In A Theory of Justice, John Rawls developed a useful thought experiment in moral philosophy called the “veil of ignorance.” Rawls asked: if you didn’t know what position in society you’d be born into, what rules would you choose? His answer was the “maximin” principle: design society to maximize the welfare of the worst-off. It’s a seemingly sensible idea that some accept as a benchmark for thinking about social welfare—what economists sometimes call “social welfare functions” and others would call “distributive justice”—and the best ways to help the least well-off.
Thomas Piketty, Joseph Stiglitz, and their fellow travelers in the new socialist economics claim the Rawlsian mantle of maximizing the welfare of the worst-off. They shouldn’t. Their actual social welfare function is arguably something closer to the opposite: not maximin but minimax: to minimize the highest net worth in society. Their goal isn’t to make the poor richer, it’s to make the rich poorer. That’s a fundamentally different project, and it leads to worse policy conclusions that hurt the very people they claim to want to help.
It is the same argument that is driving wealth tax proponents like Sen. Bernie Sanders (I., Vt.), Sen. Elizabeth Warren (D., Mass.), and Rep. Ro Khanna (D., Calif.).
The de-growth agenda that Piketty, Stiglitz, and others recently endorsed makes the inversion explicit. Their argument goes roughly like this: rich countries have already achieved high living standards, so further GDP growth primarily benefits the wealthy rather than the poor. Meanwhile, growth drives carbon emissions. If advanced economies voluntarily slowed down, they could reduce emissions while freeing ecological space for developing nations to catch up. Pair that with aggressive redistribution, and you get what they call an “equal and habitable world.”
Along these lines, in her final parliamentary debate in November 1990, British Prime Minister Margaret Thatcher famously said of a similarly thinking Labour member of the House of Commons, “He would rather have the poor poorer, provided that the rich were less rich.”
Shortly after the publication of his Capital in the 21st Century just over ten years ago, Piketty first had a different reason for why we should care about inequality. (N.B.: This was prior to his embrace of climate change arguments for de-growth). First he said that asset growth rates were larger than labor income growth ratess. Once critics showed this idea to be untrue, he then pivoted to a different political economy argument, that high inequality for Western countries like the United States meant political capture and a road to oligarchy like in Russia.
What this misses is that inequality can actually be a symptom of social ills rather than a cause of them. It’s not clear that high levels of inequality cause massive strife, as some level of inequality can be a sign of economic dynamism in a society. It is clear, however, that massive social strife can cause high levels of inequality. Think about the long-term stratifying effects of Apartheid in South Africa or the long-term effects of the caste system in India.
Notice what’s missing from this entire inequality-obsessed way of thinking: any well-thought out mechanism for actually improving the lives of the poor. In this framework, redistribution is downstream of a prior commitment to shrinking the pie. The original top 1 percent and top 10 percent income metrics, decried for how high they are in the current era in Piketty’s Capital, are pre-tax metrics and exclude the direct role that redistribution can play. In this sense, the wealthy aren’t necessarily taxed to just fund schools or health care or income transfers alone. They’re taxed because their wealth is treated as a negative externality. Top-end wealth is like some kind of pollution in this view. It needs to be capped, curtailed, and—ideally—eliminated. Whether the poor benefit is almost beside the point.
The case underpinning this worldview is shakier than it looks when speaking on apples-to-apples terms using absolute income metrics. The headline inequality statistics, including Piketty’s own top one percent income share estimates and the Gini coefficient, are relative measures. They tell you how slices of the pie compare to each other, not whether the people at the bottom are actually eating better. A person can’t buy groceries with a higher income share, but they can with a higher absolute real income level.
The distinction that absolute income measurement matters is enormously important when evaluating living standards over time. Research by economists Richard Burkhauser and Kevin Corinth shows that if the 1964 poverty threshold were simply adjusted for inflation, roughly 2 percent of Americans would be poor today, down from around 19 percent when President Lyndon Johnson launched the War on Poverty in 1964. The official poverty rate has budged far less only because the poverty line itself has been repeatedly raised in real terms, a methodological choice that obscures real material progress. Maybe the absolute poverty line established in 1964 was a low bar and should be changed to a higher bar, but at the very least, policymakers should measure apples to apples in referring a consistent absolute income standard over time.
The confusion runs in both directions. As income inequality rose within many Western countries over the past few decades, global inequality fell dramatically, as hundreds of millions of Chinese and Indian workers entered the middle class by global income standards. The absolute incomes of the world’s poorest got richer faster than the world’s richest. This was a success story for those focused on absolute incomes and alleviating poverty. For the minimax crowd, it registers as little more than noise, probably because they’re obsessing about the top of the distribution, not the bottom.
The danger of prioritizing equality over prosperity becomes obvious during a recession. Inequality often falls because capital income collapses faster than wages. By standard inequality measures, society appears more equal. Yet inequality can fall while workers lose jobs and below median household incomes decline. If lower inequality is achieved through widespread impoverishment, it is hard to call that progress. Indeed, inequality metrics like top one percent income shares fell during the Great Recession. Similarly, inequality can rise while the incomes of the poor are rising, even if the incomes of the rich are rising faster.
The environmental argument for de-growth is similarly weak. Economic growth and CO2 emissions are not as tightly coupled as the de-growth case assumes. As advanced economies have shifted from industrial to service-based production, growth has become increasingly decoupled from resource use, particularly since the 1970s. Emissions have already been falling in the United States and across much of Europe. And the dire scenarios that once drove apocalyptic growth projections, particularly the RCP 8.5 emissions pathway that was long presented as a central expectation rather than a high-end stress test, have been quietly abandoned by most serious climate economists.
There’s also a basic global economy point that the de-growthers tend to wave away. The developing world doesn’t exist in a vacuum. Growth in poor countries depends heavily on trade, investment flows, and consumer demand from rich ones.
None of this means inequality is not a legitimate concern. But there’s a world of difference between caring about the poor and being obsessed with the rich. Piketty and Stiglitz are right that policymakers should care about the least well-off, but it’s odd that they spend so little of their own focuses on the poor. They’re wrong that the way to help them is by treating top-end wealth as the enemy.
Helping the poor points toward growth, innovation, and broadly shared prosperity, not managed stagnation. The central question for public policy should not be how to make the rich poorer. It should be how to make the poor richer.