Why is Income Inequality Bad?

June 26, 2011

When you think of the America, what comes to mind? Opportunity? Wealth? Equality? If it’s equality that comes to mind, then you should know that America may not be as equal as you think, according to the CIA and United Nations.

American cities with the most income inequality include some of our largest, such as Atlanta, New Orleans, Washington D.C., and Miami. New York City is the ninth most unequal city on the planet. International cities with similar levels of income inequality include Abidjan, Ivory Coast, Buenos Aires, Argentina, Nairobi, Kenya, and Santiago, Chile.

But those are just cities, right? Let's see how we, as a country, compare internationally.

The U.S. is ranked 39 out of 136 (with Sweden ranked 136 and the most equal). Some of the countries ranked most closely to the U.S. in terms of family income distribution include Rwanda (35), the Phillippines (36), Uganda (37), Jamaica (38) and Iran (42).

More than 70% of the countries measured have more equitable distribution of family income than the U.S. That includes Cambodia (48), Russia (51), China (52), Vietnam (77), India (79), Egypt (90), France (98), Pakistan (109), and over 85 other countries.

Moreover, in 2007, the United States had the fourth highest rate of income inequality of all OECD countries. What’s even worse? We also had the fourth highest rate of relative poverty; over 6% worse than the average country.

Okay, so we’ve got income inequality. But, why is that so bad? Well, let’s take a look at what inequality has led to:

It seems extreme income inequality is a pretty precarious position, and it has already made for some devastating results. It’s time to take a stand before it gets even worse.


could use some charts...

I'd like to see some charts that graph income inequality compared to these other social indicators. Put inequality on the X-axis, and a particular social indicator on the Y-axis, then plot out all the countries. Could be really eye-opening.

Hi,I think that these charts


I think that these charts from the UK based Equality Trust should be helpful.


another thing

Another thing that would be useful is to tell about what has happened in countries when income inequality got really bad, and also in countries when income inequality got better.

Seriously? Correlation is not the same as causation.

You list lots of bad things about the U.S. without ever showing that they are actually caused by income inequality. They are also presented as generalizations, since you say "x is more common in more unequal countries because x happens a lot in the U.S." Maybe it's true that those things are more common in unequal countries, but there is no evidence presented in this article. I can just as easily say that rather than obesity, inequality leads to startvation, since African countries with high income inequality are more frequently afflicted with poverty and starvation. Furthermore, the abundance of fatty foods in America and other developed countries is due to the abundance of fatty foods. I really doubt there is even a general correlation between obesity and income inequality, but the fact remains that you have showed no causal link. The arguments from The Equality Trust that this article links to are also seriously flawed in that their analysis (mainly in the form of graphs) only shows statistics for developed nations. More socialistic European countries have greater income equality because they tax rich people at higher rates than the U.S. does, and they have longer life expectancies because they provide health care to everyone. This is a correlation. The income equality does not magically make people live longer; there is an entirely separate reason for it. High incarceration rates in the U.S. are due to ridiculous MMS laws, as well as the "war on drugs" which needlessly imprisons people. It is a political issue, not an economic issue. Perhaps there is an argument to be made that inequality causes crime, but it is not made successfully in this article. I'm not going to go through each claim individually, because none of them are properly warranted. Just recognize that they are all correlational and not well justified.

Also, I'd just like to mention that the term "relative poverty" is horribly deceptive, and not particularly meaningful. You never explain what is meant in this case, but presumably it is meant to say that more people are poor relative to the rest of the country. However, even someone in the bottom 20% of wealth in the U.S. is significantly better off than someone living in a country that is actually poor, regardless of that country's level of "relative poverty."

If you actually want to convince people that income inequality is a problem, make some better arguments that aren't so obviously unjustified. My instinct is certainly to think that income inequality is bad, but when people try to pass off correlations as evidence of causation, it makes me think that they don't actually have any good arguments to support their position.


It's easy to pick a few stats, slice them up a certain way and pretend to find correlation. Notice you're not even comparing the US to the same countries in all of these stats. One time you're comparing them to only industrialized countries, then to 222, then to OECD countries, then to fully industrialized countries, then with mental illness there is no comparison made. Yes, I'm sure I could cite several stats the same way you did and prove, equally as ineffectively, that income inequality is great.