Understanding Economic Inequality
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Understanding Economic Inequality

Bigger Pies and Just Deserts

Todd A. Knoop

In Understanding Economic Inequality, the author brings an economist’s perspective informed by new, groundbreaking research on inequality from philosophy, sociology, psychology, and political science and presents it in a form that it is accessible to those who want to understand our world, our society, our politics, our paychecks, and our neighbors’ paychecks better.
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Chapter 3: Why might inequality be necessary? Incentives, freedom, and efficiency

Todd A. Knoop

Abstract

Some of the best and brightest minds in economics, philosophy, sociology, and history do not believe that inequality is necessarily something to worry about, and that a society in which equality is imposed on it by government is worse in every important aspect. Here, we examine different perspectives on inequality that contend that economic inequality is a necessary evil that should be accepted, not corrected. The views presented here argue that allowing markets to work optimizes efficiency and welfare by maximizing the size of the pie; allowing free choice ensures freedom; and that competition and a focus on meritocracy and “just deserts” promotes the virtues of hard work and entrepreneurship. In other words, inequality is not only efficient, it is also just. Focusing on attaining some abstract notion of “equality” will not only lead to a less efficient economy, it will also lead to a less fair society.

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