Inequality Differs For Different Societies

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    Taking into consideration the dramatically different ways individuals earn income and accumulate wealth is essential in understanding the nature of income and wealth inequality – and the potential problems it may pose, finds a new essay by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank. “When measuring inequality, you can’t simply compare countries such as Canada, where typically businesses and entrepreneurs only prosper by benefiting society to countries where cronyism and government-granted privileges are widespread and rig the system for elites,” says Jason Clemens, executive vice-president of Fraser Institute and co-author of ‘How Income and Wealth are ‘Earned’ Matters in Understanding Inequality.’ The essay spotlights several countries and the different ways people earn income and accumulate wealth. One way is to provide goods or services at prices consumers will pay, which benefits the entrepreneur and, more importantly, society at large. In other words, entrepreneurs are successful in these countries by satisfying demand in the population. Contrast that situation, which is often the case in Canada, with other countries where people can amass great wealth while producing negative consequences for society. For example, in Mexico, ‘cronyism’ and special privileges granted by government to individuals and businesses reduce competition and create monopolies. Consequently, some Mexican companies are able to charge higher prices for goods and services (telecommunications, for example) than consumers would see in a competitive market.