By Max Borders
The pundit class has spilled a lot of pixels about the so-called rich-poor “gap.” They spilled even more when the pup-tents started popping up in Zuccotti Park. But almost all of these gap-minders have failed to address the fact that there are two kinds of inequality. One kind matters and one doesn’t.
The inequality that matters is the kind that is the result of bad policies. These policies transfer resources from the poor and middle class to the rich — shrinking the economic pie. The great political scientist Mancur Olson called this “concentrated benefits, diffuse costs,” but most people call it crony capitalism. Great civilizations fall when rulers reward Takers at the expense of Makers.
The pundit class has spilled a lot of pixels about the so-called rich-poor “gap.” They spilled even more when the pup-tents started popping up in Zuccotti Park. But almost all of these gap-minders have failed to address the fact that there are two kinds of inequality. One kind matters and one doesn’t.
The inequality that matters is the kind that is the result of bad policies. These policies transfer resources from the poor and middle class to the rich — shrinking the economic pie. The great political scientist Mancur Olson called this “concentrated benefits, diffuse costs,” but most people call it crony capitalism. Great civilizations fall when rulers reward Takers at the expense of Makers.
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