Obama: Cut the deficit by taxing the rich

[Rath]

HappySqurriel said:

Honestly, income disparity is a poor way to measure fair outcomes in an economy. Supposing the purchasing power per dollar is the same in both scenarios which is a more desireable outcome:

A "poor" household earns $25,000 per year, a typical (mean or median) household earns $100,000 per year, and a "rich" household earns $400,000 per year.

A "poor" household earns $15,000 per year, a typical (mean or median) household earns $30,000 per year, and a "rich" household earns $60,000 per year.

While the households in scenario 1 are all better off than their equlivalents in scenario 2, the focus on more equitable distribution would lead people to choose scenario 2.

 

We should be discussing how we can grow the economy to ensure that the standard of living of everyone within the economy improves as much as is possible; not discussing how to create an economy where the realitive reward of success is minimized.

Or a middle ground. Why do people only assume that one of two extremes can be chosen.

Clearly income disparity should not be the only measure, or even the most important measure. Far more important are things like the standard of living for the lower income groups.

The problem with income disparity though is that its effect is to reduce the standard of living of the low income groups by concentrating the wealth in the high income group - wealth within a society is a finite resource and a pool of it in one place does mean that there has to be an lack of it elsewhere.