We’re talking about inequality all wrong

Boston University economist Laurence Kotlikoff writes a regular column answering questions about your Social Security benefits.


Despite appearances to the contrary, this year’s presidential follies have managed to feature at least a few policy discussions amid all the name-calling.

Income inequality in particular has animated voters on both sides of the partisan divide, but the solutions advocated by candidates from each party are markedly different.

Democrats claim higher taxes on the rich and more benefits for the poor are the best ways to reduce inequality. Republicans argue what we really need is more growth, accomplished by lowering taxes to spur work and investment with, it seems, benefit cuts to make up lost revenue.

Remarkably, this debate has taken place based on partial and inappropriate indicators of U.S. inequality. Each party is dead certain about how to address inequality, yet neither knows what it is. Neither has a comprehensive and conceptually correct measure of inequality. The right measure is not how much wealth or income people have or receive, but their spending power after the government has levied taxes on those resources and supplemented those resources with welfare and other benefits.

Read more: PBS


Laurence Kotlikoff Laurence Kotlikoff’s state-of-the-art retirement software is available here, for free, in its “basic” version. His new book, “Get What’s Yours—the Secrets to Maxing Out Your Social Security Benefits,” (co-authored with Paul Solman and Making Sen$e Medicare columnist Phil Moeller) was published in February by Simon & Schuster. Find a complete list of Kotlikoff’s columns here.


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