The Growth of Income Inequality in the United States

Introduction

In the United States, income inequality, or the uneven distribution of revenue, wages, salaries, and earnings, continues to grow rapidly. Income inequality is widening the gap between the wealthy and everyone else. Distribution of income has been established as a key determinant of social mobility. Social mobility is defined as the movement of peoples between social classes in a society. Social classes most directly affect education, opportunity, and income. The income gap has grown increasingly since the 1960s, and the differing percentiles of income reflect racial and ethnic inequalities in the United States. In this paper, I will argue that John Rawls’s second principle of justice is the right principle for approaching income inequality because it both instills values of justice as a function of government and combats social immobility in disenfranchised communities. Utilizing this principle, income should be redistributed with the intent of benefiting the worse off in society in order to provide citizens with fair equality of occupational opportunity and promote social mobility.

Prominent experts on the topic of income inequality include Emmanuel Saez, Thomas Piketty, and Raj Chetty. Raj Chetty, leader of the Equality of Opportunity Project, utilized anonymised tax records to produce data sets proving wide societal disparities in intergenerational mobility. Lower levels of mobility are seen most clearly in disenfranchised communities. In proving that United States’ citizens are met with often insurmountable obstacles when attempting to rise above their parents in income and opportunity, Chetty challenges the widespread infatuation with the American Dream.

Similarly, Emmanuel Saez and Thomas Piketty have published reports claiming that top marginal tax rates could be raised 50 to 70 percent without posing any threat to economic growth. These numbers offer a preventable solution for income inequality in the United States by means of taxation and subsequent redistribution of income. The lack of negative economic consequences associated with high taxation provides support for the ability of the government to mitigate the damages of intergenerational social immobility through redistribution.

John Rawls’s Second Principle of Justice

Regarding equality of opportunity in a nation, many policy proposals reflect values of John Rawls’s modern political philosophies. In A Theory of Justice, Rawls establishes two principles of justice. Most relevant to the discussion of income inequality is the second principle of justice, which states that social and economic inequalities must satisfy two conditions: (1) they are to be attached to offices and positions open to all under conditions of fair equality of opportunity and (2) they are to be to the greatest benefit of the least-advantaged members of society.

In the first part of the second principle, Rawls asserts that people should be governed in a system that provides fair equality of opportunity, thus people of equal talent and willingness should not be restricted by the class they were born into. Fair equality of opportunity addresses the fact that the majority of people’s incomes are determined by the occupational opportunities and connections they are presented with as a result of their social class. This principle acknowledges inevitable income gaps but allows for these income gaps only if they are a result of equivalent discrepancies in talent or motivation rather than the inequality of opportunity regarding access to occupations and careers.

The second part of the second principle, also known as the difference principle, implies that society should function to benefit primarily the worse off. In this assertion, Rawls allows for gaps in income so long as said gaps serve to ultimately benefit those in the lowest class. Income gaps should not exist if they are solely in place to exploit the lower classes. They must only exist to function in favor of those who would benefit the most. As an example, it would be morally permissible to allow for income gaps if they served to motivate the worse off to work harder in order to increase their income.

As applied to income inequality and social mobility, the policy implications of Rawls’s second principle of justice would call for the redistribution of income only to the extent of allowing each citizen fair opportunities and a morally acceptable standard of living. Moreover, these policies would reflect heavily the suggestions made by economists such as Chetty. In his work, Chetty identifies five determinants of social mobility: segregation, income inequality, school, social capital, and family structure. Policy regarding these five factors should promote fair equality of opportunity and also aim to better the worse off without calling for absolute equality of income among all citizens.

Policies to rectify social immobility due to income inequality could expand upon the Earned Income Tax Credit (EITC), or a refundable tax credit given to low to medium wage workers. Tax credits such as this one work to transfer the income of the top bracketed income earners to those in the lower classes while still preventing a completely even distribution of income. In re-allocating income to the worse off, disenfranchised communities suffering from social immobility can then utilize the larger income to build better education and social structures conducive to higher rates of mobility. This would assist in the development of socially mobile communities, which would allow for improvements concerning fair equality of opportunity in future generations. As a result of fair equality of opportunity, fewer community members would suffer from lack of resources in education and occupation. Rather than remaining stagnant due to the social lottery, or the socioeconomic circumstances into which a person is born, community members could be granted resources based on natural talent and hard work.

John Rawls’s second principle as the right principle for approaching income inequality

In the United States, income should be redistributed according to Rawls’s second principle of justice. This principle grants the government the ability to ensure fair equality of opportunity and therefore promotes social mobility through the distribution of income tax credits and cash transfers to the worse off.

Rawls’s second theory of justice is directly countered by Robert Nozick in Anarchy, State, and Utopia. Nozick claims that no centralized group should be entitled to control the distribution of income. Moreover, he warns that no redistribution can be established or continuously enforced without directly interfering with people’s lives and choices as to their own voluntary transactions, or the willing and consensual trade of goods or services between a buyer and a seller. He claims that consumers hold significant power in determining the price point of goods and services. Therefore, the distribution of income as related to consumption in the United States is enabled and endorsed by citizens through their voluntary transactions. The liberty-limiting redistribution of income interferes with citizens’ just entitlement to their acquisitions. It should, therefore, be impermissible to allow the government to control the distribution of income if said distribution is a product of voluntary transactions.

I argue that Nozick’s argument against income redistribution is invalid due to the requirements Nozick establishes in order for people to be justly entitled to their holdings. Nozick states that in order for a person to be entitled to a holding, the person must have (1) acquired the holding in accordance with the principle of justice in acquisition and (2) acquired the holding in accordance with the principle of justice in transfer. The principles of justice in acquisition and transfer specify that any holding obtained through fraudulence, enslavement, or forced exclusion from competition in exchanges cannot be considered a just holding. In examining the place of justice in entitlement to holdings, it is asserted that the fact that a thief’s victims voluntarily could have presented him with gifts does not entitle the thief to his ill-gotten gains. Justice in holdings is historical; it depends upon what actually has happened (Nozick 153). Imperative to ‘voluntary’ transactions is the evaluation of who confirms the voluntary consent of both parties in a transfer of goods. Historically and currently, those in majority positions of power are granted the ability to establish whether or not the worse off consent to market practices and subsequent income distributions.

Following the establishment of justice in acquisitions and transfers is the assertion that injustices in holdings must be rectified. While Nozick opposes Rawls’s goal of redistribution, Nozick’s concern with the rectification of injustices directly agrees with Rawls’s second principle of justice. Historically, income has not been distributed fairly or justly in regards to fair equality of opportunity. Fair equality of opportunity falls in line with Nozick’s justice of acquisition and transfer, as both argue that people are not entitled to goods (i.e. income) if said goods were not acquired in a system which promoted and ensured fair equality of opportunity. If justice in holdings is an issue of historical fairness, it is clear that the United State’s has not recovered from a history of prolonged oppression and enslavement. The modern inequality can be seen clearly in the research of Chetty and Saez, which depicts the notable lack of social mobility for African Americans and other racial minorities in the United States. According to both Nozick and Rawls, the just action would be to require the rectification of past injustices. While Rawls explicitly states that this unfairness of equality of opportunity can be alleviated by means of income redistribution, Nozick does not offer a solution concerning both how to rectify past injustices and who to hold accountable or place in charge of said rectification.

While Nozick and Rawls differ in the reasoning for a redistribution of income, both provide theories of justice that could utilize redistribution as a policy implementation. Rawls calls for this redistribution on the basis of the government’s contractual obligation to operate on the virtue of justice. Rawls believes this redistribution would be effective in eliminating the morally arbitrary social lottery. Moreover, Nozick would not agree that income inequalities must be in place only to benefit the worse off, but would instead allow mitigations of income inequality with the intent of rectification. Rawls and Nozick also differ in their plans for the longevity of redistribution, as Rawls argues for the government’s continuous responsibility to redistribute income and ensure justice. Nozick would view such interventions as a threat to people’s rights and would allow for the least possible intervention only in cases of rectification.

Nozick utilizes the case of famous basketball player Wilt Chamberlain to elaborate on the importance of voluntary transactions. He describes a scenario in which people buy basketball tickets and drop an extra twenty-five cents into a box upon their admission with the knowledge that those twenty-five cents would be directly transferred to Wilt Chamberlain. If Wilt Chamberlain ends his basketball season with 250,000 dollars, his income is significantly larger than those around him. Nozick claims that this income inequality is fair because consumers chose to voluntarily transfer their money to Wilt Chamberlain’s income and thus agreed to an uneven distribution of income. In this scenario, the income of Wilt Chamberlain is permissible in regards to the principles of justice of acquisition and transfer.

While the concept of consensual voluntary transfers is comprehensive in theory, the transparency and simplicity of the Wilt Chamberlain example rarely occurs in real life. This theory extends to assume that the worse off fall in the lowest income bracket because they consent to their incomes through their transactions. This disregards the role of social immobility and restricted equality of opportunity as a determinant of income distribution. Rawls’s view of income redistribution acknowledges the complexity and depth of income inequality, while Nozick’s Wilt Chamberlain example simplifies income redistribution in order to assert that government involvement in redistribution limits personal freedoms.

Conclusion

Supported by the economic research of Chetty, Piketty, and Saez, Rawls’s second principle of justice provides a compelling argument in favor of the redistribution of income. Rawls allows for redistribution of income with the goal of achieving a fair equality of opportunity to all citizens. Moreover, he allows for inequalities in distribution only if said inequalities would benefit the worse off in a society. The second principle of justice, contrary to views such as Nozick’s, does not infringe on personal freedoms but instead works to ensure that income is acquired and transferred by just means. This principle stands in favor of Nozick by addressing the need for rectification of historical injustices in acquisition and transfer while also expanding on Nozick’s need for income redistribution only for the purpose of rectification. Rawls asserts that income should be distributed justly not only for the sake of rectification but for the goal of justice in governance. Due to its ability to fully address issues of inequality and social immobility as well as defend the government’s position in ensuring economic justice, Rawls’s second principle of justice is the right principle for addressing income inequality in the United States.

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The Growth of Income Inequality in the United States. (2019, Jul 01). Retrieved September 24, 2021 , from
https://studydriver.com/the-growth-of-income-inequality-in-the-united-states/

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