I write concerning Peter Zeller’s recent Community Voices piece on global income inequality (“Oxfam is wrong about ‘obscene’ wealth.”) I take serious issue with his dismissal of the 20th century as an experiment in income distribution.
As a political economist I would argue that the tax policies of the 20th century actually reduced inequality while in no way impacting economic growth or the status of the wealthy. This was most ably noted in Thomas Picketty’s recent work on the subject. Zeller sets up a straw man argument by assuming that central planning of communist states is what Oxfam — or anyone — is calling for. Taxes on the wealthy “redistribute” wealth via funding for public education and the welfare state while minimum-wage policies help boost incomes as well. The 20th century is clear evidence of this.
Even in the pure fantasy of a market system where wealth is an unassailable good, inequality affects how relatively well off people have a greater impact on prices, as in real estate markets. I don’t have the space to further argue the point on innovation and lower prices, though one could rightly argue this point in a broader sense. I prefer instead to ask what innovation is lost, what future entrepreneur is held back by inequality that leads to unequal access to education? That is the result of the neoliberal market experiment of the last 30 years.
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