The Fundamental Producer of Income Inequality is...

George Will nails it, which proves, despite what you make think, that he hasn't forgotten all tyhe Mises and Hayek that he once read:

The fundamental producer of income inequality is freedom. Individuals have different aptitudes and attitudes. Not even universal free public education, even were it well done, could equalize the ability of individuals to add value to the economy. Besides, some people want to teach, others want to run hedge funds. In an open society, rewards are set not by political power but by impersonal market forces, the rewards of which will differ dramatically but usually predictably. Beyond freedom’s valuable fecundity in producing unequal social outcomes, four other facets of today’s America fuel inequality.

First, the entitlement state exists primarily to transfer wealth regressively, from the working-age population to the retired elderly who, after a lifetime of accumulation, are the wealthiest age cohort. Second, big, regulatory government inherently exacerbates inequality because it inevitably serves the strong — those sufficiently educated, affluent, articulate and confident to influence the administrative state’s myriad redistributive actions.

Third, seven years of ZIRP — zero-interest-rate policy — have not restored the economic dynamism essential for social mobility but have had the intended effect of driving liquidity into equities in search of high yields, thereby enriching the 10 percent of Americans who own approximately 80 percent of the directly owned stocks. Also, by making big government inexpensive, low interest rates exacerbate the political class’s perennial disposition toward deficit spending. And little of the 2016 federal budget’s $283 billion for debt service will flow to individuals earning less than the median income.

Fourth, family disintegration cripples the primary transmitter of social capital — the habits, mores, customs and dispositions necessary for seizing opportunities. When 72 percent of African American children and 53 percent of Hispanic children are born to unmarried women, and 40 percent of all births are to unmarried women, and a majority of all mothers under 30 are not living with the fathers of their children, the consequences for the life chances, and lifetime earnings, of millions of children are enormous.

Inequality Does Not Reduce Prosperity

By Scott Winship

Since the Great Recession, inequality has loomed large in policy debates in the United States and around the world. Losses from the recession and the slow pace of recovery since have fueled concerns that inequality is not simply unfair but harmful. It is now commonplace to see claims that high and rising inequality levels have held back or worsened living standards among the poor and the middle class, a theme of Thomas Piketty’s best-selling Capital in the Twenty-First Century.

Such concerns may nevertheless be misplaced. The prospect of vast economic returns might, for instance, incentivize more innovation and investment, producing stronger economic growth and higher incomes even among those who do not amass fortunes. By rewarding work and human capital investment, inequality between the upper middle class and the poor could also promote stronger earnings growth for everyone over time.

Read the rest here.

Richard Epstein on Inequality and High Taxes

Richard Epstein is off a bit when he says the rich don't have extra influence over the political process. They all don't, but the Jamie Dimion's and Warren Buffett's sure do. And, I am not so rah, rah on Epstein's cheering of 1950's government highway infrastructure programs (See Walter Block's Privatization of Roads and Highways) Beside that, Epstein is pretty solid in this clip.

Watch Does U.S. Economic Inequality Have a Good Side? on PBS. See more from PBS NEWSHOUR.

(ViaGregMankiw)