This is the Cato Daily Podcast for Tuesday, December 3rd, 2013.

I'm Caleb Brown.

Most Americans are in the 1%, planet wide anyway, but income and wealth inequality within the United States is still a topic of debate.

Agis Deaton engages this debate in his new book, The Great Escape, Health, Wealth, and the Origins of

inequality.

We talked about inequality within the United States earlier today.

At first blush, it seems fairly compelling that there is this really substantial problem that needs to be dealt

with.

What do people get right and wrong when we are asked to think about inequality.

I think that like a lot of these things the problem is that you can't deal with it in

sound bites, in short sound bites like that. It's much more complicated.

And I know academics always say it's much more complicated.

But in this case, I think looking at a single inequality index or trying to argue that inequality is either good or either bad,

which seems to have divided the world.

I mean, half the economists are saying, it's the market stupid, this is the way it's supposed to work and the other half are saying

inequality is a disaster and we have to do something about it and I think both of those

are true and that there are aspects of those that are real problem and aspects of this that are not a real problem.

So you know you have to recognize the importance of the market and that

inequality is another way of looking at incentives a lot of the time and we need incentives to make things work.

So some of the inequality that comes from returns to education for instance is part of the incentives for people to go to school and by and large that's a good thing.

Of course some people get left behind, you know, who are not capable of benefiting from the education

or whatever, but we'd probably live with that.

...