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U.S. Public Supports a More Equitable Distribution of Income

According to a recent study by Michael I. Norton of the Harvard Business School and Dan Ariely of Duke University, Americans overwhelmingly support a more just distribution of income in the United States. In fact, when respondents in the study were asked to pick their ideal income distribution in a blind comparison comparing income distributions in Sweden, the U.S. and a completely equal income distribution, respondents overwhelming chose either Sweden (47%) or an equal income distribution (43%). Only 10% of respondents chose the current income distribution in the U.S. When asked to compare Sweden, where the wealthiest 20% control 36% of the wealth, to the U.S., where the same 20% control 84% of the wealth, respondents (again in a blind comparison) chose Sweden over the U.S. 92% to 8%.

The study also had some other interesting results. First the majority of respondents vastly underestimated the actual level of wealth inequality in the U.S., most believing that the wealthiest 20% control 59% of the wealth (as noted above the actual number is 84%). When asked to construct their own ideal distributions of wealth the majority of respondents assigned 32% of wealth to the top quintile. To construct this more equitable system respondents favored moving wealth from the top quintile to the bottom three, leaving the second untouched, and evidencing a greater concern for the less fortunate than the more fortunate. More startling, these views held across political, gender, and economic lines. Meaning that Americans of all different levels of income, genders, and political persuasions favor a more equitable model along the lines of Sweden and not the current distribution.

What this suggests to me is that the question we should be asking ourselves is not whether or not income redistribution is a good thing, since Americans are overwhelmingly in favor of it, but what is the best way to go about it. Here is where I suspect to find the most disagreement, probably because people who ascribe to different political ideologies understand the causes of such inequality differently. I also think, however, that some of this disagreement could be solved simply by educating people about what the actual wealth distribution is the U.S. is, something that people seem woefully ignorant of.

The most obvious answer to the question of how to change the current imbalance to a fairer one is through taxes, a subject on which I’ve already written from a Catholic Social Teaching standpoint. Other options include things like better wage laws and changes in the federal budget (notably a drastic reduction in defense spending). Whatever the answer is, this is clearly where the conversation should be focused. Something is clearly broken in the U.S., and as this study indicates, people overwhelmingly agree on the problem. Identifying the problem is always an important first step, now we need to get serious about finding the solution. 

About Stephen DeWitt, OFM

  • troll

    “income mobility” is a can of worms

    here’s a Fed working paper that massages the data and concludes:

    …evidence suggests that over the 1967?to?2004 time span, a low?income family’s
    probability of moving up decreased, families’ later year incomes increasingly depended on their starting place, and the distribution of families’ lifetime incomes became less equal.

  • Baronius

    Zing, I don’t think a person could reconcile Christianity and Clavos’s ideology. But just as there are religious and non-religious people on the Left, so there are both on the Right. They have different principles but agree on policy matters.

  • Boeke

    So, why not tax the bejeesus out of the rich?

  • Clavos

    So, why not tax the bejeesus out of the rich?

    Would serve ‘em right.

    The nerve of them, getting rich in this country! Violating every principle it stands for!

  • Cannonshop

    #53 What happens when the Rich decline to play anymore, Boeke? Wealth, esp. great wealth, indicates a certain mobility, it’s not too difficult to see “The Rich” taking their ball and going to, say, the Caymans, or some other country, where they are not getting their eyeballs taxed out of them.

    Perhaps, in the process of doing so, taking the business that MADE them rich (and the attendant jobs) along with them, or perhaps just liquidating it and selling off the bits.

    all of which has happened before, though in most earlier examples, it was rich fellas leaving somewhere else to come to the United States with their money.

  • http://www.thingsalongtheway.blogspot.com cindy

    Cannonshop spells out the hostage relationship between labor and capital.

    Why not ask what if the rich expect to turn the US into a ghetto by demanding labor bring itself in line with the third world slave labor market?

    Your comment, Cannonshop, describes the problem with the relationship and reveals how their is no “fair market” for labor. Everything recommended by pro-capitalists makes the claim of fairness, yet really, always ends in trying to appease wealthy because of their unfair advantage.

  • troll

    What happens when the Rich decline to play anymore…

    then labor will reorganize production and go right on producing wealth – which is what productive people do

    …don’t let the door catch you on the ass Mr Galt

  • http://thingsalongtheway.blogspot.com/ Cindy

    One of the main problems with capitalism is capitalists.

    In exploring a run for president Donald Trump as repeatedly accused China of taking manufacturing jobs from the U.S., saying “the problem with our country is that we don’t make anything anymore.”

    But an array of Trump-branded products from ties, dress shirts and other clothing in the Donald J. Trump Signature Collection, to hats, stuffed animals, cufflinks and tie clips are stamped “Made in China.”

    Visitors to the Trump Store in the lobby of the Trump Tower on Fifth Avenue in New York City, or to the displays of Trump clothing at Macy’s in New York?s Herald Square, would be hard-pressed to find much labeled “Made in the U.S.A.”

  • troll

    …like Adam Smith says – never put profiteers in positions of political power

  • http://thingsalongtheway.blogspot.com/ Cindy

    lost an ‘h’

    should be [h]as repeatedly

  • Boeke

    In fact, the rich and powerful HAVE withdrawn from this fallow economy, that’s why there is $2trillion in retained earnings in US corps (that’s money lying dormant, NOT being used to revive the economy, start new industries like wind and solar power, more efficient housing, etc.), and why $2trillion more is lying unemployed in US banks.

    The rich and powerful of America are simply hoarding cash, they are NOT re-investing in America.

    Thus, it makes sense to tax that money right now to kickstart the US economy.

    We can issue ‘vouchers’ for those bonds (they are mainly in treasury bonds, which the Rich get a very special deal on, since they earn 0.25% even on bonds that they are entitled to but have not yet purchased, plus other perqs). We can proclaim the value of those ‘vouchers’ to be whatever we want, as per the history of other voucher systems throughout history.

    It is no more illicit to issue vouchers for corporate savings or inter-bank savings than it is to recommend vouchers for old-age pensioners, as people do when they talk about vouchers for Social Security (thus undermining one of the few remaining sound financial institutions in the USA). In fact, vouchers for SS are adverse since it immobilizes liquid funds that typically flow immediately and constantly into the economy with a very high Economic Multiplier.

    Issue vouchers for Retained Earnings! It’s easy to uncover them since they are located in the Treasury already.

  • Clavos

    Thus, it makes sense to tax that money right now to kickstart the US economy.

    If it’s in their possession, it’s already been taxed.

    Given the temper of the times, the wealthy individual who isn’t actively offshoring his/her wealth and possibly his/her person, is asking for trouble.

  • Boeke

    So what? Tax it again. Money gets taxed over and over as it moves thru the economy. Think how many times that bowl of cereal you had for breakfast was taxed. Money transactions provide convenient and measurable places to extract a tax. Nothing new about that.

    Trouble comes from offshoring wealth, too, as my bro-in-law willl testify, having been indicted.

  • Clavos

    There are ways to offshore wealth without incurring the risk of indictment — renouncing US citizenship and becoming a citizen of another country is one.

  • Clavos

    Money gets taxed over and over as it moves thru the economy.

    True, but apples and oranges. Money in someone’s account isn’t “moving through the economy.”

  • http://www.RoseDigitalMarketing.com Christopher Rose

    It isn’t even necessary to renounce one’s USA citizenship to legally offshore wealth.

    If you guys will forgive the blatant self promotion, I am developing a new service to help people protect their family, homes, businesses and other wealth from the overly aggressive US state and legal system and will be offering said service to clients in due course.

    My understanding is that as a non-American I am better placed to offer such services to people in the USA because if Americans discuss such matters with their domestic accountants and lawyers, they are often required to report you to the government.

    In the meantime, if anybody has any questions, I am happy to help.

  • Boeke

    Trouble is most people don’t discover the need to shelter wealth until after they’ve accumulated it, and it’s difficult to do retroactively.

    It may be that in the future a parent will consider it important to incorporate a newborn and establish his offshore shelters immediately upon birth, much as he might setup a college savings account.

    Why not? We seem to be busy extending people privileges to corporations, why not extend corp privileges to all citizens, especially the ability to escape responsibilities?