6.7.2 Political Responses to Inequality
Political responses to inequality are possible, and perhaps politically necessary, to improve people’s lives – but are controversial.
As described in the previous section (6.7.1), individualists want to minimise government spending and taxation. They believe that market forces are the best way of allocating economic resources. This ideology, also known as ‘neoliberalism’ (3.5.9), has dominated politics in Britain and America since the 1980s. Many people have not seen much improvement in their standard of living, whilst seeing others becoming very rich. The political responses to inequality need to address the reasons why it has become so pronounced in recent decades.
Gross inequality inhibits economic growth, as described earlier (3.5.6). Inequality can start with the unbalanced way in which corporate wealth is shared between workers, the management, shareholders, other lenders, the government (in taxes), and investment in future growth. Economic growth requires healthy workers and customers with enough money to pay for goods and services. And lack of investment can inhibit future growth.
Perfect equality of income and assets is unachievable and undesirable. People need to feel that they can improve their finances by hard work, as an incentive to create wealth (3.2.1), and it would create a sense of injustice if those who were not working received the same economic rewards. People will tolerate some inequality if they believe that they personally have a good chance of becoming wealthier.
If people believe that the whole system is unfair, they become resentful and they want politicians to correct it. As Martin Jaques asserted, in a 2016 article The death of neoliberalism and the crisis in western politics, economic inequality “is, bar none, the issue that is driving the political discontent that is now engulfing the west”. Voters have repeatedly removed incumbent governments in what this website has described as the politics of resentment. The election of Donald Trump in 2016, the flip to the Democrats in 2020, and the flip back to Donald Trump in 2024 were all examples of voter discontent with their economic circumstances.
The following sub-sections explore different aspects of the political responses to economic inequality:
● Individualists and collectivists differ on whether inequality is a problem (6.7.2.1). These contrasting ideologies were clearly visible in the difference between the Democrat and Republican party platforms in the 2024 election, for example. Republican policies for increasing economic growth would increase inequality (and the UK Conservative Party policies are similar).
● There are several political reasons for reducing inequality (6.7.2.2). Thomas Piketty and others have argued that survival of the political system might depend on it – and there are examples of public resentment leading to revolution. And there is evidence that more equal societies have a better quality of life for both rich and poor.
● There are different policy objectives for intervening to reduce inequality, according to the level of poverty being addressed (6.7.2.3). They range from humanitarian assistance to the destitute all over the world, through socio-economic rights in wealthy countries, to more equal sharing of wealth.
● There are several ways of reducing economic inequality (6.7.2.4). These include providing public services, education, and healthcare that are available to everybody; tax loopholes need to be closed so that the rich pay in at least as high a proportion of income as everybody else; and regional variations need to be addressed.
● It might be possible to limit some of the political ploys used by wealthy people to get richer (6.7.2.5). These ploys include influencing people and politicians by using media outlets that they own, lobbying, and making financial donations to politicians. Elon Musk, for example, is using all these techniques.
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/672f.htm.