Income Inequality - Is That Fair?
Many people think income equality is an important goal. They think it will make a lot of people happy.
Find out if this is true by watching the video on the left:
For an interesting examination on income inequality read this
If Income Equality is not the Answer--What is?
Lifting the poor out of poverty. The best example of this is China.
Transferring the Wealth to the Poor
Let's say we could transfer the rich people's money to the poor. Let's ignore all the ethical problems with this and focus on just one practical implication.
If there were no rich people there would not be early adapters for products that are expensive. Microwave ovens used to cost $11,401 in today's dollars in 1955 (figures are from http://en.wikipedia.org/wiki/Microwave_oven).
In 1967 the home microwave cost $3501 in today's dollars. Wealthy people bought these extra ovens.
This enabled manufacturers to work on improving them until today you can buy one for a couple of hundred dollars. And they work much better.
So today, even poor people can have a microwave oven. While rich people couldn't have one a hundred years ago.
If we did not have wealthy people we could have government bureaucrats take our tax money and decide which new products would be supported until the price comes down.
But that would cost a lot of money. And the bureaucrats would pick many wrong products. And they would be influenced by lobbying groups. And maybe even bribed.
Maybe that is why most new products and inventions come from societies with high-income gaps and free markets. Which system do you think is better?
More information on what poor really means: