Outcome Inequality

Screen-Shot-2014-03-24-at-2.18.07-PM-718x500The words income inequality show up frequently in political speeches. Usually the person is lamenting the gap between those who make a lot of money and those who don’t, and how much tax that high income person pays.

It’s true that Warren Buffet has a lower tax rate than his secretary. He makes approximately 1000 times as much, but pays a smaller percentage of that income to the government.

But what if we started talking about outcome inequality? Since income should be linked to outcome (or output), Mr. Buffet is making a fair salary. If I had received $1000 worth of BRK.A for my 13th birthday, I’d be sitting on over $30,000. Am I really going to complain that he made a pile of money along the way?

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