Tag Archives: economic justices

Care About Income Inequality?

Complaints about income inequality are common. Leaving aside the generally bad economic and moral arguments that seek to make the case that such inequality is unjust, there is one argument that is worth considering.

What I have in mind are the subsidies available to those who purchase electric cars. An editorial in the Wall Street Journal describes this as nothing less than “blatant income transfer for the well-to-do.” The editorial board goes on to say that

Electric cars are significantly more expensive than the average vehicle, with a starting price of around $36,000. A recent Congressional Research Service study found that nearly 80% of the credits were claimed by households with adjusted gross income of more than $100,000. Sales data show that about half of all electric vehicle sales occur in one state—California.

A proposed bill with bipartisan support would expand the subsidy “cost[ing] taxpayers nearly $16 billion over the next decade.”

Besides the injustice of supporting the private economic decisions of the wealthy, the subsides themselves have not worked as promised. “CEO Elon Musk had been saying … that his competitors want the subsidies while Tesla doesn’t need them.”

Unfortunately for Musk and Tesla, “sales fell as the tax-credit[s]” have been paused out.” And while some would still argue for the positive net ecological benefit of electric cars, based on the results today, selling more electric vehicles won’t “have the slightest impact on the climate.”

Ending unjust subsidies for a commercially unviable product that fails to deliver on its promised ecological benefits seems to me to be a good place to battle income inequality.

More importantly, it highlights the significant moral difference between income inequality that is the result of differences in productivity and government intrusion in the market. The former is morally acceptable serving as it does the common good by producing goods and serves that (at least in principle) makes life better for many of us and so frees up resources for all of us. The latter, however, is morally unacceptable because, as electric car subsidies suggest, it redirects government and private resources to the benefit of a minority at the expense of the common good.

In Christ,

+Fr Gregory