The issue of wealth inequality has been the subject of political dispute for the past 100 years or more. According to the 2022 World Inequality Report, the richest 10% of individuals now own nearly 76% of the world’s wealth, highlighting the current magnitude of global wealth inequality. Despite the concerning levels of income inequality that continue to plague both developing and developed countries alike, philosopher Harry Frankfurt sheds light on a new perspective that prompts the question: Is wealth inequality truly the issue? Are we really bothered by economic inequality?
In his provocative yet influential book On Inequality, Frankfurt argues that economic equality has no intrinsic value – it does not matter whether some people have less than others. Although we may be troubled by unjust causes of economic inequality (e.g. lineage, sexuality, race, etc.) as well as its potential consequences, Frankfurt argues that we are not really bothered by inequality for its own sake. Instead, it is the absolute, and not the relative, that truly tugs at our conscience – not that some people have more, but that some people do not have enough.
In a world of economic advances shared via an increasingly interconnected yet intricate global system, a portion of the global population is still isolated from the shared benefits of development – trapped in a cycle of poverty where they do not have adequate income and lack access to basic resources like housing, healthcare, or education. The World Bank found that almost half the world’s population still struggles to meet basic needs, living on less than $5.50 a day. It is this case of extreme inequality that Frankfurt claims to bother us the most; when some are very rich and others destitute. In the case of two extremes, it is easy to blame inequality when the underlying issue is also interwoven with issues of poverty and impoverishment.
Frankfurt claims that if the poorest had enough resources to lead good and fulfilling lives, the fact that others have more should not be as troubling. The core problem therefore is not of inequality, but the poverty and destitution suffered by those who have the least. To better illustrate this, imagine a society with perfect income equality but high levels of poverty. From an egalitarian perspective, this may seem ideal, because everyone is on the same playing field – everyone is equally as poor. However, research has shown that few would prefer this hypothetical world to the one in which we live in now. To focus solely on inequality is therefore distracting and alienating, as Frankfurt suggests that it is not the root cause of concern behind the moral tug.
Many scholars disagree with Frankfurt, as research has found that people naturally gravitate towards establishing equal divisions, even in extreme situations. An example of said research is by psychologists Alex Shaw and Kristina Olson, which involved telling children between the ages of six and eight about two boys, Dan and Mark, who had cleaned up their room and were to be rewarded with five erasers – but there were five of them, so an even division was impossible. Shaw and Olson found that most children preferred to throw away the fifth eraser rather than create an unequal division.
Although this may seem motivated by the desire for equality, the result changes significantly when Shaw and Olson told the children that Dan did more work than Mark. When the context changes and a disparity in effort was introduced, most children were comfortable with giving three erasers to Dan and two to Mark. Many other studies of children and small-scale societies also yield similar results, where no evidence has suggested that we naturally value equality for its sake, and instead favor fairness above all. These studies have concluded that people are willing to accept inequality as long as such inequality is fair.
This can be confusing if you equate fairness to equality. Todd Zakrajsek argues that fairness and equality need not always be equivalent to one another, as this oversimplification implies that everyone begins at the same place and needs the same things to succeed. Realistically however, not everyone begins at the same starting point and has access to the same resources. Hence, fairness can more accurately be linked to equality in opportunity – granting everyone what is necessary to increase chances of success.
This is the foundation of equity. Equity is free from the biases that occur with equality, as it reduces institutional barriers and instead focuses on catering to the context-specific cases of each individual. Whereas equality is giving everyone the same thing, equity focuses more on giving individuals what they need. This is best represented by the infamous picture above. Recently, more studies similar to that of Shaw and Olson, have further reinforced the strong preference people have towards fairness/equity over and above equality. Most of these studies conclude that if people vary in effort, ability, moral deservingness, and a fair system takes into account of these differences, a preference for fairness implies that we prefer unequal outcomes in actual societies.
Although economic inequality may not be a problem in and of itself, it still has clear detrimental effects that justifies its continued relevance. From an economics perspective, the rich tend to have lower marginal propensities to consume, suggesting that the extreme concentration of wealth can slow economic growth. Great disparities of income and wealth can also undermine current political and economic systems, as the wealthiest can utilize money as a tool to exert a disproportionate share of political influence to then shape society in accordance with their interests. It can therefore be argued that enough economic inequality can transform a democracy into a plutocracy, a society ruled by the rich. Aside from this, large inequalities of inherited wealth can also create an economic caste system that undercuts equality of opportunity. The unjust restriction of social mobility can create social conflicts and instill hostility between the rich and poor, wreaking havoc by compromising the stability and harmony of social relations.
Along the path towards achieving fairness, Frankfurt argues that reducing inequality is a natural byproduct of the process. For instance, raising taxes on the rich to secure decent living conditions for the poor has an indirect effect of reducing inequality. He suggests that although equality should not be the primary end goal, it can indeed be addressed to some extent as an additional benefit of striving for fairness and equity, particularly the alleviation of poverty.
Although the interconnected nature of equality and poverty alleviation allows public policy to essentially “kill two birds with one stone”, Frankfurt urges us to reevaluate whether we are too fixated on the topic of inequality and not enough on fairness, especially the overall suffering of the poor. Knowing that inequality can be reduced without having to take the forefront of public policy, he implores us to divert a shift in focus towards improving the well-being of those who have the least by increasing their access to basic resources. Going forward, many proposed solutions include redesigning taxes, regulation, and policies, along with philanthropic strategies that specifically target the most disadvantaged. Frankfurt’s ideas on equality can therefore be taken as a wakeup call for us to reflect on what matters more – relative differences or the absolute suffering of the poor.
Barucca, P. (2020). A Fair Governance: On Inequality, Power and Democracy. Topoi, 40(4), 765–770. https://doi.org/10.1007/s11245-020-09697-z
Bloom, P. (2015, October 22). The Atlantic. The Atlantic; theatlantic. https://www.theatlantic.com/science/archive/2015/10/people-dont-actually-want-equality/411784/
Fisher, J. D., Johnson, D. S., Smeeding, T. M., & Thompson, J. P. (2020). Estimating the marginal propensity to consume using the distributions of income, consumption, and wealth. Journal of Macroeconomics, 65, 103218. https://doi.org/10.1016/j.jmacro.2020.103218
Ford Foundation. (2023). How the Ford Foundation uses grants to tackle inequality. Ford Foundation. https://www.fordfoundation.org/news-and-stories/videos/how-the-ford-foundation-uses-grants-to-tackle-inequality/
Frankfurt, H. G. (2015). On Inequality. In Jstor.org. Princeton University Press. https://www.jstor.org/stable/j.ctvc77dq3
Interaction Institute for Social Change. (2016, January 14). Illustrating Equality VS Equity. Interaction Institute for Social Change. https://interactioninstitute.org/illustrating-equality-vs-equity/
Kim, C. U., & Park, J.-W. (2021, June 2). Towards a feasible income equality. LSE Business Review. https://blogs.lse.ac.uk/businessreview/2021/06/02/towards-a-feasible-income-equality/
Piketty, T., Saez, E., Zucman, G., Duflo, E., & Banerjee, A. (2022). World Inequality Report. In World Inequality Database. World Inequality Lab. https://wir2022.wid.world/www-site/uploads/2022/03/0098-21_WIL_RIM_RAPPORT_A4.pdf
Posen, A. (2014, August 5). The economic inequality debate avoids asking who is harmed. FinancialTimes; Financial Times. https://www.ft.com/content/b46a586e-1be6-11e4-9db1-00144feabdc0
Scanlon, T. M. (2014, June 3). The 4 biggest reasons why inequality is bad for society. Ideas.ted.com. https://ideas.ted.com/the-4-biggest-reasons-why-inequality-is-bad-for-society/
Starmans, C., Sheskin, M., & Bloom, P. (2017, May 4). The science of inequality: why people prefer unequal societies. The Guardian; The Guardian. https://www.theguardian.com/inequality/2017/may/04/science-inequality-why-people-prefer-unequal-societies
Shaw, A., & Olson, K. R. (2012). Children discard a resource to avoid inequity. Journal of Experimental Psychology: General, 141(2), 382–395. https://doi.org/10.1037/a0025907
Stiglitz, J. E. (2016). How to Restore Equitable and Sustainable Economic Growth in the United States. American Economic Review, 106(5), 43–47. https://doi.org/10.1257/aer.p20161006
Stiglitz, J. E. (2015). Inequality and Economic Growth. The Political Quarterly, 86(51), 134–155. https://doi.org/10.1111/1467-923x.12237
The World Bank. (2018, October 17). Nearly Half the World Lives on Less than $5.50 a Day. The World Bank. https://www.worldbank.org/en/news/press-release/2018/10/17/nearly-half-the-world-lives-on-less-than-550-a-day
Zakrajsek, T. (2021, September 2). Do we need equity or equality to make things “fair”? Actually, we need both. Times Higher Education. https://www.timeshighereducation.com/campus/do-we-need-equity-or-equality-make-things-fair-actually-we-need-both
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.
This author has not left any details