This is the Cato Daily Podcast for Wednesday, October 17th, 2007.

I'm Caleb Brown.

According to the Wall Street Journal, the top 1% of American workers earn 21% of the national income, the bottom 50% by contrast

divvy up just 12% of the national pie.

But how relevant is income inequality at the national level in an increasingly globalized world.

Cato Institute Policy Analysts Will Wilkinson says that arguments over the fairness of income inequality actually obscure more important discussions.

You see income inequality numbers bandied about in the news a lot lately. It's not clear that these are

numbers that are relevant to much of anything. The increase of income inequality can simply be a purely mathematical fact

about the growth of an economy.

If some people have a larger stake in the economy, they hold more stocks,

more bonds, they own, you know, big chunks of mutual funds and things like that.

And the economy is doing well, those people who have a big stake in a growing

economy are going to grow richer faster than other people. That doesn't

necessarily tell us anything about the justice or the fairness of an economy.

What a lot of people seem to think is that if a distribution of income grows more unequal, that that's a at a first blush some evidence

that the society is growing less just. But that's not necessarily the case if you consider the fact that an

economy is a positive sum game, that the pie can keep getting bigger and bigger and

bigger, everybody can keep getting bigger and bigger and

bigger. Everybody can keep getting a bigger

absolute share with some people's share growing

somewhat faster than others.

That can lead to growing inequality,

...