In his State of the Union address, President Barack Obama had much to say about the US economy and the nation’s recovery from the financial crisis. But some of his sharpest words concerned income inequality. While generating applause, the president’s rhetoric misses the core economic challenges facing low-income Americans and reduces the likelihood of constructive policy action.
While the president now wisely acknowledges the importance of mobility, the underlying difficulty concerns the way the problem is framed. Inequality is not in itself necessarily undesirable. People earn more or less depending on how old they are, how hard they work, and how useful are the business or creative aptitudes they possess. This is a normal feature of a competitive, dynamic economy. Continue reading »