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The Weak Demand for Equality

Frank Levy writes:

[W]e do a lousy job measuring the inefficiency (and loss of creativity) that comes from economic insecurity, stagnant wages, and shrinking benefits. There are many things we can do without turning our economy into the new France. It is about time we started trying.

If workers had a strong enough demand for more benefits relative to wages, or for more job security relative to wages, I think employers would be willing and able to provide those job features. They might even be willing to provide private long-term insurance against variance in individual compensation.

Yes, further reductions in the variance of compensation would have to come from government, and while those policies could have real productivity costs, they could be worth their costs if people were averse enough to compensation inequality. However, the key question is how strongly people want to reduce compensation inequality.

I see no fundamental reason that people should or should not want to reduce inequality or insecurity to any particular degree. These are just questions of preferences, pure and simple. While one could complain, as does Florida, that “the problem is that virtually no one in a position of leadership (in either party) seems aware of it or willing to talk about it,” a simpler theory is that this is not a “problem” the public wants to solve.

It is interesting to note that there are many kinds of inequality that people could in principle be averse to, including unequal achievement in sports or music, unequal number or quality of friends, unequal number or quality of sexual partners, unequal lifespans, and so on. Government policy could be used to reduce any of these types of inequality, if the public so desired. Yet academic discussions focus almost entirely on equality of compensation, and sometimes on access to education and health care.

Also from This Issue

Lead Essay



Response Essays

  • Reality and Fantasy in Economic Revolutions by Robin Hanson


  • Education and Inequality in the Creative Age by Frank Levy




The Conversation