Inequality, Poverty, and Why We’re Definitely Not Broke

I participated in a debate Thursday morning on the role of government in poverty reduction. A couple of “curious” points came up from the conservative side which I keep hearing lately and which make little sense to me.

First, on inequality, Michael Tanner from the Cato Institute couldn’t understand why I kept going on about inequality. It doesn’t have anything to do with poverty (Scott Winship of the Brookings Institution made a similar argument in a Senate hearing a few weeks back). Tanner argued that if everyone’s income doubled, poverty would go down but inequality wouldn’t change, so inequality must not matter.

Um… ok… but that’s a total non-sequitur. What’s been happening for most — not all — of the past 30 years is the pattern of real income growth you see here, from a recent CRS study. Sure, if everyone’s income grew at the overall average of the first bar-20%-we’d have less poverty and less inequality. But in the real world, average income grew 20%, fell 6% at the low end, and was up 60% for the top