Draft An End in Itself and a Means to Good Ends: Draft
Why Income Equality is Important

Arthur MacEwan[1]
March 2009

“The social system is not an unchangeable order beyond human control but a pattern of human action.”—John Rawls (1971, p. 102)

In recent years “poverty reduction” has become the watchword in development agencies, in international lending institutions, and among development economists generally. The focus on poverty reduction reached a high point perhaps with the articulation of the Millennium Development Goals (MDGs) and with the extensive analytic work that has accompanied the MDGs.[2] Yet, much of the discussion of poverty reduction and economic development in low and middle income countries has either ignored the issue of income distribution or has tended to view income distribution only in terms of its impact on economic growth.

Poverty and inequality, however, are intimately bound up with one another.[3] Both as an analytic issue and as a policy issue, there are severe limitations in attempting to deal with poverty – or, more broadly, with economic well-being – without also examining income inequality. Indeed, it is questionable that we can even define poverty independently of income distribution.

In this essay, I want to develop the argument that economists and economic policy-makers should focus much greater attention on inequality as measured by the distribution of income (and wealth). The traditional focus simply on absolute levels of income as a measure of poverty and economic well-being is fundamentally flawed. My argument here has thee parts:

• Poverty or, more generally, economic well-being cannot be effectively defined as distinct from income distribution.

• Income distribution is fundamental to our understanding of justice (fairness) and human rights, and relative