In a recent issue of The Hoya, Brian Shaud argued that rising income inequality in the United States has exacerbated a number of social ills and threatens to destroy the promise of the American Dream (“The Growing Wealth Gap,” A3, Feb. 6, 2012).

Liberals are missing the point when it comes to inequality. I don’t deny that inequality exists, that it matters or that it’s a problem. But I think that focusing on income inequality is misleading and distracts us from the real problems that face America in the 21st century.

The principal statistic on income inequality is the gini coefficient — basically an index of income dispersion in a country. The gini coefficient as a measure of injustice, however, it is problematic in a subtle way.

First of all, income is not an accurate measure of well-being. Consumption — spending money on the things that make our lives better — is. Take Warren Buffet, who has a very high income but also donates 99 percent of his wealth. His personal consumption is not nearly as high as his income. The inequality between his life and ours is far lower when we consider how much he actually consumes. In fact, if we raised Buffet’s taxes, the burden wouldn’t fall on him in any meaningful way because he isn’t using his fortune for himself anyway.

As it turns out, data published in an article in The New York Times by W. Michael Cox and RichardAlm (“You Are What You Spend,” Feb. 10, 2008) suggest that the increase in consumption inequality has been far lower than the increase in the gini coefficient.

Secondly, the gini coefficient is influenced by many things other than social inequity. People tend to earn more as they grow older, so different age dispersions can change the gini coefficient. Some of us will choose to work long hours as investment bankers, consultants or lawyers, while others will place a higher value on leisure. Some of us will choose to forgo income now for income in the future.

When it comes to a social justice viewpoint, it could be argued that all of these are morally neutral decisions. Any increase in the gini coefficient from these factors represents the outcomes and interactions of many perfectly acceptable actions and preferences.

In fact, some negative aspects can decrease the gini coefficient, and some positive factors can increase it. The financial crisis wiped out a large portion of the income gains of the top one percent, especially in the financial sector. If American immigration laws changed to allow more poor immigrants to work in the United States, we could lift a large number of people out of poverty even as our ginicoefficient increased.

Finally, not all inequality is necessarily bad. Bill Gates and Steve Jobs earned their riches mainly by providing useful products for the rest of us, and the majority of us are better off because of them. Those who do a lot for the world deserve high incomes.

This isn’t to say that there are no unjust causes of inequality. In fact, there are plenty of examples. On one end of the distribution, we have a public school system that, regardless of what you think of the proposed solutions, consistently under-educates and underserves at-risk children. On the other end, special interest and corporations have hijacked the policy-making process. Both of these are terrible social ills that increase inequality.

Note that in all of these cases, inequality is a symptom of what’s wrong in our society, not the disease itself. Rather than obsess about a meaningless number, we should focus on ensuring that our rules and institutions are fair.

If you’re concerned that low-skilled workers have poor job prospects, changing the tax code to redistribute income is treating the symptom. The better response is finding a way to increase our skilled workforce. If you believe corporations are fleecing the public, taking over regulatory committees and earning huge profits, the correct response is to find out how to stop the revolving door between corporations and politics. Increasing the corporate tax rate misses this completely.

The gini coefficient is a poor measure of injustice, and those of us concerned about societal inequality shouldn’t get hung up on a simplistic and unreliable measure. Focusing on income inequality ignores the real problems. We should instead focus on ensuring that the rules of the game are not rigged in favor of special interests. That guarantee of a fair and honest process, not the guarantee of an outcome, is the American Dream.

Preston Mui is a junior in the College and President of Hoyas for Liberty.

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