In USA President Barack Obama’s State of the Union address in January 2014, he stated that during the remainder of his term, he will focus on income inequality in the country. It seems peculiar that the President considers income inequality as the most important issue in society rather than economic growth or employment, proving how income inequality has become a topic that caught the obsession of the political and cultural elites in the past few years.
How should Christians approach the issue of income inequality? Is it really wrong? To arrive at the answer, let’s debunk three of the most common misconceptions about the point in question:
1) Income isn’t wealth. The latter translates to a high standard of living. The former does not. Indeed, it’s unrealistic to want everybody to have the same standard of living by earning the same large amount.
Income inequality is a sign of fair income distribution. It would be wrong to pay everybody the same amount of money regardless of our differences in background, experience and productivity. Such a scenario could foment instability and lead to chaos.
2) Income inequality and economic inequality are not the same problem. For instance: Even if a person experiences no economic inequality, their income could be far less than those earned by most other people in their respective economic class.
Many consider the yawning differences in income as unfair, but it doesn’t really show whether the economy is flourishing. The issue of income inequality does nothing but try to push for redistribution of wealth without figuring out how to equalize incomes.
Incomes aren’t zero-sum, where the gains and losses balance out one another, so it’s pointless to measure income inequality. As Dr. Samuel Gregg, Director of Research at the Acton Institute, explains, “When one person gets rich, someone else gets poorer. It is among the greatest economic fallacies; unfortunately, many economists and people believe that income inequality is equivalent to zero-sum thinking but it really is not.”
Discussions about income inequality almost always pertain to redistribution of income despite the fact that the wealth of those who earn a lot more than most other people will not be enough money to go around. Still, many want those in the above-average classes to redistribute their income among those in the below-average classes. Not only is this wishful thinking, but, generally, it’s likely to lead to everyone becoming poorer and reducing incentives for hard work and risk taking (e.g. business startups), which advance society.
3) Income inequality isn’t related to poverty. For example, a country with a high income inequality doesn’t necessarily mean that the people are impoverished. In fact, Christians shouldn’t attribute poverty to income inequality. They are able to alleviate the plight of the less fortunate by sharing their wealth, so there’s no correlation between income inequality and poverty for them.
The solution to poverty is allowing a society where people can flourish rather than impose redistribution policies that can create further dependence and create a welfare state that becomes expensive. The state solving poverty means there is no relationship with the recipient (i.e., the people) and the giver (i.e., the Government), whereas when the Church deals with poverty it is relational.
The Church needs to take back the responsibility of helping people from the Government so the latter can carry out it’s true function—protecting the individual rights of its citizens. While there will be income inequality in such a society with free markets, this model will enable people to do well based on their hard work, ingenuity and God-given gifts and that everyone end’s up better off.
Income inequality is not always a bad thing as the media makes it out to be. It can be healthy in many cases, some of which were mentioned here already, proving that the solution to mankind’s problems lies elsewhere, and more work needs to be done to reach it.