| Lack of social mobility, not inequality, makes us unhappy |
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| Written by Marek Hlavac | |
| Thursday, 26 July 2007 | |
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Many proponents of the welfare state claim that greater redistribution
of income is needed to combat economic inequality. Sometimes, they
point to recent findings in behavioural economics which, they believe,
show that inequality makes people feel less happy. Richard Layard, a
professor at the London School of Economics, for instance, argues that
one's happiness can be detrimentally affected by other people's
earnings and that it could be efficient to discourage work effort that
leaves society feeling less happy as a whole. Arthur Brooks, a professor of government policy at Syracuse University, however, reads the evidence differently. In a recent Wall Street Journal article, he argues that the problem is a perceived lack of opportunity rather than income inequality. "To focus our policies on inequality, instead of opportunity, is to make a serious error - one that will worsen the very problem we seek to solve and make us generally unhappier," he writes. Transferring money from the rich to the poor is a case in point, he suggests: "Redistributionist policies tend to reduce incentives to create wealth, which means less economic growth and fewer jobs, and less charitable giving--all to the detriment of those lower on the income scale." What should we focus on, then? Rather than try to wipe out economic inequality, we should instead implement policies that enhance social mobility: "improving educational opportunities, addressing cultural impediments to success, enhancing the fluidity of labor markets, ...and protecting the climate for entrepreneurship." Sounds like a good place to start.
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