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The Ethics of Reducing Inequality

At the same time that poorer countries have been catching up to wealthier countries, income and wealth disparities within countries have been rising to alarming levels. Addressing this fundamental economic challenge will require a careful balance between policies that ensure equality and policies that reward work and innovation.

NEW YORK – Around the world, the effects of alarmingly high economic inequality are spilling over into politics and society. Economic insecurity is a driving force behind violent conflicts in the Middle East and the rise of fascist elements in some European countries, not least Hungary and Poland. Even in older democracies such as the United States, economic marginalization has led to a strengthening of chauvinist and supremacist identities and other social problems such as the opioid epidemic.

These trends have been ongoing for some time. But, according to Branko Milanovic of the City University of New York, a big shift occurred between 1988 and 2008. During this period of “high globalization,” the two segments of the world making gains were the wealthiest 1% in rich and poor countries and the middle class in a few Asian countries – namely China, India, Indonesia, Thailand, and Vietnam. Meanwhile, the World Bank has shown that 766 million people – around 10% of the global population – were still living below the extreme-poverty threshold of $1.90 per day as of 2013.

Much has been written about the policies needed to rectify this dismal picture. And yet, powerful voices in both rich and developing countries – and, tragically, even among the misinformed poor – claim that current income disparities are fair because they are a result of free markets. Convincing them to support remedial interventions, then, will require a deeper look at the underlying logic and morality of inequality.

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