Intra-Urban Inequality

At Bloomberg Noah Smith has posted the latest installment in the ongoing series on inequality. Many of the discussions of inequality have focused on inequality at a global or national scale. In this installment Dr. Smith considers the question at a much more local level:

One reason urban inequality is so important is that this is how most people experience the phenomenon on a daily basis — in cities, rich, middle-class and poor people are in constant contact. Experiments and other studies clearly show that people care about their status relative to reference groups, and one important reference group is the people who live nearby. That makes intuitive sense. If some rich person in Switzerland is buying a mansion, I only perceive it as a statistic on paper, but every time I see someone walk into a restaurant that I can’t afford, it reminds me of my lower economic status.

These effects are visible in aggregate data as well. Economist Ed Glaeser finds a negative correlation between city-level inequality and self-reported happiness.

I’m not an economist but I am a person who is noted for getting things done. I’ve got to confess that I just don’t look at things the way Dr. Smith does. I tend to look at equality in terms of the factors, particularly the institutions, that foster equality and those that discourage equality. Let’s consider a few.

Type	Fosters equality	Does not
Income
	Free market	Subsidies paid to service providers.
	Relatively small, local banks.	Branch banking
	Aggressive anti-trust activities	Little or no anti-trust activity
	No barriers to entry	Credentialling
Wealth
	High inheritance taxes	Low inheritance taxes
	Personal property taxes	No personal property taxes
	High property taxes	Low property taxes
Social
	Low immmigration	High immigration
	Common language	Multiple languages
	Universal military service	Volunteer military with low participation
	Free K-12 education that accepts everyone and which most children attend.	Private schools

That list is not intended to be exhaustive, merely indicative.

My point here is that, if you want greater equality, you’ve got to change the critical success factors. If you try to preserve all of the factors, nothing you do will result in greater equality.

What other factors do you think are involved in increasing/decreasing income, wealth, or social equality? Distinguish between the factors themselves and whether changing them is desirable. I’ll suggest another factor: zoning.