Is Laziness the Cause of Economic Inequality?

Once, laments over economic inequality were the sole purview of the left.  But now the growing gap between the rich and the poor is a mainstream concern. "The distribution of income and wealth in the United States has been widening more or less steadily for several decades, to a greater extent than in most advanced countries," Federal Reserve Chair Janet Yellen observed in a speech on October 17. And "I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history." 

In a recent report, titled "Redistribution, Inequality and Growth," the International Monetary Fund (IMF) contended that economic inequality is an enemy of growth. And in his state of the union address earlier this year, President Barack Obama acknowledged that, despite four straight years of economic growth, inequality in the United States has deepened. Now, a new Pew Research Center survey of the citizens in 44 countries has found that a median of 60 percent — including 46 percent of Americans — say inequality is a very big problem in their respective societies.

When offered the chance to choose one out of six different causes for inequality — government economic policies, workers’ pay, the educational system, trade, the tax system and the poor’s work ethic — people around the world generally agree that the gap between the rich and the poor is a product of failed government policies and inadequate wages.

Poverty, they say, does not result from a poor work ethic among the disadvantaged. And this consensus that inequality is the result of inadequate policies and low wages suggests a potential course for narrowing the income and wealth divide. Government economic policies can be changed and wages can be raised. This means that the global public agrees that inequality is not the consequence of some character flaw of the poor. It is an economic condition that can be fixed.

Nearly equal portions of the public in advanced, emerging, and developing countries, cite the gap between the rich and the poor as a very big problem. And notably, it is the leading economic concern in the eyes of people in major economies such as China and Germany, at 42 and 39 percent, respectively, according to the new Pew Research survey. A global median of 29 percent say their government’s actions are to blame for inequality, making it the leading cause cited. People in advanced economies, in particular, believe that their governments are responsible for the rich getting richer and equally culpable for the poor becoming relatively poorer. A median of 32 percent in those nations blame government, three times the percentage that cite the failings of their educational system and double the share who blame their tax system. This includes 54 percent of Greeks, 52 percent of the Spanish, and 46 percent of South Koreans who say public policies are to blame. Notably, in comparison, only 24 percent of Americans fault government actions.

Low wages run a close second in the public eye as the cause of inequality. A global median of 23 percent cite the failure of companies to adequately compensate their workers. Significant percentages of those in advanced economies fault workers’ wages for the gap between the rich and the poor, including 29 percent in Japan and 26 percent in both France and Germany. Just 13 percent of Americans blame their paycheck, however, despite stagnating incomes in the United States.

Wage shortfalls are seen as a cause of inequality in a number of emerging markets, where significant portions of the populations in some key countries seem to think that recent national economic performance has not translated into adequate improvements in income. 44 percent of Poles (who weathered the Eurocrisis better than any other European Union member) and the same proportion of Brazilians say inadequate wages are the principle cause of inequality in their societies. There is similar blame cast by 39 percent of Colombians and Chileans alike.

Globally, only 11 percent of people point the finger at their educational system. 10 percent attribute inequality to a lack of individual hard work, while 8 percent blame trade between countries and the structure of the national tax system. Notably, the United States and Britain are two of the few places in the world that blame individuals’ lack of hard work — 24 percent — for the rising gap between the rich and the poor. (This is roughly on par with the level of blame at their own government’s policies: 24 percent in the United States and 23 percent in Britain).

Of those living in advanced economies, a median of 48 percent support higher taxes on the wealthy and corporations to fund programs for the poor that would fight inequality. This includes 61 percent of Germans, 54 percent of Spaniards, 53 percent of South Koreans, half of all Britons, and 49 percent of Americans. Not surprisingly, in the United States, 70 percent of liberals say high taxes are a more effective way to combat inequality, while just 33 percent of conservatives agree. 

Citizens in emerging and developing economies see things differently. In these places, people believe that low taxes on the rich and businesses to stimulate growth are a better way to address inequality. At least 60 percent of those in Brazil, Argentina, and Vietnam, express this opinion. Majorities in developing economies like Uganda, Ghana, Kenya, and Nicaragua also lean toward low taxes.

Inequality is squarely on the world’s economic agenda, especially now that many economists think it inhibits much-needed growth. And publics around the world say governments and corporations can do something about it by fixing national economic policies and raising wages. But a consensus about the specifics of those policy changes continues to elude us. Public support for reducing the gap between the rich and the poor may require a more complex set of policy initiatives, not one-size-fits-all prescriptions.