Editor's Note: This column was co-written by Anne Bradley, PhD, who serves as Vice President of Economic Initiatives at the Institute for Faith, Work and Economics.
All-American rocker Bruce Springsteen has taken to the pages of Rolling Stone magazine to lament the existence of income inequality in our country today: “You cannot have a social contract with the enormous income disparity — you’re going to slice the country down the middle. It’s not going to hold.”
His viewpoint seems to be shared by more than six in ten Americans who think that “one of the biggest problems in this country is that more and more wealth is held by just a few people,” according to a 2011 poll by the Public Religion Research Institute. The Occupy Wall Street campaign only contributed to this sentiment, leading ordinary Americans to talk about the wealthy “one percent” and the presumably destitute “ninety nine percent.”
The reality is, almost all this is the result of economic illiteracy rather than careful moral reasoning.
First of all, not all forms of inequality are unjust. Rather, the Bible says that diversity is woven into the very fabric of our creation (Genesis 1:11-26). God has given blessings to all—it can rain on both the just and the unjust (Matthew 5:45)—but our gifts differ both in degree and in kind. In Jesus’ parable of the talents, a rich man gives his slaves different amounts of money, according to their ability. (Matthew 25:14-30)
Justice has to do with what each of us is rightly owed. If what is owed is equal, then justice requires equality. If what is owed is not equal, then justice requires inequality.
In market-based economies, we can exchange our labor—our time, knowledge, skill, willingness to risk, and effort—for other things we value. We each have different “comparative advantages,” to use a term from economics. Even as individuals, the value of our labor varies by time and place, and so does the income we can get for it. In the end, the value placed on our labor is assessed by the consumer. We determine whether an entrepreneur will be wealthy, and that wealth comes if and only if the entrepreneur has met the needs of the customers. Absent cronyism or corruption, this is just.