Markkula Center of Applied Ethics

Addressing Disparities in Income and Wealth

The Challenge

In the United States, the gap between the incomes of rich and poor people has grown substantially since the 1970s, and wealth inequality has shown a parallel increase. Globally, inequalities between rich and poor countries are also apparent, challenging us to consider whether extreme and persistent disparities violate ethical norms.

What's at Stake

From the walkout of developing countries at the World Trade Organization talks in Cancun to shareholder revolts over executive compensation, income inequality is an underlying theme in many arenas, both global and domestic. The impact of government policies, such as the recent federal tax cuts, on such disparities has been widely debated. Every society tolerates some measure of inequality, but extremes of wealth and poverty may ultimately threaten social and political stability. They may also violate basic ethical principles of fairness and compassion. One framework for evaluating the ethics of disparities was offered by the U.S. Conference of Catholic Bishops, when they stated, "A fundamental moral measure of any economy is how the poor and vulnerable are faring." Large disparities in income and wealth may be least justifiable when they coexist with large numbers of people suffering extreme poverty.

Critical Questions

  • Do large disparities in wealth and income in fact violate important ethical principles?

  • Is there a compelling ethical objection to inequality per se, in the form of wide variations in income and wealth, or is the major ethical challenge specifically poverty—the existence of a significant number of people suffering from severe material deprivation?

  • What are the economic, social, and political factors that have created recent trends in income and wealth inequality? Are these trends likely to continue?

  • To what extent should governments undertake measures to reduce poverty or income and wealth inequalities, and what kinds of policies are most effective and least disruptive?

  • How can distributive issues be raised in the political process, both nationally and globally, in a fashion that avoids the divisiveness of class warfare?

  • How do we achieve a balance between the goals of redistributive policies and competing ethical objectives, such as economic freedom and efficiency?

October 23, 2003

Read the text of William Sundstrom’s presentation on Addressing Disparities in Income and Wealth.

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