For this discussion paper, I would like to focus mostly on Feldstein's argument of tackling poverty instead of inequality and why this is a dangerous perspective. To begin with, Feldstein's argument concerning the Pareto principle refers to the economic concept of Pareto superiority, which assumes an allocation of resources that helps at least one person while keeping everyone else at least as well off as before. Pareto efficiency, on the other hand, assumes an allocation where no one can be made better off without making at least one person worse. Thus, Feldstein suggests that we live in a Pareto superior society, where we have not yet achieved maximum efficiency. In other words, we have not reached our full productive potential and thus the increase in wealth among the rich should be seen merely as an advance towards pareto efficiency carried out by the upper stratum of society.
[...] Focusing policies on poverty sidesteps the driving forces of the issue, which revolve around a system that will naturally produce inequality until it is truly democratized. We have seen in numerous readings that the wealthy are by far the most influential class in the realm of politics, but Ladd and Bowman also cite the fact that if our middle class begins to feel that it is being squeezed in by classes below or above them, and they feel that odds are being rigged against those who work hard and play by the rules, the political importance of economic inequality will grow.” In other words, the middle class could potentially have a greater voice in this issue, but they lack an incentive to do so since the root of inequality is mostly affecting the lower class. [...]
[...] Inequality vs poverty For this discussion paper, I would like to focus mostly on Feldstein's argument of tackling poverty instead of inequality, and why this is a dangerous perspective. To begin with, Feldstein's argument concerning the pareto principle refers to the economic concept of pareto superiority, which assumes an allocation of resources that helps at least one person while keeping everyone else at least as well off as before. Pareto efficiency, on the other hand, assumes an allocation where no one can be made better off without making at least one other person worse off. [...]
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