or not they are going to help others, so government should not force individuals to pay taxes to reallocate income.

Egalitarianism is a philosophical framework describing the inherent equality of all individuals in a society as a function of fundamental worth and social status. Rawls argues the market is just if all individuals have the same starting point in society and that government should provide equal access to all institutions in a community to correct for any disadvantages in the starting positions that an individual may experience. However, he continues to explain that this meritocratic system of justice, as he calls it, still permits the distribution of income to be a result of the natural order of abilities and talents. Rawls advocates the policy of the trickle-down effect, where the talented are encouraged to develop their gifts and talents so their